Ram is a chartered accountant in practice. His proprietory concern has been appointed as the statutory auditor of a private limited company. Subsequently, it came to light that Mrs. Ram has been holding less than 1% shar

Pursuant to Section 141, a person who himself, or his relative or partner 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 is not eligible for appointment of auditor of the company. Provided that the relative may hold security or interest in the company of face value not exceeding one thousand rupees or such sum as may be prescribed under the Companies (Audit and Auditors) Rules, 2014. As per Rule 10 of the Companies (Audit and Auditors) Rules, 2014, a relative of an auditor may hold securities in the company of face value not exceeding rupees one Lakh. In accordance with the provisions stated above, Mrs. Ram may hold shares of the value not exceeding one lakh rupees to render Mr. Ram eligible for appointment as the auditor. Since the question is silent on the value of the 1% shares of the company, the conclusion regarding the appointment of Ram may be drawn as under: If the holdings of Mrs. Ram exceed one lakh rupees; based on aforesaid provision of law Mr. Ram cannot be appointed as auditor. However, if Mrs. Ram holding is less than one lakh rupees; Mr. Ram can be appointed as auditor.