MCA modifies the threshold limit for private limited companies in relation to appointing/re-appointing of auditors

MCA modifies the threshold limit for private limited companies in relation to appointing/re-appointing of auditors

June 28, 2017 Corporate 0

The Ministry of Corporate Affairs (“MCA”) has notified the Companies (Audit and Auditors) Second Amendment Rules, 2017 (“Amendment Rules”) thereby amending the Companies (Audit and Auditors) Rules, 2014 (“Principal Rules”). The Amendment Rules are effective from 22nd June, 2017.

The amendments are discussed in the table below:

Principal RulesAmendment Rules
Rule 5. Class of companies

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:-

(b) all private limited companies having paid up share capital of rupees twenty crores or more;

 

 

Rule 5. Class of companies

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:-

(b) all private limited companies having paid up share capital of rupees fifty crores or more;

Implications
The Amendment Rules have increased threshold limit for private limited companies who are required to follow certain conditions while appointing/re-appointing auditors.

Therefore, private limited companies having paid up share capital of 50 crore rupees or more cannot appoint/reappoint:

i. an individual as auditor for more than one term of five consecutive years; and

ii. an audit firm as auditor for more than two terms of five consecutive years.

Prior to this, private limited companies having paid up share capital of 20 crores or more was restricted from appointing/re-appointing individual auditors for more than one term of five consecutive years or audit firm for more than two terms of five consecutive years.

 

Source: Ministry of Corporate Affairs

About the author

Lexplosion:

0 Comments

Would you like to share your thoughts?

Your email address will not be published. Required fields are marked *

Leave a Reply