One of the independent directors sought information regarding the appointment of internal auditors for the following Group Companies in accordance…

(a) As per section 138 of the Companies Act, 2013, following class of companies (prescribed in Rule 13 of the Companies (Accounts) Rules, 2014) shall be required to appoint an internal auditor or a firm of internal auditors, namely:- (A) every listed company; (B) every unlisted public company having- (1) paid up share capital of fifty crore rupees or more during the preceding financial year; or (2) turnover of two hundred crore rupees or more during the preceding financial year; or (3) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year; or (4) outstanding deposits of twenty five crore rupees or more at any point of time during the preceding financial year; and (C) every private company having- (1) turnover of two hundred crore rupees or more during the preceding financial year; or (2) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year. In the given case, XYX Limited is a listed company. As per section 138 of the Companies Act, 2013, every listed company is required to appoint an internal auditor or a firm of internal auditors. Thus, in view of the above, XYX Limited is required to appoint an internal auditor. Further, MNM Limited is unlisted public company. The company is having 60crore as equity share capital which is exceeding the prescribed limit of rupees fifty crore as per section 138. Thus, MNM Limited is required to appoint an internal auditor as per section 138 of the Companies Act, 2013. GFG Limited is unlisted private company and having 70crore as equity share capital,180 crore as turnover and 80crore loan from Bank and PFI. In view of provisions of section 138 of the Companies Act, 2013 discussed above, all the limits are below the prescribed limit for a private company. Therefore, GFG Limited is not required to appoint an internal auditor. It can be concluded that XYX Limited and MNM Limited are required to appoint the internal auditor as per the provisions of the Companies Act, 2013 whereas GFG Limited is not required to do the same.