Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Professional Updates »
Open DEMAT Account in 24 hrs
 Draft Panel for Appointment/ Re-appointment of Statutory Auditors of State Co-operative Banks (Stccbs) and Central Co-operative Banks (Ccbs) for the Year 2025-26.
 Commencement of Live Virtual Classes for the students of CA. Final course appearing in May 2026, September 2026 and January 2027 Examinations.
 Information Systems Audit - Assessment Test (ISA - AT), July 2025
 Advanced ICITSS -Adv. Information Technology Test Computer Based Mode (CBT) Schedule May, Jun, Jul, Sep, Oct, and Nov 2025
 Auditing and Assurance Standards Board Online Panel of Experts for addressing Bank Branch Audit related queries
 Results of the Chartered Accountants Intermediate and Foundation Examinations held in January 2025 declared.
 Invitation for contribution to Question Bank in respect of Self-paced Online Module Examinations (Set-A, B, C & D)
 Will deadline for income tax filing change in the new Income Tax Bill?
 Result of the Chartered Accountant Final Examinations held in November 2024 is likely to be declared on Thursday, the 26th December 2024 (Late evening) - (20-12-2024)
 Advanced Integrated Course on Information Technology and Soft Skills (Advanced ICITSS) Adv. Information Technology Test - Computer Based Mode (CBT) Dec 2024 Jan-Feb-Mar 2025
 Re-Scheduling of Chartered Accountants Examination scheduled to be held on 13th November 2024 (Wednesday) at the Examination Centre(s) at Hazaribagh (Jharkhand), Jamshedpur (Jharkhand), Ranchi (Jharkhand), Raipur (Chhattisgarh) and Jhunjhunu (Rajasthan)

Regarding Clarification on Applicability of Rotation principles on a company as per Section 139 of the Companies Act 2013 where the company ceases to fall under the ambit of Rotation principles in subsequent years.
January, 31st 2019
                                      Announcement


Regarding Clarification on Applicability of Rotation principles on a company as
per Section 139 of the Companies Act 2013 where the company ceases to fall
under the ambit of Rotation principles in subsequent years.


This is regarding the applicability of Rotation principles on a company as per Section 139 of
the Companies Act 2013 where the company ceases to fall under the ambit of Rotation
principles in subsequent years.


Provisions of the Companies Act 203 and Rules thereon







Section 139 (2) of the Companies Act 2013 provides 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:


Further as per the "Companies (Audit and Auditors) Rules, 2014, for the purposes of sub-
section (2) of section 139, the class of companies shall mean the following classes of
companies excluding one person companies and small companies:-
(a) all unlisted public companies having paid up share capital of rupees ten crore or more;
(b) all private limited companies having paid up share capital of rupees fifty crore or more;
(c) all companies having paid up share capital of below threshold limit mentioned in (a) and
    (b) above, but having public borrowings from financial institutions, banks or public
    deposits of rupees fifty crores or more.







Issue


"A Chartered Accountant/ firm, an auditor in a company on which Rules relating to Rotation
of auditors were applicable, retired in the year 2017 and a new auditor appointed in the
same year. After amendment was brought as per Companies (Amendment) Act 2017, the
company do not meet principles of rotation of auditors in the year 2018.
Whether the auditor who was an auditor of the company in the year 2017 can be
reappointed by the company as the company ceases to fall under the criteria of rotation of
auditors?"


View


The Corporate Laws & Corporate Governance Committee at its 43rdmeeting held on 7th
January, 2019 discussed the issue and was of the view that since the requirement of
rotation of auditors is not applicable on the company subsequently, therefore the auditor
who was the auditor in the company earlier in the year 2017 can be reappointed without
prejudice to the other provisions of the Companies Act 2013.


In other words, once a company ceases to fall under the ambit of Rotation principles, the
company can appoint any chartered accountant/ firm as an auditor of the company
irrespective of the fact that the same chartered accountant/ firm was an auditor of the
company in previous years.




With Regards


CA. Debashis Mitra                                   CA. Dhinal A. Shah
Chairman, Corporate Laws &                           Vice Chairman, Corporate Laws &
Corporate Governance Committee                       Corporate Governance Committee
The Institute of Chartered Accountants               The Institute of Chartered Accountants
of India                                           of India

Home | About Us | Terms and Conditions | Contact Us
Copyright 2025 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting