1. Section 139(1)
Every company in its very 1st Annual General Meeting , shall appoint an Individual or a Firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of 6th AGM and there after till the conclusion of every 6th AGM.
2. Manner of selection and appointment of auditors
Rule 3 of the Companies (Audit and Auditors) Rules 2014
1. Where a company is required to constitute audit committee under section 177 then committee and if a company is not required to constitute Audit committee then the Board of the Company shall considered the qualification and experience of proposed auditor to satisfy itself whether the qualification and experience of the proposed auditors is in commensurate with the size of the company.
2. The audit committee or the Board shall call any relevant information from the proposed auditors as may deemed fit.
3. The Audit committee shall recommend to the board the name of the proposed auditors and the board shall considered and recommend the same to the members in AGM for appointment.
4. In case if the board is not agreeing with the recommendation of the Audit committee, it shall refer back the recommendation to the committee for reconsideration citing reason for such disagreement.
5. If the audit committee, after considering the reason and decide not to reconsider its original recommendation, the board shall record the reason for its disagreement with committee and send its own recommendation for consideration of the members in AGM and if Board agrees with the recommendation of the audit committees, it shall place the matter for consideration by members in the AGM.
3. Consent of Auditor
Section 139(1) and Rule 4 the Companies (Audit and Auditors) Rules 2014
Before appointment the written consent of the Auditor and a certificate shall be obtained from the auditor.
The Auditor shall submit a Certificate that-
a. He is not disqualified for appointment under the act, under CA act 1949 and the rules, regulations made there under
b. the appointments is as per the terms provided under the act.
c. The appointment within the time;
d. The proper list of proceedings against the auditors or audit firm pending with respect to professional matter of conduct, as disclosed in the certificate, is true and correct.
2. The notice to registrar for appointment of auditor shall be in form ADT-1 within 15 days from the date of the appointment.
4. Appointment of auditor in case of Govt. Company Section 139(5)
The CAG of India shall, in respect of a financial year, appoint an auditor duly qualified to be appointed as an auditor of companies under this Act, within a period of 180 Days from the commencement of the financial year, who shall hold office till the conclusion of the annual general meeting.
5. Appointment of 1ST Auditor Section 139(6)
The first auditor of a company, other than a Government company, shall be appointed by the BOD within 30 Days from the date of Incorporation of the company and in the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within 90 days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.
6. Appointment of Auditor by CAG Section 139(7)
The first auditor shall be appointed by the CAG of India within 60 days from the date of registration of the company and in case the CAG does not appoint such auditor within the said period, the BOD of the company shall appoint such auditor within the next 30 days; and in the case of failure of the Board to appoint such auditor within the next 30 days, it shall inform the members of the company who shall appoint such auditor within the 60 days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting.
7. Casual vacancy Section 139(8)
1. In case of Govt. Company- Shall be filled by CAG with 30 days from vacancy/ resignation.
2. In case of other company- be filled by the Board of Directors within 30 days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a GM convened within 3 Months of the recommendation of the Board and he shall hold the office till the conclusion of the next AGM.
8. Section 139(10)
Where at any AGM the auditor is not appointed or reappointed then existing Auditor shall continue to be auditor of the company.