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Rotation of auditor u/s 139(2)

Jayanta Bandyopadhyay (375 Points)

26 May 2025

We have unlisted public ltd co and llp.

Having outstanfing borrowing of Rs. 100 cr & Rs. 10 Cr respectively

Audit firm completes 9 years. Should we change them next year or any outstanding loan factor blocks rotation

Please advise

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2 Replies

Poojitha Raam Vinay (Practice ) (10860 Points)
Replied 26 May 2025

The Unlisted Public Ltd. Company has borrowings of ₹100 crore ➤ Rotation of auditors is applicable.

Statutory auditor can be appointed . Outstanding loan shall be not be a criteria for rotation of auditors.

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Areeba Nishat (20 Points)
Replied 28 May 2025

Under Section 139(2) of the Companies Act, 2013, certain classes of companies are required to rotate their auditors to ensure independence and avoid long-term associations that could affect objectivity.

Specifically:

Listed companies, and
Unlisted public companies with a paid-up share capital of ₹10 crore or more, or certain thresholds of public borrowings/deposits,

must rotate their audit firm after:

1 term of 5 consecutive years for individual auditors, or
2 terms of 5 consecutive years for audit firms.

After completing the term, there's a mandatory cooling-off period of 5 years before the same auditor/audit firm can be reappointed.

This provision helps maintain transparency and strengthens the corporate governance framework. Let me know if you'd like info on applicability or exemptions!