Can auditor purchase debentures of company in which he is appoint as auditor ?
dipeshdayani (Student CA Final ) (54 Points)
17 March 2015dipeshdayani (Student CA Final ) (54 Points)
17 March 2015
Saurabh Maheshwari
(B.com,ACA)
(5923 Points)
Replied 17 March 2015
As per Sec 141(3)(d)(i), if a person(auditor) or his partner or relative is holding any security (whether or not having voting rights) in the company or its subsidiary or its holding or associate company or a subsidiary of such holding co. then such person shall be disqualified from being appointed as auditor of the company.However, the relative of the auditor may hold securities for the face value not exceeding Rs. 1 lacs.
Please note: such exception only for relative and not for holding security by auditor or his partner.
Therofore,auditor cannot hold debentures of auditee company.
CA KAUSHAL BHINDORA
(Chartered Accountant)
(72 Points)
Replied 28 May 2015