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Appointment of Statutory Auditor - Disqualifications

This query is : Resolved 

04 October 2007 According to Section 226(3)(e) a person who holds any security of the company cannot be appointed as the auditor where security has been defined as an instrument carrying voting rights. Now my question is

Whether a person holding preference share/s in a company can be appointed as the statutory auditor of the Company?

In my view a person holding preference share/s shall not be appointed as the statutory auditor since preference shares also carries voting rights in the matters affecting them. Moreover, if preference dividend is in arrears for a continuous period of two years in respect of cumulative preference shares, the holder will get a right to vote in the meetings in respect of all matters.

04 October 2007 Hence , if the auditors holds preferece shares in a company, he is not eligible to appoint as an auditor

12 November 2007 Very useful.

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