• CS NISHA SARAYAN

Auditor Appointment in Private Limited Companies: Provisions and things to keep in mind


What is the purpose of appointment of auditor in a company?


Every company registered under Companies Act 2013 or under any previous law are required to maintain proper books of account and get it audited every year so as to ensure that accuracy and proper records are maintained by the company. Therefore, audit is necessary as it gives confidence to the shareholders that the accounts are true and fair. It also helps to improve company’s internal controls and systems. So we need to appoint auditor for the company in order to protect the interest of the shareholders.


Section 139 of The Companies Act 2013, governs the provisions for appointment of auditor for the company.


We can classify appointment of auditor into two cases-

Case 1- Appointment of first auditor

Case 2- Appointment of subsequent auditor


Following is the procedure for appointment of auditor-

Case 1-Appointment of first auditor-

For other than Government company

  • The Board of directors shall within 30 days from the incorporation of company appoint individual or firm as first auditor of the company who shall hold the office till the conclusion of first Annual general Meeting.

  • In case the board of directors fails to appoint, the members of the company in an extra ordinary general meeting shall appoint first auditor within 90 days.


For Government company

  • The Comptroller and Auditor General of India (CAG) shall appoint first auditor within 60 days from the date of incorporation of company who shall hold the office till the conclusion of first Annual General Meeting.

  • In case of failure to appoint auditor by CAG,the board of directors shall appoint within next 30 days.

  • In case of failure by the Board too, The members of the company shall appoint such auditor within 60 days at an extra-ordinary general meeting.


Case 2-Appointment of subsequent auditor-

For other than Government company

  • According to the provisions of the act, every company shall appoint individual or firm as the auditor at its first annual general meeting who shall hold the office from the conclusion of this meeting till the conclusion ofsixth annual general meeting and thereafter till the conclusion of every sixth annual general meeting.

For Government company

  • The Comptroller and Auditor General of India(CAG) shall in respect of financial year appoint the subsequent auditor of government company within 180 days from the commencement of financial year who shall hold the office till the conclusion of annual general meeting.


Every company has to file E-form ADT 1 with the Registrar of Company within 15 days from the date of appointment of auditor in meeting.


Attachments required-

  • Copy of written consent obtained from the auditor appointed.

  • Copy of intimation sent by the company to the auditor.

  • Copy of resolution passed by the company.


Following points shall be kept in mind for appointment of auditor-

  • The individual so appointed as auditor shall not hold the office for more than one term of five consecutive years.

  • An individual so appointed as auditor above shall not be eligible to be re-appointed as auditor in the same company for five years from the completion of his term.

  • The Audit firm so appointed shall not hold the office for more than two terms of five consecutive years.

  • An audit firm so appointed as auditor above shall not be eligible to be re-appointed as auditor in the same company for five years from the completion of his term.

  • Before the appointment of auditor, a written consent shall be obtained from his regarding its appointment and that its not disqualified to be appointed under the Companies Act 2013.

  • The company shall inform the auditor concerned of his or its appointment, and also file a notice of such appointment with the Registrar within fifteen days of the meeting in which the auditor is appointed.

  • Where a company is required to constitute an Audit Committee, the appointment if auditor in such companies shall be made after taking into consideration the recommendations made by such committee.


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