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 !
