MCA imposes ₹15 lakh compounding fee on Shree Renuka Sugars for violating auditor tenure and rotation rules under Section 139.
₹15 Lakh Fine for Auditor Reappointment Violation
The Ministry of Corporate Affairs (MCA) imposed a compounding fee of ₹15 lakh on Shree Renuka Sugars Limited for contravening auditor appointment norms under Section 139 of the Companies Act, 2013, particularly regarding tenure limits and mandatory rotation for listed entities.
The contravention involved reappointment of auditors beyond permissible limits without complying with ADT-1 filing requirements or obtaining requisite shareholder approvals in the annual general meeting (AGM). The MCA considered the breach technical but procedurally significant.
Implications for Practitioners
This case highlights regulatory focus on auditor independence. Legal advisors must ensure compliance with rotation cycles, ADT-1 disclosures, and AGM resolutions for auditor appointments to avoid compounding liabilities, even for non-mala fide errors.
