# Rotation, Tenure & Cooling Period of Auditors
## 1. Companies to Which Rotation Applies [Sec 139(2) read with Rule 5]
Rotation provisions apply to:
- All Listed companies
- Unlisted public companies with paid-up share capital ≥ ₹10 crore
- Private companies with paid-up share capital ≥ ₹50 crore
- All other companies (whether public/private) having borrowings from banks/PFIs or public deposits ≥ ₹50 crore
Exception: Rotation does NOT apply to:
- One Person Company (OPC)
- Small Company
## 2. Maximum Tenure
| Type of Auditor | Maximum Consecutive Tenure |
|---|---|
| Individual auditor | One term of 5 consecutive years |
| Audit firm | Two terms of 5 consecutive years each (= 10 years) |
## 3. Cooling-Off Period
After the maximum tenure is completed, the auditor / firm is NOT eligible for re-appointment in the same company for 5 years.
### Q1: Can such an auditor be appointed as Internal Auditor of the company during the cooling period?
Ans: Yes – the prohibition is only on appointment as statutory auditor.
### Q2: Can such an auditor be appointed as Statutory Auditor of Holding or Subsidiary during cooling period?
Ans: No – the prohibition extends to the holding/subsidiary/associate of the same company.
## 4. Other Persons INELIGIBLE During Cooling Period [Rule 6]
The following are also ineligible for appointment during the cooling period of 5 years:
1. An audit firm having common partner(s) as the audit firm whose tenure has just expired.
2. Audit firms under the same network of audit firms – "same network" includes:
- Same brand name / trade name
- Common control
3. If an outgoing partner of an audit firm takes interchange of audit firm AND certifies FS, retires from the firm and joins another firm – such other firm becomes ineligible for appointment for 5 years.
## 5. Audit Committee – Recommendation of Incoming Auditor
The Audit Committee recommends the name of an individual auditor or audit firm who may replace the existing auditor on expiry of his/its tenure.