Question

Tick mark the correct answer.
If an auditor, after his appointment, becomes disqualified as specified in Section $226\left(3\right)$ and $\left(4\right)$ of the Companies Act $1956$, ____________ .

• A. the appointing authority will ask him to vacate his office
• B. the company law board will ask him to tender his registration
• C. he will be deemed to have vacated his office
• D. The Institute of Chartered Accountants of India will terminate him from office

Answer 1

The correct option is C he will be deemed to have vacated his office

As per section 226(3) and 226(4) of the Companies Act 1956 an auditor would be disqualified if he is a body corporate, employee or director of the company, indebted to the company or acts as a guarantor to the company for more than Rs-1000, holds shares of the company, etc. If after a valid appointment any of these said situations take place the auditor will have to vacate his office as he is disqualified to act as an auditor of the company.