Explanatory Notes

Companies Act 2006

2006 CHAPTER 46

8 November 2006


Part 16: Audit

Chapter 4: Removal, Resignation, Etc of Auditors
Section 510: Resolution removing auditor from office

775.This section restates the rule that the shareholders in a company always have the right to dismiss its auditor by ordinary resolution. As at present, to remove the auditor before the end of his term of office, even a private company will need to hold a general meeting to pass such a resolution.

776.Subsection (2) requires special notice of the resolution (see note on section 511). Subsection (3) provides that shareholders’ right provided by this section does not prevent the auditor being entitled to being compensated for termination of his appointment. Subsection (4) specifies that the resolution described here is the only way in which an auditor can be removed before the end of his term of office.