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.