LIC Act 25Chapter VI · Finance, Accounts and Audit
Section 25 · Appointment of auditors
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(1) The Corporation shall, at its first annual general meeting,
appoint as many auditors (which may be individual or firm) as it deems fit, and such auditor shall hold
office from the conclusion of that meeting till the conclusion of its sixth annual general meeting
thereafter, and shall similarly appoint auditor for subsequent periods of five years at a time, and the
manner and procedure of selection of auditors by the members at such a meeting shall be such as may be
prescribed:
Provided that before such appointment is made, the written consent of the auditor to such appointment, and a certificate from the auditor that the appointment, if made, shall be in accordance with such conditions as may be prescribed, shall be obtained from the auditor:
Provided further that such certificate shall also declare that the auditor satisfies the criteria provided for eligibility for appointment as an auditor of a company under section 141 of the Companies Act.
(2) The Corporation shall not appoint an auditor for more than one term of five consecutive years:
Provided that an auditor who has completed the term of appointment shall not be eligible for reappointment or for fresh appointment as auditor for a period of five years from such completion:
Provided further that no audit firm shall be appointed as auditor for a period of five years which, if appointed, as on the date of its appointment, would have a common partner or partners with the audit firm whose term as auditor in the Corporation had expired in the financial year immediately preceding the financial year in which fresh appointment is to be made, or which is associated with the same network of audit firms as the audit firm whose term had expired as aforesaid:
Provided also that nothing contained in this sub-section shall prejudice the right of the Corporation to remove an auditor or the right of the auditor to resign from such office of the Corporation.
Explanation.--For the purposes of this sub-section, the expression same network includes firms operating or functioning under a common brand name or trade name, or under common control, or which are network firms as defined under any guidelines for networking issued by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949).
(3) Subject to the provisions of this Act, the Corporation may resolve in a general meeting to provide that--
(a) in the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be resolved by members;
(b) the audit shall be conducted by more than one auditor.
(4) Any casual vacancy in the office of an auditor shall be filled by the Board within thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the Corporation in a general meeting convened within three months of the Board making recommendations in this behalf, and the auditor so appointed shall hold office till the conclusion of the next annual general meeting.
(5) Where at any annual general meeting, no auditor is appointed, the existing auditor shall continue to be the auditor of the Corporation.
(6) All appointments, including the filling of a casual vacancy of an auditor under this section, shall be made after taking into account the recommendations of the Audit Committee.
(7) The remuneration of the auditor shall be fixed in the general meeting or in such manner as may be determined therein.
(8) Until the first annual general meeting is held, auditors duly qualified to act as auditors of companies under the law for the time being in force relating to companies shall be appointed by the Board with the previous approval of the Central Government, and shall receive such remuneration from the Corporation as the Central Government may fix.
(9) Notwithstanding anything contained in sub-section (1), where an auditor has been appointed previous to the first annual general meeting, either under section 25 as it stood before the coming into force of section 137 of the Finance Act, 2021 or thereafter under sub-section (8), and the term specified for such auditor's appointment has not expired, and the auditor meets the criteria referred to in subsection (1), such auditor shall continue till the expiry of the term so specified:
Provided that nothing contained in this sub-section or in section 25A shall prejudice the right of the Corporation to remove such auditor or the right of the auditor to resign from such office of the Corporation.
(10) An auditor appointed under sub-section (1) or sub-section (8) or sub-section (9) shall provide to the Corporation or its subsidiaries such other services as are approved by the Board, but shall not include any of the services, whether rendered directly or indirectly, that are enumerated in section 144 of the Companies Act:
Provided that an auditor who has been performing any non-audit services on or before the coming into force of section 137 of the Finance Act, 2021 shall comply with the provisions of this sub-section before the close of the first financial year in which the said section comes into force.
Explanation.--For the purposes of this section, the word firm shall include a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009).
Provided that before such appointment is made, the written consent of the auditor to such appointment, and a certificate from the auditor that the appointment, if made, shall be in accordance with such conditions as may be prescribed, shall be obtained from the auditor:
Provided further that such certificate shall also declare that the auditor satisfies the criteria provided for eligibility for appointment as an auditor of a company under section 141 of the Companies Act.
(2) The Corporation shall not appoint an auditor for more than one term of five consecutive years:
Provided that an auditor who has completed the term of appointment shall not be eligible for reappointment or for fresh appointment as auditor for a period of five years from such completion:
Provided further that no audit firm shall be appointed as auditor for a period of five years which, if appointed, as on the date of its appointment, would have a common partner or partners with the audit firm whose term as auditor in the Corporation had expired in the financial year immediately preceding the financial year in which fresh appointment is to be made, or which is associated with the same network of audit firms as the audit firm whose term had expired as aforesaid:
Provided also that nothing contained in this sub-section shall prejudice the right of the Corporation to remove an auditor or the right of the auditor to resign from such office of the Corporation.
Explanation.--For the purposes of this sub-section, the expression same network includes firms operating or functioning under a common brand name or trade name, or under common control, or which are network firms as defined under any guidelines for networking issued by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949).
(3) Subject to the provisions of this Act, the Corporation may resolve in a general meeting to provide that--
(a) in the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be resolved by members;
(b) the audit shall be conducted by more than one auditor.
(4) Any casual vacancy in the office of an auditor shall be filled by the Board within thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the Corporation in a general meeting convened within three months of the Board making recommendations in this behalf, and the auditor so appointed shall hold office till the conclusion of the next annual general meeting.
(5) Where at any annual general meeting, no auditor is appointed, the existing auditor shall continue to be the auditor of the Corporation.
(6) All appointments, including the filling of a casual vacancy of an auditor under this section, shall be made after taking into account the recommendations of the Audit Committee.
(7) The remuneration of the auditor shall be fixed in the general meeting or in such manner as may be determined therein.
(8) Until the first annual general meeting is held, auditors duly qualified to act as auditors of companies under the law for the time being in force relating to companies shall be appointed by the Board with the previous approval of the Central Government, and shall receive such remuneration from the Corporation as the Central Government may fix.
(9) Notwithstanding anything contained in sub-section (1), where an auditor has been appointed previous to the first annual general meeting, either under section 25 as it stood before the coming into force of section 137 of the Finance Act, 2021 or thereafter under sub-section (8), and the term specified for such auditor's appointment has not expired, and the auditor meets the criteria referred to in subsection (1), such auditor shall continue till the expiry of the term so specified:
Provided that nothing contained in this sub-section or in section 25A shall prejudice the right of the Corporation to remove such auditor or the right of the auditor to resign from such office of the Corporation.
(10) An auditor appointed under sub-section (1) or sub-section (8) or sub-section (9) shall provide to the Corporation or its subsidiaries such other services as are approved by the Board, but shall not include any of the services, whether rendered directly or indirectly, that are enumerated in section 144 of the Companies Act:
Provided that an auditor who has been performing any non-audit services on or before the coming into force of section 137 of the Finance Act, 2021 shall comply with the provisions of this sub-section before the close of the first financial year in which the said section comes into force.
Explanation.--For the purposes of this section, the word firm shall include a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009).
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