• CHAPTER 4 CHAPTER 4 REMOVAL, RESIGNATION, ETC. OF AUDITORS

    • Removal of auditor

      • 479. Resolution removing auditor from office

        (1) The members of a company may remove an auditor from office at any time.
        (2) This power is exercisable only—
        (a) by ordinary resolution at a meeting and in accordance with section 480 (special notice required for resolution removing auditor from office), or
        (b) in the case of a company with only one member, by written resolution or a decision taken as mentioned in section 362 (records of decisions by sole member).
        (3) Nothing in this section is to be taken as depriving the person removed of compensation or damages payable to him in respect of the termination—
        (a) of his appointment as auditor, or
        (b) of any appointment terminating with that as auditor.
        (4) An auditor may not be removed from office before the expiration of his term of office except by resolution under this section.

      • 480. Special notice required for resolution removing auditor from office

        (1) Special notice is required for a resolution at a general meeting of a company removing an auditor from office.
        (2) On receipt of notice of such an intended resolution the company must immediately send a copy of it to the auditor proposed to be removed.
        (3) The auditor proposed to be removed may make with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and request their notification to members of the company.
        (4) The company must (unless the representations are received by it too late for it to do so)—
        (a) in any notice of the resolution given to members of the company, state the fact of the representations having been made, and
        (b) send a copy of the representations to every member of the company to whom notice of the meeting is or has been sent.
        (5) If a copy of any such representations is not sent out as required because received too late or because of the company's default, the auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.
        (6) Copies of the representations need not be sent out and the representations need not be read at the meeting if, on the application either of the company or of any other person claiming to be aggrieved, the Court is satisfied that the auditor is using the provisions of this section to secure needless publicity for defamatory matter.

        The Court may order the company's costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.

      • 481. Notice to Registrar of resolution removing auditor from office

        (1) Where a resolution is passed or a decision is taken under section 479 (resolution or decision removing auditor from office), the company must give notice of that fact to the Registrar within 14 days.
        (2) If a company fails to give the notice required by this section, a contravention of these Regulations is committed by—
        (a) the company, and
        (b) every officer of it who is in default.
        (3) A person who commits the contravention referred to in subsection (2) shall be liable to a level 2 fine.

      • 482. Rights of auditor who has been removed from office

        (1) An auditor who has been removed by resolution under section 479 (resolution or decision removing auditor from office) has, notwithstanding his removal, the rights conferred by section 473(2) (auditor's rights in relation to resolutions and meetings) in relation to any general meeting of the company—
        (a) at which his term of office would otherwise have expired, or
        (b) at which it is proposed to fill the vacancy caused by his removal.
        (2) In such a case the references in that section to matters concerning the auditor as auditor shall be construed as references to matters concerning him as a former auditor.

      • 483. Failure to re-appoint auditor: special procedure required for written resolution

        (1) This section applies where a resolution is proposed as a written resolution of a private company with more than one member whose effect would be to appoint a person as auditor in place of a person (the "outgoing auditor") whose term of office has expired, or is to expire, at the end of the period for appointing auditors.
        (2) The following provisions apply if—
        (a) no period for appointing auditors has ended since the outgoing auditor ceased to hold office, or
        (b) such a period has ended and an auditor or auditors should have been appointed but were not.
        (3) The company must send a copy of the proposed resolution to the person proposed to be appointed and to the outgoing auditor.
        (4) The outgoing auditor may, within 14 days after receiving the notice, make with respect to the proposed resolution representations in writing to the company (not exceeding a reasonable length) and request their circulation to members of the company.
        (5) The company must circulate the representations together with the copy or copies of the resolution circulated in accordance with section 308 (circulation of written resolutions proposed by directors) or section 310 (circulation of written resolutions proposed by members).
        (6) Where subsection (5) applies—
        (a) the period allowed under section 310(3) for service of copies of the proposed resolution is 28 days instead of 21 days, and
        (b) the provisions of section 310(5) and (6) (contraventions) apply in relation to a failure to comply with that subsection as in relation to a default in complying with that section.
        (7) Copies of the representations need not be circulated if, on the application either of the company or of any other person claiming to be aggrieved, the Court is satisfied that the auditor is using the provisions of this section to secure needless publicity for defamatory matter.

        The Court may order the company's costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
        (8) If any requirement of this section is not complied with, the resolution is ineffective.

