Proxy advisory body Institutional Investor Advisory Services India (IIAS) has called for periodic rotation of auditors and capping their tenure at 10 years.

"IIAS expects the tenure of the audit firm to be capped at 10 years. It would recommend voting against the reappointment of vintage auditors."

An auditors' tenure of over 10 consecutive years blemishes the objectivity of the audit process and the independence of the auditor, it said.

It said 25 of Nifty-50 companies and 17 of 30-share Sensex companies had the same auditors for more than 10 years.

Two had rotated their auditors in the current proxy season. The rest opted for the three-year transition window.

Under the Banking Regulations Act, 1949, banks must change their auditors every four years.

The body called on shareholders to vote against reappointment of vintage auditors, despite the window period afforded by the Companies Act.

Though the regulations provide a three-year transition window from April 1 for compliance, IIAS believes that good corporate governance practices transcend regulatory requirements.

A cooling-off period of five years after the stipulated threshold is required to be considered eligible for re-appointment.

Section 139 of the Companies Act is applicable with retrospective effect, which means the existing term of the current auditors will be taken into account for computing the overall tenure.

The Act has provided a transition window--instead of making immediate changes, companies with vintage auditors, tenure of 10 years can comply with the rotation requirement anytime within three years from the date of commencement of the Act as on April 1 2014. (Business Standard)