AMENDMENT IN THE COMPANIES (AUDIT AND AUDITORS) RULES, 2014

Ministry of Corporate Affairs while exercising the powers conferred by section 139 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), has amended the existing Companies (Audit and Auditors) Rules, 2014 and has introduced Companies (Audit and Auditors) Second Amendment Rules, 2017 vide notification bearing no. GSR 621(E) issued on 22nd June 2017.

Amendment in brief

All Private Companies having a paid share capital of less than Rupees Fifty Crore shall be eligible to appoint an individual as auditor for more than one term of five consecutive years and an audit firm as auditor for more than two terms of five consecutive years.

Comparative analysis of the Amendment

The Companies (Audit and Auditors) Rules, 2014

Old Provision:

Rule 5

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 TWENTY 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.

New Provision:

Rule 5

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;

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