Ceiling number of audit

Section 141(3) of the Companies Act, 2013 provides stipulations on eligibility, qualifications and disqualifications of auditors. The relevant provisions provide that certain persons shall not be eligible for appointment as an auditor of a company. One of the provision was that a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies then such person is not eligible to be appointed as auditor of the company [Section 141(3)(g) of Companies Act, 2013].

On 6th June, 2015, Ministry of Corporate Affairs has issued a notification by which it has clarified that section 141(3)(g) of the Companies Act, 2013 shall apply with the modification that the words "other than one person companies, dormant companies, small companies and private companies having paid-up share capital less than one hundred crore rupees" shall be inserted after the words "twenty companies".

Accordingly, the updated section is as follows:-

Eligibility, qualifications and disqualifications of auditors

Section 141(3): The following persons shall not be eligible for appointment as an auditor of a company, namely:—

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(g) a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies (other than one person companies, dormant companies, small companies and private companies having paid up share capital less than one hundred crore rupees)

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This implies that limit of 20 audits shall not include audits of one person companies, dormant companies, small companies and private companies having paid up share capital less than one hundred crore rupees.