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Companies act-2013

Ravi Kumar Somani (Indirect Taxes Specialization) (3893 Points)

19 April 2016

Hello 1. Can a relative of statutory auditor be appointed as a director of a Company, if yes what are the provisions? 2. Can a relative of MD be appointed as a director in its Holding Company, if yes, what are the provisions? 3. Can a shareholder of a Company be appointed as a director in its subsidiary Company? if yes what are the provisions?

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3 Replies

Jatin Bajaj (CS) (2928 Points)
Replied 20 April 2016

According to section 141(3) (f), if a person whose relative is director or employment in a Company as a Director or KMP,then it would attract disqualification of an auditor.

Yes relative of MD can be appointed as the director of the Company but as per section 185 of the Companies Act 2013, Company cannot provide loan to directors or any other person in whom director is interested. provided that Company can provide loan to Managing Director by passing special resolution in General Meeting subject to aprooval of Shareholders.

Yes Shareholder of the Company can be appointed as the Director in Subsidiary Company, but before appointment of a person as a Director, he should apply for DIN under section 154 of Companies Act 2013, and shall file form no DIR-2 , ( Consent to act as the Director of the Company)

Ravi Kumar Somani (Indirect Taxes Specialization) (3893 Points)
Replied 21 April 2016

Hello jatin

I want to ask if there is already a statutory auditor in our company, now can we appont his relative as a director in a Company?

Jatin Bajaj (CS) (2928 Points)
Replied 22 April 2016

YES , YOU CAN APPOINT HIS RELATIVE AS THE DIRECTOR OF THE COMPANY. BUT PLEASE REFER SECTION 141(3)(f) WHICH CLEARLY SAYS DISQUALIFICATION OF AUDITOR, READ WITH 141 (4), WHICH CLEARLY SPECIFIES THAT WHEN A PERSON APPOINTED AS AN AUDITOR OF A COMPANY INCURES ANY OF THE DISQUALIFICATION AS PER SECTION 141(3), HE SHALL VACCATE HIS OFFICE AND SUCH A VACCATION SHALL BE THE CASUAL VACCANCY OF THE AUDITOTR.