Clarification Regarding Body Corporate for the Purpose of Section 226 (3) (A) of the Companies Act, 1956

The Ministry of Corporate Affairs has clarified that Limited Liability Partnership of Chartered Accountants will not be treated as body corporate for the limited purpose of section226 (3) (a) under the Companies Act, 1956. Accordingly, a notification has been sent for publication by the Ministry.

This clarification follows a number of representations received in the Ministry from Institute of Chartered accountants of India wherein they have stated that under Section 226 (3) (a) of the Companies Act, 1956 a Body Corporate is disqualified from the appointment as auditor by a company. Since LLP is a body corporate as per Section 3 (1) of the Limited Liability Partnership Act, 2008, LLP among Chartered Accountants will not be qualified for appointment as auditor under section section 226 (3) (a) under the Companies Act, 1956.