Appointment of Auditor

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Life is a Race.....CA FINAL (Querist)
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04 February 2010 In one of the private limited company following situation arise:

One of the director possess 15% equity shares. Now his mother who is chartered accountant wants to accept the appointment as auditor of the Pvt. ltd. co.

Can she accept?

Ankur Garg

Ankur Garg (Expert)
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04 February 2010 No she cannot accept the appointment as her position may adversely affect her independence as statutory auditor.

Being a relative of director she should not accept. ICAI is also of the same view.

Regards

Jagruti (CS)

Jagruti (CS) (Expert)
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04 February 2010 Companies Act do not prohibit appointment of relative of Director. For the purpose you have to take special resolution for his appoint as it will attract Section 314 i.e. holding of office or place of profit if remuneration of auditor is 10000 per month or more.

And central govt approval if it is 20000 or more per month.

However it is advisable that relative should not be appointed as Independence is likely to be affected

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