Section 139 of the Companies Act, 2013 decides who appoints a company's statutory auditor, for how long, and when the auditor must be replaced. Members appoint the auditor at an AGM for a multi-year term, and listed and certain other companies must rotate auditors after a fixed tenure. Form ADT-1 then tells the Registrar.
Last reviewed: 17 October 2026. Facts checked. We opened a Taxmann summary of sections 139 and 140 and a second Taxmann page on rotation, and ran a web search on rotation limits. Both opened pages agree on the term and cooling-off figures below. We tried the India Code page for section 139 and it returned a 403 error, so we did not read the statute text directly. We did not open Rule 5 or Rule 6. Rupee thresholds for rotation are left out because the pages we saw disagree.
The short version
- The first auditor is appointed by the Board.
- Later auditors are appointed by members at the AGM.
- Some companies must rotate their auditor. Others need not.
- The company files Form ADT-1 after each appointment.
Who appoints, and when
The table below follows the Taxmann summary for a non-government company.
| Situation | Who appoints | Timeline |
|---|---|---|
| First auditor | The Board | Within 30 days of registration |
| Board fails to appoint | Members at an EGM | Within 90 days |
| Later auditors | Members at the AGM | Appointed at the first AGM, holding office to the sixth AGM |
| Casual vacancy | The Board | Within 30 days |
| Casual vacancy from resignation | Members at a general meeting | Approval within 3 months of the Board's recommendation |
Government companies follow a different route through the Comptroller and Auditor General. This article covers non-government companies only.
The five-year term
An auditor is appointed for a term that runs from one AGM to the sixth AGM after it. In plain words, this is one five-year block. The two pages we opened describe the block as five consecutive years.
Check the notice. If you plan to replace the retiring auditor, or stop their reappointment, section 140 asks for a special notice. We cover that route in our statutory auditor guide.
Rotation under section 139(2)
Rotation is the rule that stops one auditor staying forever. The pages we opened say:
- An individual auditor can serve one term of five consecutive years.
- An audit firm can serve two terms of five consecutive years.
- After the maximum, a cooling-off period of five years applies before the same auditor returns to that company.
- One Person Companies and small companies are outside rotation.
Two further points came from the Taxmann rotation page, which is commentary rather than the Act. Check them before you rely on them:
- Time served before the Act came into force counts toward the limits.
- A firm cannot take over if it shares a common partner with the firm whose tenure ended in the previous financial year. The incoming auditor also cannot belong to the same network as the outgoing one.
Which companies must rotate
Rotation applies to listed companies and to classes of company set by Rule 5 of the Companies (Audit and Auditors) Rules, 2014. Those classes use paid-up capital and borrowing tests. The two pages we saw gave different private company figures, so we do not quote one. Read Rule 5 itself, then use the auditor rotation tracker to see where each client stands.
Filing after appointment
The company files Form ADT-1 with the Registrar within 15 days of the meeting that appointed the auditor. Our walkthrough is in Form ADT-1: how to file.
A practical checklist
- List every client with its auditor start year and firm or individual status.
- Mark clients that fall under rotation, using Rule 5.
- Count terms served, including earlier years where relevant.
- Diarise the AGM where each term ends.
- Collect the written consent and eligibility certificate before the AGM. The section 141 disqualification checker helps here.
- File ADT-1 within 15 days.
Common mistakes
- Reappointing an individual who has used up the one term.
- Forgetting that the firm's earlier years count.
- Filing ADT-1 late because the meeting date was not circulated internally.
- Treating a casual vacancy as an ordinary appointment.
Frequently Asked Questions
How long can an auditor stay with a company?
For companies that must rotate, one five-year term for an individual and two for a firm, according to the pages we opened. Companies outside rotation can keep appointing the same auditor, subject to eligibility.
What is the cooling-off period?
Five years, in the sources we opened. During it, the outgoing auditor cannot be reappointed to that company.
Who appoints the first auditor?
The Board, within 30 days of registration. If it does not, members step in at an EGM within 90 days.
When is ADT-1 due?
Within 15 days of the meeting that made the appointment.
Does section 139 apply to small companies?
Rotation does not. Appointment rules still do. Check the rules for any relief that applies to your company.
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