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: Will your answer differ, if a different firm of auditors have been appointed as the Statutory Auditors in the year 2017 and whether the firm is eligible for re-appointment for a second term of five years, if Mr. Ropher is appointed as a partner in the audit firm in the year 2022 ?

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. Thus, an audit firm which has completed one term of five consecutive years, is eligible for reappointment as auditor in the same company for a second term of five years after the completion of the first term. Further, Section 139 of the Companies Act, 2013 provides that - "Provided further that as on the date of appointment no audit firm having a common partner or partners to the other audit firm, whose tenure has expired in a company immediately preceding the financial year, shall be appointed as auditor of the same company for a period of five years." Since the firm was holding office as Auditor for the first term of five years from 2017-2022, it can still be re-appointed for the second term as for a firm two terms are permitted and given that Mr. Ropher would not have held office in this company as 2017-2022 also the firm was only holding office.

Topics: Companies Act, 2013

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic