ROTATION OF STATUTORY AUDITORS

The Companies Act, 2013, and the Companies (Audit and Auditors) Rules, 2014, govern the appointment and rotation of statutory auditors. Eligibility and Rotation

1. *Eligibility*: The audit firm can continue as statutory auditors until the end of their term (2014-2025), provided they meet the eligibility criteria under the Companies Act, 2013. 

2. *Rotation*: Since the company's borrowings exceeded ₹50 crores in October 2024, the rotation requirement under the Companies Act, 2013, is triggered. 

The audit firm cannot be re-appointed for another term of five years from 2025.

Appointment of New Auditor 

1. *New Auditor*: The company must appoint a new auditor for a term of five years, starting from 2025. 

2. *Transition*: The existing audit firm will continue until the end of their term (2025). The new auditor will take over from the next financial year (2025-2026). Key Takeaways - The audit firm can continue until the end of their term (2025). -

 Due to the increase in borrowings, the company must appoint a new auditor for a term of five years, starting from 2025. -

The new auditor will take over from the next financial year (2025-2026). 

The Companies Act, 2013, and the Companies (Audit and Auditors) Rules, 2014, govern the appointment and rotation of statutory auditors. Eligibility and Rotation

1. *Eligibility*: The audit firm can continue as statutory auditors until the end of their term (2014-2025), provided they meet the eligibility criteria under the Companies Act, 2013. 

2. *Rotation*: Since the company's borrowings exceeded ₹50 crores in October 2024, the rotation requirement under the Companies Act, 2013, is triggered. 

The audit firm cannot be re-appointed for another term of five years from 2025.

Appointment of New Auditor 

1. *New Auditor*: The company must appoint a new auditor for a term of five years, starting from 2025. 

2. *Transition*: The existing audit firm will continue until the end of their term (2025). The new auditor will take over from the next financial year (2025-2026). Key Takeaways - The audit firm can continue until the end of their term (2025). -

 Due to the increase in borrowings, the company must appoint a new auditor for a term of five years, starting from 2025. -

The new auditor will take over from the next financial year (2025-2026). 

Not applicable to this company:

• Sec 139(2) rotation applies to listed companies and the prescribed classes in Rule 5 of the Companies (Audit and Auditors) Rules, 2014:

– unlisted public companies with paid-up capital of Rs 10 crore or more

– private limited companies with paid-up capital of Rs 50 crore or more

– all companies with public borrowings (from banks or financial institutions, public deposits) of Rs 50 crore or more.

• A private limited company with Rs 5 crore paid-up and Rs 14 crore turnover is below these, unless its borrowings from banks or FIs are Rs 50 crore or more. Turnover isn't a criterion.

• So the audit firm appointed in 2014 can continue (re-appointed for 5-year terms under Sec 139(1), with ADT-1 filed). No mandatory change.

• If the company crosses a threshold later, the transition provisions and 10-year cap (firm) or 5-year cap (individual) apply, with a cooling-off period.