Appointment of LLP as Statutory Auditors now permissible -LLP will not be treated as Body Corporate for Limited Purpose
The Ministry of Corporate Affairs has paved the way for the appointment of LLP, as the Statutory Auditor of the Company.
MCA vide its notification, has notified that LLP, which is a Body Corporate as per the Limited Liability Partnership Act 2008, shall not be treated as Body Corporate, for the purpose of section 226(3)(a) of the Companies Act 1956, in exercise of its powers under 2(7)(c) of the Companies Act 1956.
As section 2(7) (c) of the Companies Act 1956, the Central Government may by notification, notify that a Body Corporate, will not be recognized as Body Corporate for the purpose of the Companies Act 1956.
The text of section is given below:
(7) “Body corporate” or “corporation” includes a company incorporated outside India but does not include—
(a) a corporation sole ;
(b) a co-operative society registered under any law relating to co-operative societies ; and
(c) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification in the Official Gazette, specify in this behalf ;
Section 226 (3) of the Companies Act 1956 provides for the disqualification for appointment of auditor of a company and as per clause (a) of this sub section, a body corporate cannot be appointed as Auditor. The MCA by its aforesaid notification has taken LLP out of the purview of the Body Corporate under this sub section and therefore, LLP can be appointed as the Auditor of the company.
It is to be noted that MCA vide its circular no No 10/2011 dated 04/04/2011 has allowed CA/CS/CWA to practice under LLP in partnership wilh other fellow members of same institute and in case of CS, also with members of such recognized profession as may be prescribed.
Please take note that notification is yet to be published in the official gazette