MCA clarifies Rotation of Auditors- 3rd proviso to Section 139(2) of Companies Act 2013 substituted

[P K Agarwal]

Dear Members,

Please note that MCA vide Removal of Difficulties Order dated 30th June 2016 has issued clarification in the matter of Rotation of Auditors and has substituted (with retrospective effect from 1st April 2014) 3rd proviso to Section 139(2) of the Companies Act 2013 which reads as under:

“Provided also that every company, existing on or before the commencement of this Act which is required to comply with the provisions of this sub-section, shall comply with requirements of this sub-section within a period which shall not be later than the date of the first annual general meeting of the company held, within the period specified under sub-section (1) of section 96, after three years from the date of commencement of this Act.”.

Section 139 of the Companies Act, 2013 provides that certain class of companies are required to rotate their auditors every five years if it is an individual auditor and every ten years if it is an audit firm. But there was a moratorium for a period of three years from the commencement of the Act, when the rotation of auditors would not apply. Therefore since the Act commenced on 1st April, 2014, the rotation would not apply upto 31st March, 2017. But apparently there was some confusion that when should the appointment of the new auditors take place.

With the above clarification/ substitution, the auditors will hold office upto the annual general meeting of the financial year 31st March, 2017 and at that AGM, a new auditor would be required to be appointed. 

The Copy of the Order dated 30th June 2016 is attached herewith which is self explanatory.

Thanking you

CA Pawan Kumar Agarwal

For MADANLAL & ASSOCIATES   मदनलाल एंड एसोसिएट्स 
Chartered Accountants                     शासप्राप्त  लेखापाल

29A, Rabindra Sarani                      

3rd Floor, Room No 9                      

Kolkata 700073.                             

Mob:  9830262464, 9830459297                                                                    

email: madanlala...@gmail.com  and  madanlala...@vsnl.net

CONFIDENTIALITY CAUTION

This communication (including any accompanying documents) is intended only for the use of the addressee(s) and contains information that is PRIVILEGED AND CONFIDENTIAL. Unauthorized reading, dissemination, distribution or copying of this communication  or its attachments in any manner is prohibited. If you have received this communication in error, please notify us immediately by email and promptly destroy the original communication and the attachments contained therein. Thank you for your cooperation.