Rotation of Auditor

As per section 139(2) of Companies Act,2013 the legal provision states that excluding small companies and one person companies following companies are required to comply with legal provision of section 139(2) which is as follows:

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:

Hence, if the company is listed in the current year it is assumed that the provisions of rotation of auditor is applicable in current year only and as per rules the prior period under which the audit firm has hold the office will be considered.

Since, the audit firm has already completed 2 terms of 5 year each, the same audit firm will be eligible to hold the office for period of three years which is considered as transition period as per Rule 3.

Following is the example: An audit firm appointed as auditor in AGM dated 30/09/2013 or earlier can hold auditor’s post till AGM to be held in three years from 1 st April, 2014 (on or before 29-09-2017) for 3 years.

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