Master in Accounts & high court Advocate
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Posted on 30 September 2024
Yes, there is a cap on the tenure of an auditor in a Private Limited Company. As per the Companies Act 2013, an auditor can serve a private limited company for a maximum of 5 consecutive years. This means that your current auditor, who has been serving since 30.03.2017, has already completed 5 years and is due for rotation. Section 139(2) of the Companies Act 2013 states that: "No listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint— (a) an individual as auditor for more than one term of five consecutive years; and (b) an audit firm as auditor for more than two terms of five consecutive years: Provided that an individual auditor who has completed his term under this section shall not be eligible for re-appointment as auditor in the same company for a period of five years from the completion of his term." However, it's important to note that this restriction does not apply to private limited companies that are not listed or do not fall under the prescribed classes. But, it's always best to check with the Companies Act or consult with a legal/financial expert to confirm the specific requirements applicable to your company. In your case, since your auditor has already completed 5 years, it's recommended to rotate the auditor to ensure compliance with the Companies Act. You may want to consider appointing a new auditor or seeking