Under the Companies Act, 2013, the “period of rotation” for auditors is calculated as the continuous span during which the auditor (or audit firm) has been appointed to serve, beginning from the commencement date of the first term and extending up to the date on which their term ends (whether by expiry, reappointment, or removal). In practice, this means:

• Continuous Service:
  If an auditor is appointed for a term of five years and then reappointed for a subsequent term, the period of rotation is the aggregate of these consecutive terms. For example, if an auditor is first appointed on April 1, 2015, for five years and then reappointed on April 1, 2020, their continuous service period is counted as 10 years. For listed companies, guidelines (in line with Section 139 and regulatory requirements) typically mandate that the audit firm should not serve for more than 10 consecutive years, after which rotation is required.

• Break in Service:
  If there is a break between appointments, only the continuous period of service from the latest appointment is counted towards the rotation requirement.

Relevant Provisions

• Section 139(1) of the Companies Act, 2013 provides that the auditor is appointed for a term of five years.

• Section 139(5) (applicable especially to listed companies) implies that if an auditor (or audit firm) is reappointed, the cumulative continuous period of service is considered for rotation purposes. In practice, regulatory guidelines and SEBI requirements for listed entities set a maximum continuous service period (typically 10 years), after which the audit firm must be rotated.