Omega Private Limited Company (OPLC) is a professionally managed Company ensuring good corporate governance, integrity and transparency in all its dealings. The Company is engaged in developing customised software packag

CS Professional · Governance, Risk Management, Compliances and Ethics · PYQS · December 2022
Omega Private Limited Company (OPLC) is a professionally managed Company ensuring good corporate governance, integrity and transparency in all its dealings. The Company is engaged in developing customised software package for automobile manufacturers. It has a paid-up share capital of ₹ 55 crore and borrowings from Banks and Financial Institutions to the tune of ₹ 56 crore as at 31 st March, 2022. Mr. Ropher, an American Citizen, a qualified Certified Public Accountant (CPA) honoured in Australia and a Member of ICAI, holding Certificate of Practice was appointed as the Statutory Auditor of OPLC at the Annual General Meeting (AGM) of the Company convened on 18-11-2017 for a period of five consecutive years. Since his term of office is getting expired on completion of five years, the Company is proposing to re-appoint Mr. Ropher for a second term of five consecutive years at the AGM to be convened on 29-09-2022 considering his excellent audit work and professional knowledge. With reference to the provisions of the Companies Act, 2013, answer the following: Is the re-appointment of Mr. Ropher for a second term of five years valid in Law ?

Answer & Explanation:

Section 139(2) of the Companies Act, 2013 read with Rule 5 of the Companies (Audit and Auditors) Rules, 2014 provides that all private limited companies having paid up share capital of rupees 50 crore or more shall not 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. Also, an individual auditor who has completed his term of five consecutive years shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term. In view of the above, Mr. Ropher, as an Individual, cannot be re-appointed as the Statutory Auditor of the company for the second term of five years.

Topics: Companies Act, 2013

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