MCA clarifies on Body Corporate for section 226(3)(a) of the Companies Act, 1956

General Circular No.30/2011 GOI MCA Dated: 26:05:2011

All the Regional Directors, All the Registrar of Companies

Clarification regarding ˜Body Corporate™ for the purpose of section 226(3) (a) of the Companies Act, 1956

The Ministry of Corporate Affairs has received representation from the Institute of Chartered Accountants of India wherein they have stated that under section 226(3) (a) of the Companies Act,1956 a body corporate is disqualified from appointment as auditor by a company. Since LLP is a body corporate as per section 3(1) of the Limited Liability Partnership Act, 2008, LLP among Chartered Accountants will not be qualified for appointment as auditor under section 226(3)(a) of the Companies Act,1956. 2 It is hereby clarified that Limited Liability Partnership of chartered accountants will not be treated as ˜body™ corporate for the limited purpose of section 226(3) (a) of the Companies act,1956 and notification in this respect has been sent for publication in the Gazette of India.

Yours Faithfully,

(Kamna Sharma)

Assistant Director

 

CLR Note: Please refer to our article [ LLP Firms cannot act as Statutory Auditors ] where-in we pointed out the impact of the last MCA circular declaring LLPs as body corporate, the impact of which was that LLP firms will not be able to be appointed as Statutory Auditors. The present  circular seeks to remedy the situation. The Ministry of Corporate Affairs has clarified that Limited Liability Partnership of Chartered Accountants will not be treated as body corporate for the limited purpose of section226 (3) (a) under the Companies Act, 1956. Accordingly, a notification has been sent for publication by the Ministry.
This clarification follows a number of representations received in the Ministry from Institute of Chartered accountants of India wherein they have stated that under Section 226 (3) (a) of the Companies Act, 1956 a Body Corporate is disqualified from the appointment as auditor by a company. Since LLP is a body corporate as per Section 3 (1) of the Limited Liability Partnership Act, 2008, LLP among Chartered Accountants will not be qualified for appointment as auditor under section section 226 (3) (a) under the Companies Act, 1956.

Good lobbying by ICAI and prompt action by MCA !

Tag: LLP

profile image

About Taniya

Taniya | Associate

eMinds Legal Consulting Pvt. Ltd. is a Consulting Firm in India specialzing in Corporate Laws, Compliances, Secretarial, FEMA, Indirect Taxation, Cyber Laws & Contracts. The Firm comprises of a team of professionals of Company Secretaries, Lawyers and Chartered Accountants with an in-depth subject matter knowledge and participative industry experience of over 12 years.

Corporate Law Referencer

Recent Articles

Recent Legal updates

Recent Gst Updates