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Taken share or not

CA HIRAL PATEL (CHARTERED ACCOUNTANT) (536 Points)

18 September 2010

If Statutory auditor is not taken an audit if he has share of that company,but if he also work as an Promoter and he has taken some shares of that company ,

Now in this case can stat.auditor is taken as audit or not ????????????????

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2 Replies

Joey Tribbiani (fdg) (2010 Points)
Replied 18 September 2010

As per sec 226(3) 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;

(c) a person who is a partner, or who is in the employment, of 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 holding any security of that company after a period of one year from the date of commencement of the Companies (Amendment) Act, 2000.

Explanation.-For the purpose of this section, "security" means an instrument which carries voting rights.]

Explanation.-References in this sub-section to an officer or employee shall be construed as not including references to an auditor.

In ur case the the promoter is a CA in practise and he wants to take the stat audit of the company,as per above stated provisions he can not do so if he also holds shares in the company. But he is not barred frm taking the audit if he has only promoted the company and doesnt hold any security of that company.