The government has relaxed conditions for unlisted companies that do not have loans, from banks, financial institutions or deposits from the public, of more than Rs50 crore on rotation of auditors. Currently, these companies can’t appoint individual auditors for five consecutive years and auditor firms for two straight terms of five years, if their paid up capital is at least Rs20 crore.
The Ministry of Corporate Affairs has come out with a notification, amending this rule under the Companies Act, to raise this threshold to Rs50 crore.
“The increase in the threshold on paid-up capital for triggering rotation of auditors would provide relief to a number of private companies where there is limited public interest,” said Sai Venkateshwaran of KPMG.
Mamta Binani, past president of the Institute of Company Secretaries of India said this will help in ease of doing businesses for these firms. The rule was changed in line with recommendations of Parliament’s standing committee on finance.