ELIGIBILITY OF STATUTORY INDIVIDUAL AUDITOR

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This discussion clarifies the eligibility of individual auditors for statutory appointments in private limited companies. An individual auditor can serve for a maximum of 5 consecutive years. The initial appointment as the first auditor counts towards this 5-year limit. Reappointment is possible for private companies with paid-up share capital under ₹50 crore, but specific rules apply to larger or listed companies, including mandatory cooling-off periods.

ASTHA AGRAWAL

ASTHA AGRAWAL (Querist)

24 October 2024 AN INDIVIDUAL AUDITOR IS ELIGIBLE FOR ONLY 5 CONSECUTIVE YEARS FOR BEING STATUTORY AUDITOR IN A PRIVATE LIMITED COMPANY.
SO, IF AN INDIVIDUAL AUDITOR IS BEING APPOINTED AS FIRST AUDITOR IN A PRIVATE LIMITED, THEN CAN THE SAME INDIVIDUAL AUDITOR BE APPOINTED AS SUBSEQUENT AUDITOR FOR NEXT 5 CONSECUTIVE YEARS IN THE SAME PRIVATE LIMITED.
WILL THE PERIOD OF FIRST AUDITORSHIP WILL BE CONSIDERED FOR CEILING LIMIT OF 5 CONSECUTIVE YEARS ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 October 2024 He can be reappointed if private company is having paid up share capital of less than rupees 50 crore.

ASTHA AGRAWAL

ASTHA AGRAWAL (Querist)

24 October 2024 DHIRAJLAL RAMBHIA SIR WHY THIS 50 CR SHARE CAPITAL LIMIT?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 October 2024 For listed companies and specified class of companies cooling period of 5 years is mandatory.
Specified class or classes of the Companies are as follows:
All unlisted public companies having paid up share capital of rupees 10 crore or more;
Every private company having paid up share capital of rupees 50 crore of more;
All companies having public borrowings from bank, financial institutions or public deposit of rupees 50 crore or more.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 October 2024 What is the term of appointment of Auditor for specified class companies under the Companies Act, 2013?

The subsequent Auditor i.e. appointed after the first Auditor for specified class of companies shall hold the office:

Individual: For one term of 5 years and then a cooling period of 5 years is to be provided i.e. can be re-appointed after a break of 5 years.

Firm: For two terms of 5 years i.e. 10 years and then a cooling period of 5 years is to be provided i.e. can be re-appointed after a break of 5 years.

ASTHA AGRAWAL

ASTHA AGRAWAL (Querist)

24 October 2024 DHIRAJLAL RAMBHIA SIR THANK YOU

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 October 2024 You are welcome.

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