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Section 141 of companies act 2013

Abhishek Sharma (Senior Assurance) (43 Points)

13 March 2015

"BC & Co." is an Audit Firm, having partners Mr.B, Mr.C & Mr.A who is a relative of Mr. C

Mr.A is holding securities of the company "MWF Ltd." having face value of Rs. 96000. Whether BC & Co. is authorised from being appointed as auditors.?

In this ques. Mr.A is a partner and relative. So, as per the limit of Rs. 1,00,000 for relative, Mr.C is not ineligible making the firm eligible, but taking Mr.A as partner the firm becomes ineligible.

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4 Replies

CA HAYEDAR SHAIKH (Practice ) (627 Points)
Replied 18 March 2015

Dear Abhishek,

Section 141(3) of Companies Act, 2013 states that

A person who or his relative or partner

is holding any security/interest in the company or its subsidiary or of its holding or associate company or subsidiary of such holding company. It has been further provided that an relative may hold security or interest in the company of face value not exceeding one lac rupees.

shall not be disqaulified from being appointment as Auditor.

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Abhishek Sharma (Senior Assurance) (43 Points)
Replied 18 March 2015

But in this case the relative is a partner himself

Srividya Murali (Article Assisstant) (211 Points)
Replied 19 March 2015

ya. As per section 141(3) of companies act,2013, an individual himself or his partner or his relative holding shares in a company shall be disqualified from appointment as an auditor of such company. the allowance of face value of INR 1,00,000 is for the relative only. So, in this case, BC&co. will be disqualified because in case of Mr.A, his position as a partner supercedes his position as relative of Mr.C.