As per section 141(3)(g) of Companies Act, 2013 (the Act) person shall not be eligible for appointment as an auditor of a company, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies.
Ministry of Corporate Affairs (MCA) vide notification dated 5 June 2015 (original notification) has given several exemptions to Private Companies. One of the exemption is granted u/s 141 of the Act which states that One Person Companies (OPCs), Dormant Companies, Small companies, and Private Companies having paid up share capital less than 100 crore rupees will not be included while counting limit of 20 companies as in section 141(3)(g) of the Act.
MCA has issued another notification dated 13 June 2017 amending the original notification. Pursuant to this amendment, exemption given to private companies can be availed only by the Companies which have not committed default in filing its financial statements or annual return with the Registrar. Hence, if the company has not filed financials statements u/s 137 of the Act OR Annual Return u/s 92 of the Act within the stipulated time, all the exemptions given by MCA shall stand withdrawn.
If the private company has made a default in filing financial statement viz., AOC-4/AOC-XBRL/ACO- CFS or Annual Return i.e., MGT-7 within the stipulated time, in that case the defaulting company will be included/considered while counting the limit of 20 companies for auditor as prescribed in Section 141(3(g) of the Act.
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