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Companies Act 2006

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  • Act amendment to earlier affecting provision S.I. 2008/373 reg. 11(1) by S.I. 2013/1971 reg. 9(a) (This amendment not applied to legislation.gov.uk. Amending Regulations revoked (1.10.2013) without ever being in force by S.I. 2013/2224, reg. 2)
  • Act amendment to earlier affecting provision S.I. 2008/373 reg. 3(4) by S.I. 2013/1971 reg. 4 (This amendment not applied to legislation.gov.uk. Amending Regulations revoked (1.10.2013) without ever being in force by S.I. 2013/2224, reg. 2)

Whole provisions yet to be inserted into this Act (including any effects on those provisions):

Private companiesE+W+S+N.I.

485Appointment of auditors of private company: generalE+W+S+N.I.

(1)An auditor or auditors of a private company must be appointed for each financial year of the company, unless the directors reasonably resolve otherwise on the ground that audited accounts are unlikely to be required.

(2)For each financial year for which an auditor or auditors is or are to be appointed (other than the company's first financial year), the appointment must be made before the end of the period of 28 days beginning with—

(a)the end of the time allowed for sending out copies of the company's annual accounts and reports for the previous financial year (see section 424), or

(b)if earlier, the day on which copies of the company's annual accounts and reports for the previous financial year are sent out under section 423.

This is the “period for appointing auditors”.

(3)The directors may appoint an auditor or auditors of the company—

(a)at any time before the company's first period for appointing auditors,

(b)following a period during which the company (being exempt from audit) did not have any auditor, at any time before the company's next period for appointing auditors, or

(c)to fill a casual vacancy in the office of auditor.

(4)The members may appoint an auditor or auditors by ordinary resolution—

(a)during a period for appointing auditors,

(b)if the company should have appointed an auditor or auditors during a period for appointing auditors but failed to do so, or

(c)where the directors had power to appoint under subsection (3) but have failed to make an appointment.

(5)An auditor or auditors of a private company may only be appointed—

(a)in accordance with this section, or

(b)in accordance with section 486 (default power of Secretary of State).

This is without prejudice to any deemed re-appointment under section 487.

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Modifications etc. (not altering text)

C4S. 485 applied (with modifications) (6.4.2008) by The Bank Accounts Directive (Miscellaneous Banks) Regulations 2008 (S.I. 2008/567), reg. {7(1)}, Sch. para. 1 (with Sch. para. 11)

C5Ss. 484-539 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

Commencement Information

I1S. 485 wholly in force at 1.10.2007; s. 485 not in force at Royal Assent see s. 1300; s. 485 in force at 1.10.2007 by S.I. 2007/2194, art. 2(1)(h) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1 and with transitional provisions and savings in Sch. 3)

[F1485AAppointment of auditors of private company: additional requirements for public interest entities with audit committeesE+W+S+N.I.

(1)This section applies to the appointment under section 485(4) of an auditor or auditors of a private company—

(a)which is also a public interest entity; and

(b)which has an audit committee.

(2)But it does not apply to the appointment of an Auditor General as auditor or one of the auditors of the company.

(3)Before an appointment to which this section applies is made—

(a)the audit committee of the company must make a recommendation to the directors in connection with the appointment, and

(b)the directors must propose an auditor or auditors for appointment F2...

(4) Before the audit committee makes a recommendation or the directors make a proposal under subsection (3), the committee F3... must carry out a selection procedure in accordance with Article 16(3) of the Audit Regulation , unless the company is a small or medium sized enterprise within the meaning in Article 2(1)(f) of Directive 2003/71/EC .

(5)The audit committee must in its recommendation—

(a)identify its first and second choice candidates for appointment, [F4drawn from those auditors who have participated in a selection procedure under subsection (4),]

(b)give reasons for the choices so identified,

(c)state that—

(i)the recommendation is free from influence by a third party, and

(ii) no contractual term of the kind mentioned in Article 16(6) of the Audit Regulation has been imposed on the company.

[F5(6)The directors must include in their proposal—

(a)the recommendation made by the audit committee in connection with the appointment, and

(b)if the proposal of the directors departs from the preference of the audit committee—

(i)a recommendation for a candidate or candidates for appointment drawn from those auditors who have participated in a selection procedure under subsection (4), and

(ii)the reasons for not following the audit committee’s recommendation.

(7)Where the audit committee recommends re-appointment of the company’s existing auditor or auditors, and the directors are in agreement, subsections (4) and (5)(a) and (b) do not apply.]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F2Words in s. 485A(3)(b) omitted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by virtue of The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(2)(a)

F3Words in s. 485A(4) omitted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by virtue of The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(2)(b)

F4Words in s. 485A(5)(a) inserted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(2)(c)

F5S. 485A(6)(7) substituted for s. 485A(6)-(8) (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(2)(d)

485BAppointment of auditors of private company: additional requirements for public interest entities without audit committeesE+W+S+N.I.

(1)This section applies to the appointment under section 485(4) of an auditor or auditors of a private company—

(a)which is also a public interest entity; and

(b)which does not have an audit committee.

