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CS Executive · Company Law and Practice · Accounts and Auditors

Kaveri Textiles Ltd, a listed company, appointed Mr. Rao, an individual chartered accountant, as auditor for one term of five consecutive years. Under the Companies Act, 2013, which statement is correct about his position after completing that term?

An individual auditor of a listed company can serve only one term of five consecutive years. After completing it, he is not eligible for re-appointment as auditor in the same company for five years from the completion of his term.

  1. AHe may be re-appointed for a second term of five years
  2. BHe may be re-appointed only if a special resolution is passed
  3. CHe is not eligible for re-appointment in the same company for five years from the completion of his termCorrect
  4. DHe is not eligible for re-appointment in the same company for three years from the completion of his term

Explanation

A listed company cannot appoint or re-appoint an individual as auditor for more than one term of five consecutive years. After completing the term, the individual is ineligible for re-appointment in the same company for five years. A special resolution cannot override this bar.

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