Examine the following situations in the light of the Companies Act, 2013: (i) Mr. Prem, a Chartered Accountant, has been appointed as an auditor of…

(i) Section 141 (3) (c) of the Companies Act, 2013 prescribes that any person who is a partner or in employment of an officer or employee of the company will be disqualified to act as an auditor of a company. Section 141 (4) provides where a person appointed as an auditor of a company incurs any of the disqualifications mentioned in section 141 (3) after his appointment, he shall vacate his office as such auditor and such vacation shall be deemed to be a casual vacancy in the office of the auditor. In the present case, Mr. Prem, an auditor of A Limited, joined as partner with consultancy firm where Mr. Ajay has become a partner and Mr. Ajay is also the Finance executive of A Limited. Hence, Mr. Prem has attracted clause (3) (c) of section 141 and, therefore, he shall be deemed to have vacated office of the auditor of A Limited. (ii) As per section 141 (3) (d) (i) , an auditor is disqualified to be appointed as an auditor if he, or his relative or partner holds 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. In the present case, Mr. Tom is holding security of 1,00,000 in the B Limited, therefore, he is not eligible for appointment as an auditor of B Limited.