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Appointment of auditor

26 November 2019

Is tenure for appointment of auditors mandatory to be for 5 years or lesser period is possible. Incase of a private company

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10 Replies

achuth menon (274 Points)
Replied 26 November 2019

Yes it is mandatory for 5 years irrespective of which type of company it is only rotation is not applicable if it satisfies the conditions under Rule 5 of Companies audit and auditors rules 2014

Chirag (Professional) (1979 Points)
Replied 26 November 2019

No ,Not mandatory to appoint for 5 Years....

achuth menon (274 Points)
Replied 26 November 2019

Mr chirag sir you are absolutely wrong

Chirag (Professional) (1979 Points)
Replied 27 November 2019

Mr. achuth ,give me interpretation of provision where it's mandatory to appoint Auditor for continuous period of 5 Years...Rules and section says about appointment " Which will be till the conclusion of 5th AGM".... here word "till" if interpreted gives impression of up-till 5th AGM....I have seen many companies which are appointing auditor for lesser than 5 Years, and it's absolutely correct,( If there is any ministry clarification on the same) then provide me link of it...

achuth menon (274 Points)
Replied 27 November 2019

Please go through section 139(1) it has never used the word term of 5 years like it has used in 149(10) of Companies Act 2013 the word 'shall' is used in section 139(1) with respect to holding office the word 'till' is used to denote that his right as an auditor as per 4th proviso to section 139(2) is not undermined even if he is appointed for a period of 5 years

Tarun Sharma (CS) (29 Points)
Replied 28 November 2019

APPOINTMENT SHOULD BE RATIFIED BY SHAREHOLDER EVERY YEAR,
IF SHAREHOLDER DO NOT RATIFY CURRENT AUDITOR, THEN NEW APPOINTMENT SHALL BE CALL

achuth menon (274 Points)
Replied 28 November 2019

@ Tarun sharma that provision is no more read first proviso to section 139(1) and proviso to Rule 3(6) of Companies (Audit and Auditor) Rules 2014

PINKY KUMARI (42 Points)
Replied 06 December 2019

No, the auditor can be appointed for less than 5 years but the cooling period should be five years from the time when the auditor has completed his tenure or when he was disqualified

achuth menon (274 Points)
Replied 07 December 2019

Sorry it is wrong it is because of the fixed term auditor can be removed only by way of special notice in an AGM 140(4)

Jatin Bajaj (CS) (2928 Points)
Replied 10 December 2019

As per section 139(1) of the Companies Act 2013, the auditor shall be appointed for the period of 5 years from the conclusion of first AGM till the conclusion of sixth AGM . But for private Limited Company if the Company are below the treshold limit, the provisions of rotation of auditor is not applicable , so auditor can be further appointed for 5 years for n no of years. But if rotation of auditor is appliacble, then Company cannot appoint the firm as the auditor for two terms of five years and individual for one term of five year and after the expiry of the term, the same auditor cannot be appointed for five years .i.e. the cooling off period.