Statutory auditor term and rotation: section 139 and rule 5 in plain words

Last updated 27 Oct 2026 · India

Short answer. Under section 139(1) of the Companies Act 2013, every company appoints an auditor at its first AGM to hold office until the sixth AGM, a five-year term. Section 139(2) adds rotation for listed companies and the classes in rule 5 of the Companies (Audit and Auditors) Rules 2014: an individual auditor can serve one term of five consecutive years and an audit firm two terms of five years, followed by a five-year cooling-off. Rule 5 covers unlisted public companies with paid-up capital of ₹10 crore or more, private companies with paid-up capital of ₹50 crore or more, and companies with public borrowings of ₹50 crore or more. One person companies and small companies are outside rotation. The company files ADT-1 within 15 days of the meeting.

Checklist

Year of first appointment of the current auditor noted
Rotation class checked against rule 5 thresholds
Count of terms already served (including the firm's network rules)
Board and AGM resolutions for the new term
ADT-1 filed within 15 days

Common mistakes

Forgetting the term already served before the 2013 Act took effect, which counts toward rotation.
Re-appointing the same firm after two terms without a cooling-off.
Not refiling ADT-1 at reappointment.

Not legal advice. This is a free explainer of the Companies Act 2013 and its rules; check the current text on India Code or MCA, or ask a company secretary.

Frequently asked questions

How long is a statutory auditor's term?

Five years, from the end of one AGM to the end of the sixth AGM.

Which companies must rotate auditors?

Listed companies and the classes in rule 5: unlisted public with paid-up ₹10 crore+, private with paid-up ₹50 crore+, and companies with public borrowings of ₹50 crore+.

What is the cooling-off period?

Five years before the same individual or firm can be appointed again.

Official sources

Not tax or legal advice. This is a free explainer of public rules; deadlines and rules can change by notification, so confirm on the official portal or with your CA before you file. Last checked 27 Oct 2026.

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