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Disqualification of auditors(section 141)
As per Section 141(3)(d), a person who, or his relative or partner is holding any security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company cannot be appointed as an auditor.
So, if a "firm" holds securities, then can such firm be appointed as an auditor(because firm is not mentioned in disqualification,only partner is mentioned)?
Thanks in advance.
Replies (6)
Section 3(42) of General Clauses Act 1897 defines a "person" as under:
“person” shall include any company or association or body of individuals, whether incorporated or not;
firm can't hold shares on it's own name in the company... it can only through it's partners
@ Ravi - May I know the reason why a firm can't hold shares in it's own name?
No seperate legal entity concept for a firm I suppose.
Yes. I found this landmark case : Ganesh Das Ram Gopal vs RG cotton mills Ltd, which supports the view that a firm is not a separate legal entity.
However, a firm may become a member in Section 8 companies as per section 8(3).
However, a firm may become a member in Section 8 companies as per section 8(3).
The question itself in incorrect. Firm cannot hold any shares in a company expect section 8 company.
His relative can hold shares upto 1 lakh of its nominal face value. But auditor should not hold a shares of 1 rupee also..
His relative can hold shares upto 1 lakh of its nominal face value. But auditor should not hold a shares of 1 rupee also..
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