Auditors’ rotation

The Companies Act, 2013 bought in the concept of auditors’ rotation every 5 years. Section 139 of the Act provided that all listed companies and “such other companies” shall rotate their auditors every five years.  For “such other companies” we go to the Companies (Audit and Auditors), Rules, 2014, whereby Rule 5 provided that all unlisted public companies having paid up share capital of Rs.10 crore or more and all private companies having paid up share capital of Rs.20 crore or more and all companies below these two threshold limits but having public borrowings of Rs.50 crores or more are required to rotate their auditors.

Now vide a notification dated 22nd june, 2017 the MCA has enhanced the limit for private companies from Rs.20 crore to Rs.50 crore paid up share capital. Therefore private companies need to rotate their auditors only if their paid up share capital is Rs.50 crore or more.

That takes out all those private companies whose paid up share capital is between Rs.20 crore to Rs.50 crore from the requirement of rotating their auditors.

The notification can be read here.

Click to access CompaniesAuditandAuditorsSecondAmendmentRules2017.pdf

 

 

 

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