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139(2) of companies act

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Salini Singhi

19 Points Posted on 14 May 2022

An unlisted public company was not falling under this class as on 1st april 2014 but after increasing it's share capital more than 10 crores in 2018 it was covered under this class. The same audit firm has been conducting audit since 1st april 2012 upto 31st march 2022 I.e. now 10 years. So from when to calculate the total term of 10 years for the applicability of this section. From 2012 or from 2018 when the share capital was raised? Can anyone guide. Thank you.

Replies (2)

Quick Summary

This discussion clarifies the calculation of the 10-year audit term under Section 139(2) of the Companies Act. The query centres on whether the term starts from the initial audit engagement or from the date a company met the threshold criteria (share capital over 10 crores). The consensus suggests the term should be calculated from the company's initial engagement with the auditor, even if it didn't meet the threshold at that specific point, taking into account prior periods as per transitional provisions.

Kev Men

790 Points Posted on 18 May 2022

The total term should be calculated from 2012.

As per section 139 read with Companies (Audit and Auditors) Rules 2014, Rule 6 (3)(i):

in case of an auditor (whether an individual or audit firm), the period for which the individual or the firm has held office as auditor prior to the commencement of the Act shall be taken into account for calculating the period of five consecutive years or ten consecutive years, as the case may be;

Chirag

Professional

1979 Points Posted on 19 May 2022

Rule 6 talks about commencement of companies act ,2013 including transition provision ,mean to say retro effect happen only when at the inception of Act of 2013 ,company was meeting the threshold criteria , which is not in this case and here tenure for 5/10 Yrs will be reckoned from FY 18-19 itself ..