Rotation of auditors

Save Share

This query is : Resolved

Muralidharan (Querist)
Follow

26 July 2016 26th July 2016

A closely held public limited company has paid-up capital of Rs.12.00 crores. As per new companies act 2013 the company is required to rotate its statutory auditors.

As on the date of commencement section 139 of new act (1st April 2014) the existing statutory auditors have already completed 13 years in office. Due to the grace time provided under the Act the existing auditors can continue in office for another three years. At the AGM held in 2014 and in 2015 the existing auditors were re-appointed (covering the financial years 2014-15 and 2015-16.)

My query in this connection is whether the existing auditor can be re-appointed for one more year at the ensuing AGM to be held in the year 2016 (covering the financial year 2016-17).

with regards

Muralidharan

Mandar

Mandar (Expert)
Follow

27 July 2016 No , it would be in violation of Section 139(4) r/w Rule 6 of Companies (Audit and Auditor) Rules

Muralidharan

Muralidharan (Querist)
Follow

28 July 2016 Dear Mr.Mandar
Thanks for your reply. I request you to kindly go thro Sec 139 and rules made thereunder. The Act permits existing companies to replace the existing auditors within a period of three years from the date of commencement of the Act (Sec 139). The department recently by way of an "removal of difficulties order" had given a clarification that the three years time starts from the AGM held in the year 2014 and ends at the AGM to be held in the year 2017. This clarification has been issued by the department because doubts have been raised by various stakeholders regarding the three years time granted. Since auditors are appointed at AGM three years starts from the AGM held in the year 2014.

Message likes : 1 times

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now