      • 484. Failure to re-appoint auditor: special notice required for resolution at general meeting

        (1) This section applies to a resolution at a general meeting of a company with more than one member whose effect would be to appoint a person as auditor in place of a person (the "outgoing auditor") whose term of office has ended, or is to end—
        (a) in the case of a private company, at the end of the period for appointing auditors,
        (b) in the case of a public company, at the end of the next accounts meeting.
        (2) Special notice is required of such a resolution if—
        (a) in the case of a private company—
        (i) no period for appointing auditors has ended since the outgoing auditor ceased to hold office, or
        (ii) such a period has ended and an auditor or auditors should have been appointed but were not,
        (b) in the case of a public company—
        (i) there has been no accounts meeting of the company since the outgoing auditor ceased to hold office, or
        (ii) there has been an accounts meeting at which an auditor or auditors should have been appointed but were not.
        (3) On receipt of notice of such an intended resolution the company shall forthwith send a copy of it to the person proposed to be appointed and to the outgoing auditor.
        (4) The outgoing auditor may make with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and request their notification to members of the company.
        (5) The company must (unless the representations are received by it too late for it to do so)—
        (a) in any notice of the resolution given to members of the company, state the fact of the representations having been made, and
        (b) send a copy of the representations to every member of the company to whom notice of the meeting is or has been sent.
        (6) If a copy of any such representations is not sent out as required because received too late or because of the company's default, the outgoing auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.
        (7) Copies of the representations need not be sent out and the representations need not be read at the meeting if, on the application either of the company or of any other person claiming to be aggrieved, the Court is satisfied that the auditor is using the provisions of this section to secure needless publicity for defamatory matter.

        The Court may order the company's costs on the application to be paid in whole or in part by the outgoing auditor, notwithstanding that he is not a party to the application.

      • 485. Resignation of auditor

        (1) An auditor of a company may resign his office by depositing a notice in writing to that effect at the company's registered office.
        (2) The notice is not effective unless it is accompanied by the statement required by section 488 (statement by auditor to be deposited with company).
        (3) An effective notice of resignation operates to bring the auditor's term of office to an end as of the date on which the notice is deposited or on such later date as may be specified in it.

      • 486. Notice to Registrar of resignation of auditor

        (1) Where an auditor resigns the company must within 14 days of the deposit of a notice of resignation send a copy of the notice to the Registrar of companies.
        (2) If default is made in complying with this section, a contravention of these Regulations is committed by—
        (a) the company, and
        (b) every officer of the company who is in default.
        (3) A person who commits the contravention referred to in subsection (2) shall be liable to a level 2 fine.

      • 487. Rights of resigning auditor

        (1) This section applies where an auditor's notice of resignation is accompanied by a statement of the circumstances connected with his resignation (see section 488 (statement by auditor to be deposited with company).
        (2) A resigning auditor may deposit with the notice a signed requisition calling on the directors of the company forthwith duly to convene a general meeting of the company for the purpose of receiving and considering such explanation of the circumstances connected with his resignation as he may wish to place before the meeting.
        (3) A resigning auditor may request the company to circulate to its members—
        (a) before the meeting convened on his requisition, or
        (b) before any general meeting at which his term of office would otherwise have expired or at which it is proposed to fill the vacancy caused by his resignation,
        a statement in writing (not exceeding a reasonable length) of the circumstances connected with his resignation.
        (4) The company must (unless the statement is received too late for it to comply)—
        (a) in any notice of the meeting given to members of the company, state the fact of the statement having been made, and
        (b) send a copy of the statement to every member of the company to whom notice of the meeting is or has been sent.
        (5) The directors must within 21 days from the date of the deposit of a requisition under this section proceed duly to convene a meeting for a day not more than 28 days after the date on which the notice convening the meeting is given.
        (6) If default is made in complying with subsection (5), every director who failed to take all reasonable steps to secure that a meeting was convened commits a contravention of these Regulations.
        (7) A person who commits the contravention referred to in subsection (6) shall be liable to a level 3 fine.
        (8) If a copy of the statement mentioned above is not sent out as required because received too late or because of the company's default, the auditor may (without prejudice to his right to be heard orally) require that the statement be read out at the meeting.
        (9) Copies of a statement need not be sent out and the statement need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Court is satisfied that the auditor is using the provisions of this section to secure needless publicity for defamatory matter.

        The Court may order the company's costs on such an application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
        (10) An auditor who has resigned has, notwithstanding his resignation, the rights conferred by section 473(2) (auditor's rights in relation to resolutions and meetings) in relation to any such general meeting of the company as is mentioned in subsection (3)(a) or (b) above. In such a case the references in that section to matters concerning the auditor as auditor shall be construed as references to matters concerning him as a former auditor.

      • 488. Statement by auditor to be deposited with company

        (1) Where an auditor of a company ceases for any reason to hold office, he must deposit at the company's registered office a statement of the circumstances connected with his ceasing to hold office, unless he considers that there are no circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the company.
        (2) If he considers that there are no circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the company, he must deposit at the company's registered office a statement to that effect.
        (3) The statement required by this section must be deposited—
        (a) in the case of resignation, along with the notice of resignation,
        (b) in the case of failure to seek re-appointment, not less than 14 days before the end of the time allowed for next appointing an auditor,
        (c) in any other case, not later than the end of the period of 14 days beginning with the date on which he ceases to hold office.
        (4) A person ceasing to hold office as auditor who fails to comply with this section commits a contravention of these Regulations.
        (5) A person does not commit the contravention referred to in subsection (4) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
        (6) A person who commits the contravention referred to in subsection (4) shall be liable to a fine of up to level 4.
        (7) Where a contravention under this section is committed by a body corporate, every officer of the body who is in default also commits the contravention.

