Section 141 of the Companies Act, 2013
Section 141 of the Companies Act, 2013
Title: "Eligibility, Qualifications and Disqualifications of Auditors"
✅ Purpose:
Section 141 lays down who can or cannot be appointed as an auditor of a company under the Companies Act, 2013.
🔍 Key Provisions:
1. Who can be an Auditor?
Only a chartered accountant (CA), holding a valid certificate of practice under the Chartered Accountants Act, 1949, can be appointed as an auditor.
A firm of CAs can also be appointed, provided that the majority of partners practicing in India are qualified as CAs.
2. Disqualifications – Who cannot be an Auditor?
The following cannot be appointed as auditors of a company:
A body corporate (other than an LLP).
An officer or employee of the company.
A person who is a partner or employee of an officer or employee of the company.
A person who or whose:
Relative or partner is holding securities in the company (above ₹1 lakh face value),
Is indebted to the company above ₹5 lakh,
Has given a guarantee or security for a third party’s loan to the company above ₹1 lakh.
A person or firm who has business relationships with the company.
A person whose relative is a director or key managerial personnel in the company.
A person who has been convicted of fraud, and 10 years have not elapsed since such conviction.
A person who is already auditor of more than 20 companies (as per limits set under Section 141(3)(g)).
3. Obligation to Disclose:
If a person becomes disqualified after appointment, they must vacate their office immediately.
🧾 Penalty for Contravention:
The auditor is liable to a fine between ₹25,000 and ₹5,00,000.
⚖️ Objective:
To ensure that the auditor remains independent, impartial, and free from any conflict of interest in the company’s affairs.
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