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Appointment of company auditor

deepanshu (job) (43 Points)

09 October 2013

CAN A RELATIVE OF A DIRECTER BE APPINTED AS A AUDITOR OF THE COMPANY??

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2 Replies

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 09 October 2013

Hi,

Pls go through section 141 of the new Companies Act 2013 which states conditions for eligibility of an auditor. According to this section, a relative of a director cannot be appointed as an auditor...

Though the said section has not yet come into force, it will be effective latest by 1/4/14. So it is advisable not to appoint such a person as an auditor.

Hopefully your query is resolved...if not revert here...

Regards

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Bhargav teja (CA-FINAL Student & Article Trainee) (153 Points)
Replied 12 November 2013

According to Sec.226 of Companies act, 1956 he is disqualified to be appointed as an Auditor. The same provision as regards to Companies act 2013

For your Reference:-

None of the following persons shall be qualified for appointment as auditor of a company-

(a) a body corporate;

(b) an officer or employee of the company;

(d) a person who is indebted to the company for an amount exceeding one thousand rupees, or who, has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees;

(e) a person who is a director or member of a private company, or a partner of a firm, which is the managing agent or the secretaries and treasurers of the company;

(f) a person who is a director or the holder of shares exceeding five per cent. in nominal value of the subscribed

Thank You