        For this purpose—
        (a) any person who purports to act as director, manager or secretary of the body is treated as an officer of the body, and
        (b) if the body is a company, any shadow director is treated as an officer of the company.

      • 489. Company's duties in relation to statement

        (1) This section applies where the statement deposited under section 488 (statement by auditor to be deposited with company) states the circumstances connected with the auditor's ceasing to hold office.
        (2) The company must within 14 days of the deposit of the statement either—
        (a) send a copy of it to every person who under section 405 (duty to circulate copies of annual accounts and reports) is entitled to be sent copies of the accounts, or
        (b) apply to the Court.
        (3) If it applies to the Court, the company must notify the auditor of the application.
        (4) If the Court is satisfied that the auditor is using the provisions of section 488 (statement by auditor to be deposited with company) to secure needless publicity for defamatory matter—
        (a) it shall direct that copies of the statement need not be sent out, and
        (b) it may further order the company's costs on the application to be paid in whole or in part by the auditor, even if he is not a party to the application.
        The company must within 14 days of the Court's decision send to the persons mentioned in subsection (2)(a) a statement setting out the effect of the order.
        (5) If no such direction is made the company must send copies of the statement to the persons mentioned in subsection (2)(a) within 14 days of the Court's decision or, as the case may be, of the discontinuance of the proceedings.
        (6) In the event of default in complying with this section a contravention of these Regulations is committed by every officer of the company who is in default.
        (7) A person does not commit the contravention referred to in subsection (6) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
        (8) A person who commits the contravention referred to in subsection (6) shall be liable to a level 3 fine.

      • 490. Copy of statement to be sent to Registrar

        (1) Unless within 21 days beginning with the day on which he deposited the statement under section 488 (statement by auditor to be deposited with company) the auditor receives notice of an application to the Court under section 489 (company's duties in relation to statement), he must within a further seven days send a copy of the statement to the Registrar.
        (2) If an application to the Court is made under section 489 (company's duties in relation to statement) and the auditor subsequently receives notice under subsection (3) of that section, he must within seven days of receiving the notice send a copy of the statement to the Registrar.
        (3) An auditor who fails to comply with subsection (1) or (2) commits a contravention of these Regulations.
        (4) A person does not commit the contravention referred to in subsection (3) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
        (5) A person who commits the contravention referred to in subsection (3) shall be liable to a level 2 fine.
        (6) Where a contravention under this section is committed by a body corporate, every officer of the body who is in default also commits the contravention.

        For this purpose—
        (a) any person who purports to act as director, manager or secretary of the body is treated as an officer of the body, and
        (b) if the body is a company, any shadow director is treated as an officer of the company.

      • 491. Duty of auditor to notify appropriate audit authority

        (1) Where—
        (a) in the case of a major audit, an auditor ceases for any reason to hold office, or
        (b) in the case of an audit that is not a major audit, an auditor ceases to hold office before the end of his term of office,
        (c) the auditor ceasing to hold office must notify the appropriate audit authority and the Registrar.
        (2) The notice must—
        (a) inform the appropriate audit authority that he has ceased to hold office, and
        (b) be accompanied by a copy of the statement deposited by him at the company's registered office in accordance with section 488 (statement by auditor to be deposited with company).
        (3) If the statement so deposited is to the effect that he considers that there are no circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the company, the notice must also be accompanied by a statement of the reasons for his ceasing to hold office.
        (4) The auditor must comply with this section—
        (a) in the case of a major audit, at the same time as he deposits a statement at the company's registered office in accordance with section 488 (statement by auditor to be deposited with company),
        (b) in the case of an audit that is not a major audit, at such time (not being earlier than the time mentioned in subsection (4)(a)) as the appropriate audit authority or the Registrar may require.
        (5) In this section, "major audit" means an audit conducted under this Part in respect of—
        (a) a listed company; and
        (b) any other person in whose financial condition there is a major public interest.
        (6) In determining whether an audit is a major audit within subsection 5(b), regard shall be had to any guidance issued by the Registrar.
        (7) A person ceasing to hold office as auditor who fails to comply with this section commits a contravention of these Regulations.
        (8) If that person is a firm a contravention is committed by—
        (a) the firm, and
        (b) every officer of the firm who is in default.
        (9) A person does not commit the contravention referred to in subsection (7) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
        (10) A person who commits the contravention referred to in subsection (7) shall be liable to a level 2 fine.

      • 492. Effect of casual vacancies

        If an auditor ceases to hold office for any reason, any surviving or continuing auditor or auditors may continue to act.