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A statutory auditor independently examines a company’s financial statements and reports under the Companies Act, 2013. In India, who appoints the auditor—and the deadline—depends on whether it is the first appointment, a regular appointment at an AGM, a casual vacancy, or a company covered by the Government-company rules.
What a statutory auditor does
A statutory auditor is an external professional appointed under company law to audit a company’s financial statements and report as required by the Act. Section 143 sets out the auditor’s powers and duties, including access to the company’s books and relevant records for the audit and statutory reporting.
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The auditor’s role is an independent examination and reporting function. It does not transfer responsibility for preparing the financial statements or managing the company from its management, and an audit is not a guarantee that fraud cannot occur or that the business will succeed. Applicable auditing standards and statutory reporting requirements also govern the work.
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Who is eligible to be appointed
An individual auditor must be a chartered accountant. A firm may be appointed in its firm name if the majority of its partners practising in India are qualified; only partners who are chartered accountants may act and sign on the firm’s behalf.
Section 141 also disqualifies people in specified circumstances, including certain employment, relationships, interests and conflicts. Before appointment, the company must obtain the auditor’s written consent and a certificate confirming eligibility under section 141. Sections 139 and 141 of the Companies Act, 2013.
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How appointment differs by company and event
| Situation | Who appoints | Deadline or term |
|---|---|---|
| First auditor of a company other than a Government company | Board; if it does not act, members | Board within 30 days of registration; if it fails, members appoint at an extraordinary general meeting within 90 days. The auditor serves until the conclusion of the first AGM. |
| Regular appointment at an AGM | Members | From the conclusion of that AGM until the conclusion of the sixth AGM; notice to the Registrar within 15 days of the meeting. |
| Casual vacancy, auditor not appointed by CAG | Board | Generally within 30 days. If caused by resignation, members must also approve the appointment at a general meeting within three months of the Board’s recommendation. |
| Covered Government-company first appointment | Comptroller and Auditor General of India (CAG); then Board if CAG does not appoint | CAG within 60 days of registration; if it does not, Board has the next 30 days. If neither appoints, members appoint at an extraordinary general meeting within the statutory period. |
| Covered Government-company annual appointment | CAG | Within 180 days from the commencement of each financial year. |
| Casual vacancy in a company whose accounts are audited by a CAG-appointed auditor | CAG; then Board if CAG does not fill it | CAG within 30 days; if it does not, Board has the next 30 days. |
These periods come from section 139 of the Companies Act, 2013. The Government-company route applies only to companies covered by the Act’s definition and provisions; verify the company’s ownership or control and the current statutory wording before using that route. Section 139 of the Companies Act, 2013.
First auditor in an ordinary company
For a company other than a Government company, the Board appoints the first auditor within 30 days from registration. If the Board misses that deadline, it must inform the members, who appoint the auditor at an extraordinary general meeting within 90 days. The first auditor’s term ends at the conclusion of the first AGM.
Appointment at the AGM
Members appoint the auditor at the first AGM. The ordinary appointment runs from the conclusion of that meeting through the conclusion of the sixth AGM, with later appointments following the statutory cycle and applicable rules.
The company must obtain the auditor’s written consent and eligibility certificate, inform the auditor of the appointment, and file notice with the Registrar of Companies within 15 days of the meeting. The current filing form and portal workflow should be checked against the Ministry of Corporate Affairs’ latest instructions.
How a proposed auditor is considered
Where the company is required to have an Audit Committee, that committee recommends a proposed auditor to the Board. Where no Audit Committee is required, the Board considers and recommends a proposed auditor to members. The selection takes account of qualifications and experience relative to the company’s size and needs, as well as relevant professional-conduct matters. Section 144 of the Companies Act, 2013.
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Casual vacancy not caused by resignation
For a company whose auditor is not appointed by the CAG, the Board generally fills a casual vacancy within 30 days. Section 139 sets a different sequence for a company whose accounts are audited by a CAG-appointed auditor: the CAG has 30 days to fill the vacancy, followed by 30 days for the Board if the CAG does not act.
Casual vacancy caused by resignation
If the vacancy results from resignation, the Board’s appointment is not the only step: the company must approve it at a general meeting convened within three months of the Board’s recommendation. This additional approval requirement distinguishes a resignation vacancy from the ordinary Board-filled vacancy.
When auditor rotation applies
Rotation is not a requirement for every company. It applies to specified classes of companies under section 139(2) and the applicable rules. For companies within scope, an individual auditor may serve one consecutive term of five years, while an audit firm may serve up to two consecutive terms of five years each. The statutory scope, exclusions, restrictions on association with an outgoing auditor and applicable rules must be checked before applying these limits. Section 139(2) of the Companies Act, 2013.
What to verify before acting
- Confirm whether the company is covered by the Government-company appointment provisions.
- Check that the proposed auditor meets section 141’s eligibility requirements and has no relevant disqualification.
- Determine whether the appointment is a first appointment, AGM appointment, or casual vacancy, and whether a resignation triggers member approval.
- Check whether the company falls within the statutory rotation classes.
- Confirm the current amended Act, applicable rules, MCA filing requirements and relevant professional standards for the company’s circumstances.
This is a general explanation of the statutory framework, not a determination of a particular company’s compliance. Appointment timelines and filing workflow should be checked against current law and MCA instructions.
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