(2)But it does not apply to the appointment of an Auditor General as auditor or one of the auditors of the company.

(3)Before an appointment to which this section applies is made the directors must propose an auditor or auditors for appointment.

(4) Before the directors make a proposal under subsection (3), they must carry out a selection procedure in accordance with Article 16(3) of the Audit Regulation , [F6from which their proposed auditor or auditors must be drawn,] unless the company is a small or medium sized enterprise within the meaning in Article 2(1)(f) of Directive 2003/71/EC .

[F7(5)Subsection (4) does not apply in relation to a proposal to re-appoint the company’s existing auditor or auditors.]]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F6Words in s. 485B(4) inserted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(3)(a)

F7S. 485B(5) substituted for s. 485B(5)-(7) (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(3)(b)

[F8485C.Restriction on appointment of auditor of private company which is a public interest entityE+W+S+N.I.

(1)A person who has been, or will have been, auditor of a private company which is a public interest entity for every financial year comprised in the maximum engagement period (see section 494ZA) may not be appointed as auditor of the company for any financial year which begins within the period of 4 years beginning with the day after the last day of the last financial year of the maximum engagement period.

(2)A person who is a member of the same network as the auditor mentioned in subsection (1) may not be appointed as auditor of the company for any financial year which begins within the period of 4 years mentioned in that subsection.

(3)This section does not apply in relation to an Auditor General.]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F8S. 485C inserted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(4)

486Appointment of auditors of private company: default power of Secretary of StateE+W+S+N.I.

(1)If a private company fails to appoint an auditor or auditors in accordance with section 485,[F9485A or 485B] the Secretary of State may appoint one or more persons to fill the vacancy.

(2)Where subsection (2) of [F10section 485] applies and the company fails to make the necessary appointment before the end of the period for appointing auditors, the company must within one week of the end of that period give notice to the Secretary of State of his power having become exercisable.

(3)If a company fails to give the notice required by this section, an offence is committed by—

(a)the company, and

(b)every officer of the company who is in default.

(4)A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F10Words in s. 486(2) substituted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(5)

Modifications etc. (not altering text)

C10Ss. 484-539 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

Commencement Information

I2S. 486 wholly in force at 1.10.2007; s. 486 not in force at Royal Assent see s. 1300; s. 486 in force at 1.10.2007 by S.I. 2007/2194, art. 2(1)(h) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1 and with transitional provisions and savings in Sch. 3)

487Term of office of auditors of private companyE+W+S+N.I.

(1)An auditor or auditors of a private company hold office in accordance with the terms of their appointment, subject to the requirements that—

(a)they do not take office until any previous auditor or auditors cease to hold office, and

(b)they cease to hold office at the end of the next period for appointing auditors unless re-appointed.

F11(1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11(1B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11(1C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11(1D). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11(1E). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)Where no auditor has been appointed by the end of the next period for appointing auditors, any auditor in office immediately before that time is deemed to be re-appointed at that time, unless—

(a)he was appointed by the directors, or

(b)the company's articles require actual re-appointment, or

(c)the deemed re-appointment is prevented by the members under section 488, or

(d)the members have resolved that he should not be re-appointed, or

(e)the directors have resolved that no auditor or auditors should be appointed for the financial year in question or

[F12(f)the auditor’s appointment would be in breach of section 485C.]

(3)This is without prejudice to the provisions of this Part as to removal and resignation of auditors.

(4)No account shall be taken of any loss of the opportunity of deemed re-appointment under this section in ascertaining the amount of any compensation or damages payable to an auditor on his ceasing to hold office for any reason.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F11S. 487(1A)-(1E) omitted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by virtue of The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(6)(a)

F12S. 487(2)(f) substituted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(6)(b)

Modifications etc. (not altering text)

C15Ss. 484-539 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

Commencement Information

I3S. 487 wholly in force at 1.10.2007; s. 487 not in force at Royal Assent see s. 1300; s. 487 in force at 1.10.2007 by S.I. 2007/2194, art. 2(1)(h) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1 and with transitional provisions and savings in Sch. 3)

F13487AMaximum engagement period: transitional arrangementsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F13S. 487A omitted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by virtue of The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(7)

488Prevention by members of deemed re-appointment of auditorE+W+S+N.I.

(1)An auditor of a private company is not deemed to be re-appointed under section 487(2) if the company has received notices under this section from members representing at least the requisite percentage of the total voting rights of all members who would be entitled to vote on a resolution that the auditor should not be re-appointed.

(2)The “requisite percentage” is 5%, or such lower percentage as is specified for this purpose in the company's articles.

(3)A notice under this section—

(a)may be in hard copy or electronic form,

(b)must be authenticated by the person or persons giving it, and

(c)must be received by the company before the end of the accounting reference period immediately preceding the time when the deemed re-appointment would have effect.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C20Ss. 484-539 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

Commencement Information

I4S. 488 wholly in force at 1.10.2007; s. 488 not in force at Royal Assent see s. 1300; s. 488 in force at 1.10.2007 by S.I. 2007/2194, art. 2(1)(h) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1 and with transitional provisions and savings in Sch. 3)

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