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Himank Singla asked 1 year ago

Section 141 :

1. Section 141 states that any person whose subsidiary or associate is engaged as on date of appointment in services as per section 144 then such person shall be disqualified. Suppose, Mr. A was appointed on 30/4 and did not provide the service but during his tenure of 5 years, suppose he starts providing prohibited service to the company, will it amount to disqualification?

Will the answer be different if he starts providing such services to any of 5 companies during his appointment?

2. A company A ltd. has a holding company H Ltd. which also has another subsidiary S Ltd. Mr. P( CA by profession) is a director of A Ltd. Now as per section 141, a person whose relative is a director or who is in the employment of the company as KMP or director of the company shall not be eligible for appointment. Now as per the section, Mr P is disqualified to be appointed as auditor of A Ltd. & as per ICAI notification, also disqualified to become auditor of H Ltd. as well, but can he become auditor of S ltd?


3. Section 141 also states that a person should not be hold any security in any of the 5 co.’s but the relative can hold securities of the company in which the auditor is to be appointed with face value upto 10000. Suppose currently, the face value per reliance share is rupees 10 but market value is 900 so technically, a relative can hold securities of reliance having value 900000. Is it correct? Further, kindly confirm, such 100000 limit is per relative and that too for the company in which the auditor is to be appointed. Suppose if the relative is holding securities in the subsidiary co. of reliance then there shall be no disqualification irrespective of the limit of face value.?


1. As per Section 140(5), when auditor is removed by Tribunal, auditor is disqualified for a period of 5 years and charged u/s 447 (which in turn covers imprisonment of 3 months to years)
2. As per Section 141(3)(h), auditor is disqualified if he is convicted of any offence by court and 10 years have not lapsed.

So, reading and interpreting both sections, does this mean auditor is cillectively disqualified for 15-20 years ? Or is the case any different ?

4 Answers
RaviRavi Staff answered 1 year ago

Disqualification will be attracted, if services are offered on date of appointment or after date of appointment, it doesn’t matter

RaviRavi Staff answered 1 year ago

director of holding cannot become auditor of subsidiary
but there is no clarification whether director of subsidiary can become auditor of holding, technically it is possible, but auditor should be careful that it should not adversely affect independence, in general he should avoid such close assignments 
same explanation if co-subsidiary is involved 

RaviRavi Staff answered 1 year ago

value doesnt matter only face value matters
limit is for relatives taken together

RaviRavi Staff answered 1 year ago

both punishments would run parallelly
thats means maximum 10 years of disqualification
and both disqualifications are little different
court fraud conviction = total disqualification, immediately out of all assignments
tribunal 141 disqualification = no appointment for 5 years, continue current assignments  

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