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      Question

      Consider the following statements regarding the

      appointment of auditors under Section 139 of the Companies Act, 2013: Statement 1: The first auditor of a company can be appointed by the Board of Directors within 30 days before the first annual general meeting. Statement 2: Subsequent auditors are appointed at the annual general meeting and hold office from conclusion of that meeting till conclusion of the sixth AGM. Statement 3: An auditor can be reappointed immediately without any restrictions on the number of consecutive terms. Statement 4: The Audit Committee (where constituted) shall recommend the auditor to the Board for appointment. Which statements are correct?
      A Statements 1, 2, and 4 only Correct Answer Incorrect Answer
      B Statements 1 and 2 only Correct Answer Incorrect Answer
      C Statements 2 and 3 only Correct Answer Incorrect Answer
      D Statements 1, 2, 3, and 4 only Correct Answer Incorrect Answer
      E Statements 1 and 4 only Correct Answer Incorrect Answer

      Solution

      Section 139 prescribes auditor appointment. Statement 1 is correct—Section 139(1) allows the Board to appoint the first auditor within 30 days before the first AGM. Statement 2 is correct—subsequent auditors are appointed at AGM and hold office for a 6-year term. Statement 4 is correct—Section 139(3) requires the Audit Committee (where constituted) to recommend the auditor. Statement 3 is incorrect because Section 139(10) provides that an auditor shall not be reappointed after holding office for two consecutive terms of five years each (now extended to two consecutive terms allowing up to 8 or 10 years depending on appointment). Statements 1, 2, and 4 are correct.

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