Provision relatong to appontment of auditor

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Finance
42 Points Joined November 2012

Can someone please resolve my query regarging appointment of auditor

"If Mr. X is a Chartered Accountant within the meaning of ICAI Act,1949 is Indebted to the company to the extent of Rs.700/- AND given a third party guarentee to the extent of Rs.500/- AND at the same time holding debentures of company worth Rs.1000/- is he qualified to be appointed as an auditor of that particular company as sec 226 of Companies Act,1956?"

 

 

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On 19 February 2013 at 22:47 Report
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Employee
382 Points Joined March 2011

I think he is disqualified.

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On 19 February 2013 at 23:39
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Hi Sri Teja,

I am very happy friend that you reminded me the study days. I am reproducing section 226 as below for your kind reference.

S.226(3) (d)

(3) None of the following persons shall be qualified for appointment as auditor of a 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 ;
 
If we read this provision as a whole with the intent of the act, he is disqualified u/s.226
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On 22 February 2013 at 20:42


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