ACCA F4 - Corp and Business Law (ENG)

Part F Management, administration and regulation of companies  19: Other company officers 299

Departure of auditors from office can occur in the following ways.

(a) Auditors may resign their appointment by giving notice in writing to the company delivered to the

registered office.

(b) Auditors may decline reappointment.

(c) Auditors may be removed from office before the expiry of their appointment by the passing of an

ordinary resolution in general meeting. Special notice is required and members and auditors must

be notified. Private companies cannot remove an auditor by written resolution; a meeting must

be held.

(d) Auditors do not have to be reappointed when their term of office expires, although in most cases

they are. Special notice must be given of any resolution to appoint auditors who were not

appointed on the last occasion of the resolution, and the members and auditor must be notified.

Where a private company resolves to appoint a replacement auditor by written resolution, copies of the

resolution must be sent to the proposed and outgoing auditor. The outgoing auditor may circulate a

statement of reasonable length to the members if they notify the company within 14 days of receiving the

copy of the written resolution.

2.8.1 Resignation of auditors

However auditors leave office they must either: state there are no circumstances which should be brought

to members' and creditors' attention; or list those circumstances. Auditors who are resigning can also:

circulate a statement about their resignation to members; requisition a general meeting; or speak at a

general meeting.

Procedures for resignation of auditors

Statement of circumstances Auditors must deposit a statement at the registered office with their

resignation stating:

 For quoted companies – the circumstances around their departure.

 For non-quoted public companies and all private companies – there are

no circumstances that the auditor believes should be brought to the

attention of the members or creditors.

 If there are such circumstances the statement should describe them.

 Statements should also be submitted to the appropriate audit authority.

Company action  The company must send notice of the resignation to the Registrar.

 The company must send a copy of the statement of circumstances to

every person entitled to receive a copy of the accounts.

Auditor rights If the auditors have deposited a statement of circumstances, they may:

 Circulate a statement of reasonable length to the members

 Requisition a general meeting to explain their reasons

 Attend and speak at any meeting where appointment of successors is to

be discussed.

If the auditors decline to seek reappointment at an AGM, they must nevertheless fulfil the requirements of

a statement of the circumstances just as if they had resigned. The reason for this provision is to prevent

auditors who are unhappy with the company's affairs keeping their suspicions secret. The statement must

be deposited not less than 14 days before the time allowed for next appointing auditors.

FAST FORWARD