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No listed company or a company belonging to such class or classes of companies shall appoint or re-appoint:-

An individual

For more than one term of five consecutive years

An audit firm

For more than two terms of five consecutive years

An individual auditor or an audit firm who/which has completed his/its term as specified above shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term.  A break in term for a continuous period of 5 years shall be considered as a break for fulfilling the requirement of rotation

On the date of appointment no audit firm having a common partner or partners to the other audit firm, whose tenure has expired in a company immediately preceding the financial year shall be appointed as auditor of the same company for a period of five years.

Every company existing on or before the commencement of this Act which is required to comply with provisions of this sub-section, shall comply with the requirements of this sub-section within three years from the date of commencement of this Act

Rotation of Auditors will not apply to the following classes of Companies

i. One Person Companies

ii. Small Companies

iii. Dormant Companies

Rotation of Auditors will apply to the following classes of Companies

Type of company

Paid up share capital / Public borrowing

Public Borrowing from banks / fi’s OR Public deposits

Listed Companies

All

All

Unlisted public companies

Rs 10 crore or more

OR

Rs 50 Crores or more

Private limited companies

Rs 20 crore or more

OR

Rs 50 Crores or more


 

Published by

CA Sripriya K
(Finance Professional)
Category Corporate Law   Report

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