Definition of a relative for appointment as Statutory Auditor of a company

[Deepak Bubna]

For the purpose of appointment as statutory auditor of a company, will Mother's brothers and sisters or Father's brothers and sisters will be considered as relative restricting such Chartered Accountant to accept appointment in a company if such person from Mother or Father's side have controlling stake in the company, either as shareholders or directors or both ?

[Padmanathan KV]

Section 2(77) of Companies Act, 2013 read with Rule 4 of Companies (Specification of definitions details) Rules, 2014 - A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-

(1) Father:

Provided that the term “Father” includes step-father.

(2) Mother:

Provided that the term “Mother” includes the step-mother.

(3) Son:

Provided that the term “Son” includes the step-son.

(4) Son’s wife.

(5) Daughter.

(6) Daughter’s husband.

(7) Brother:

Provided that the term “Brother” includes the step-brother;

(8) Sister:

Provided that the term “Sister” includes the step-sister.

Therefore mother's brother and sister or father's brother and sisters will not be considered as "relative" for appointment as statutory auditor purpose.

AI Summary

Definition of relative excludes parents' siblings, so uncles and aunts do not bar appointment as statutory auditor. A person is a relative only if related as father (including step father), mother (including step mother), son (including step son), son's wife, daughter, daughter's husband, brother (including step brother) or sister (including step sister); mother's or father's brothers and sisters are therefore not treated as relatives for the purpose of restricting appointment as a statutory auditor.