Under Section 139 of the Companies Act, 2013, a retiring auditor may be re‐appointed subject to several conditions. The key conditions are as follows:

1. Eligibility and Non-Disqualification:
   The auditor must satisfy the eligibility criteria laid down under Section 141—that is, he must not be disqualified from appointment (for example, by virtue of being connected with the company in a manner that compromises independence).

2. Appointment by Shareholders at the General Meeting:
   The re‐appointment of a retiring auditor is made in the general meeting of the company. The shareholders must approve the re‐appointment by passing an ordinary resolution.

3. Consent of the Auditor:
   The auditor must furnish his consent to be re‐appointed. This consent must be in accordance with the prescribed forms and requirements.

4. Compliance with the Company’s Articles and Regulatory Provisions:
   The re‐appointment must be consistent with the company’s Articles of Association as well as any applicable regulations (for example, SEBI regulations in the case of listed companies). For listed companies, additional recommendations by the Audit Committee may be required.

5. Term and Rotation Provisions:
   The auditor is typically appointed for a term of five years. In case of re‐appointment for a second term (or beyond, where permitted by law), the auditor’s continued independence and the statutory rotation requirements must be adhered to.

Relevant Provisions

• Section 139(3) of the Companies Act, 2013:
  This section deals with the appointment and re‐appointment of auditors at the general meeting. It implies that the re‐appointment of the retiring auditor is subject to ratification by the shareholders through an ordinary resolution.

• Section 141 of the Companies Act, 2013:
  This section lists the disqualifications for appointment as auditor. The auditor must not fall under any of the disqualifications specified here to be eligible for re‐appointment.

If the appointment of an auditor is not ratified by the shareholders at the Annual General Meeting (AGM), then the auditor’s appointment ceases to be effective, and they can no longer serve as the company’s auditor beyond that point. Here’s a detailed explanation:

1. Provisional Appointment and Ratification:
   Under Section 139 of the Companies Act, 2013, an auditor (including a retiring auditor) is appointed for a term of five years. However, this appointment is provisional until it is ratified by the shareholders at the AGM. The AGM provides an opportunity for the shareholders to confirm or reject the auditor’s reappointment.

2. Consequences of Non-Ratification:

   • Cessation of Appointment:
     If the shareholders do not pass a resolution to ratify the auditor’s appointment at the AGM, the auditor’s appointment terminates immediately after the meeting.

   • Effect on Audit Reports:
     The audit reports prepared during the auditor’s term remain valid. Non-ratification does not affect the auditor’s responsibility or liability for work performed during the term.

   • Requirement to Appoint a New Auditor:
     The company must then proceed to appoint a new auditor in accordance with the provisions of the Act. The Board may need to take interim steps to ensure that the company has an auditor in place for the subsequent financial period.

3. Relevant Provision from the Bare Act:
   While Section 139 of the Companies Act, 2013 governs the appointment (and reappointment) of auditors, the key point is that the reappointment must be ratified by the shareholders at the AGM. In the absence of such ratification, the auditor’s appointment lapses automatically, meaning they lose the authority to act as the auditor of the company.

In summary, if an auditor’s appointment is not ratified at the AGM, they cease to be the auditor from that point forward, and the company must appoint a new auditor to fulfill its statutory requirements.

Under Section 135 of the Companies Act, 2013 and the prescribed Schedule VII, an eligible Indian company must incur its own CSR expenditure on activities specified therein. The CSR obligation is applicable exclusively to companies incorporated in India based on their own financial metrics and resources.

Thus, even if a foreign holding company— which, as a non‐Indian company, is not subject to the same CSR mandate— incurs expenditure on CSR activities in its jurisdiction, such expenditure cannot be clubbed with or transferred to meet the CSR requirement of its Indian subsidiary.

In other words, the Indian subsidiary must spend CSR funds from its own resources in accordance with the CSR framework under Section 135 and Schedule VII, and the expenditure incurred by the foreign holding company is not eligible to be taken as CSR expenditure by its Indian subsidiary.