Term of appointment of auditor under co. act 2013
This query is : Resolved
18 July 2014
A Company wants to appoint me as the Statutory Auditor. I have not been Auditor of the company previously. Can they appoint me now for 1 year or compulsorily they have to appoint me for 5 years as per co.s act 2013?
02 August 2025
Under the Companies Act, 2013, **the appointment of a statutory auditor for a company that is not covered under the mandatory 5-year term (such as listed companies and certain others), can be for a term of one year**, typically decided at the Annual General Meeting (AGM).
Here’s the key:
* **Section 139(2)** of the Companies Act, 2013 states that the first auditor shall be appointed by the Board of Directors within 30 days of the company’s registration.
* If the Board fails to appoint, the members must do so within the next 90 days at a general meeting.
* **Section 139(1)** and related provisions say that auditors (other than in certain cases like listed companies) are appointed for one year at each AGM.
However:
* **Section 139(2A)** mandates a 5-year term of appointment for the first auditor in the case of **listed companies and other prescribed class of companies** (subject to certain transition rules).
* Further, **Section 139(2)(b)** provides that the auditor can be appointed for a term of 5 consecutive years if the company is covered under the relevant rules (mostly applicable for listed and certain large companies).
### So to clarify your case:
* If it is a **listed company or prescribed class of company**, the auditor must be appointed for a **5-year term** (subject to ratification annually).
* For **other companies**, the auditor can be appointed for **1 year** at a time (i.e., at every AGM).
### Summary:
* If you **have not been auditor before**, and it is not a listed company or prescribed category, **you can be appointed for 1 year only**.
* If it is a **listed company or prescribed category**, the company **must appoint for 5 years**.
---
Here’s the key:
* **Section 139(2)** of the Companies Act, 2013 states that the first auditor shall be appointed by the Board of Directors within 30 days of the company’s registration.
* If the Board fails to appoint, the members must do so within the next 90 days at a general meeting.
* **Section 139(1)** and related provisions say that auditors (other than in certain cases like listed companies) are appointed for one year at each AGM.
However:
* **Section 139(2A)** mandates a 5-year term of appointment for the first auditor in the case of **listed companies and other prescribed class of companies** (subject to certain transition rules).
* Further, **Section 139(2)(b)** provides that the auditor can be appointed for a term of 5 consecutive years if the company is covered under the relevant rules (mostly applicable for listed and certain large companies).
### So to clarify your case:
* If it is a **listed company or prescribed class of company**, the auditor must be appointed for a **5-year term** (subject to ratification annually).
* For **other companies**, the auditor can be appointed for **1 year** at a time (i.e., at every AGM).
### Summary:
* If you **have not been auditor before**, and it is not a listed company or prescribed category, **you can be appointed for 1 year only**.
* If it is a **listed company or prescribed category**, the company **must appoint for 5 years**.
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