The following persons shall not be eligible for appointment as an auditor of a company:
• A body corporate, except LLP.
• An officer or employee of the company.
• Any partner/employee of officer or employee of company.
• A person who himself or his relative or partner is holding any security or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company (i.e fellow subsidiary)
Note: Relative of an auditor may hold securities in the company of Face Value not exceeding ₹1,00,000.
If the relative acquires any security or interest above ₹1,00,000, corrective action to maintain the limits as specified above shall be taken by the auditor within 60 days of such acquisition or interest.
• A person who himself or his relative or partner is indebted to the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company, in excess of ₹5,00,000.
• A person who himself or his relative or partner has given guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of ₹1,00,000
• A person or a firm who, whether directly or indirectly, has business (i.e commercial) relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company. [Except arm’s length transaction]
• A person whose relative is a director or is in the employment of the company as a director or key managerial personnel.
• A person who is in full time employment elsewhere.
• A Person or a partner who is auditor of more than 20 companies.
Note:
– While calculating the limit of 20 companies, one person companies, small companies and private companies having paid-up share capital less than ₹100 crores shall be excluded.
– In case of a firm, the limit of 20 shall be for each partner.
• A person who has been convicted by a court of an offence involving fraud and a period of 10 years has not elapsed from the date of such conviction.
• A person who, directly or indirectly, renders any service referred to in section 144 to the company or its holding company or its subsidiary company.
If a person appointed as an auditor of a company incurs any of the disqualifications specified u/s 141(3) after his appointment, he shall be deemed to have vacated his office. Such vacation shall be deemed to be a casual vacancy in the office of the auditor.
CA PREETI AGGARWAL
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