Sumit Jaiswal (Company Secretary) (818 Points)
25 September 2012We know that the ceiling on number of audits as specified in Section 224(1B) of the Companies Act do not apply to private limited companies. I wanted to know where i.e. in which section it is written that Section 224(1B) do not apply to private companies.
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 26 September 2012
Please refer to teh fourth proviso to section 224(1B) whihc reads as follows highlighted in Bold below:
224. APPOINTMENT AND REMUNERATION OF AUDITORS
(1) Every company shall, at each annual general meeting, appoint an auditor or auditors to hold office from the
conclusion of that meeting until the conclusion of the next annual general meeting and shall, within seven days of the
appointment, give intimation thereof to every auditor so appointed :
Provided that before any appointment or re-appointment of auditor or auditors is made by any company at any annual
general meeting, a written certificate shall be obtained by the company from the auditor or auditors proposed to be so
appointed to the effect that the appointment or re-appointment, if made, will be in accordance with the limits specified
in sub-section (1B).
(1A) Every auditor appointed under sub-section (1) shall within thirty days of the receipt from the company of the
intimation of his appointment, inform the Registrar in writing that he has accepted, or refused to accept, the
appointment.
(1B) On and from the financial year next following the commencement of the Companies (Amendment) Act, 1974 (41
of 1974), no company or its Board of directors shall appoint or re-appoint any person 1[who is in full-time employment
elsewhere] or firm as its auditor if such person or firm is, at the date of such appointment or re-appointment, holding
appointment as auditor of the specified number of companies or more than the specified number of companies :
2[Provided that in the case of a firm of auditors, "specified number of companies" shall be construed as the number of
companies specified for every partner of the firm who is not in full-time employment elsewhere :]
Provided further that where any partner of the firm is also a partner of any other firm or firms of auditors, the number
of companies which may be taken into account, by all the firms together, in relation to such partner shall not exceed
the specified number in the aggregate.
Provided also that where any partner of a firm of auditors is also holding office, in his individual capacity, as the
auditor of one or more companies, the number of companies which may be taken into account in his case shall not
exceed the specified number, in the aggregate.
3[Provided also that the provisions of this sub-section shall not apply, on and after the commencement of the
Companies (Amendment) Act, 2000, to a private company.]
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 26 September 2012
Sumit ji,
It is specifically provied under section 224(1)(B) itself by excluding private companies from the purview of section 224(1)(B).
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