Section 141 — Eligibility, qualifications and disqualifications of auditors

(1) A person shall be eligible for
appointment as an auditor of a company only if he is a chartered accountant:
Provided that a firm whereof majority of partners practising in India are qualified for appointment as
aforesaid may be appointed by its firm name to be auditor of a company.

1. Subs. by Act 29 of 2020, s. 29, for “five lakh rupees” (w.e.f. 21-12-2020).

(2) Where a firm including a limited liability partnership is appointed as an auditor of a company, only
the partners who are chartered accountants shall be authorised to act and sign on behalf of the firm.
(3) The following persons shall not be eligible for appointment as an auditor of a company, namely:—
(a) a body corporate other than a limited liability partnership registered under the Limited Liability
Partnership Act, 2008 (6 of 2009);
(b) an officer or employee of the company;
(c) a person who is a partner, or who is in the employment, of an officer or employee of the
company;
(d) a person who, or his relative or partner—
(i) is holding 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:
Provided that the relative may hold security or interest in the company office value not
exceeding one thousand rupees or such sum as may be prescribed;
(ii) is indebted to the company, or its subsidiary, or its holding or associate company or a
subsidiary of such holding company, in excess of such amount as may be prescribed; or
(iii) has given a guarantee or provided any security in connection with the indebtedness of any
third person to the company, or its subsidiary, or its holding or associate com pany or a subsidiary
of such holding company, for such amount as may be prescribed;
(e) a person or a firm who, whether directly or indirectly, has business relationship with the company,
or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate
company of such nature as may be prescribed;
(f) a person whose relative is a director or is in the employment of the company as a director or key
managerial personnel;
(g) a person who is in full time employment elsew here or a person or a partner of a firm holding
appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment
holding appointment as auditor of more than twenty companies;
(h) a person who has been convicted by a court of an offence involving fraud and a period of ten
years has not elapsed from the date of such conviction;
1[(i) a person who, directly or indirectly, renders any service referred to in section 144 to the company
or its holding company or its subsidiary company.
Explanation.—For the purposes of this clause, the term “directly or indirectly” shall have the meaning
assigned to it in the Explanation to section 144.]
(4) Where a person appointed as an auditor of a company incurs any of the disqualifications mentioned