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Part 16U.K.Audit

Modifications etc. (not altering text)

C1Pt. 16 applied (with modifications) (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212), regs. 1(2), 162, 163 (with reg. 189)

C4Pts. 1-39 modified (31.12.2020) by Regulation (EC) No. 2157/2001, Art. AAA1(3) (as inserted by The European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1298), regs. 1, 97 (with regs. 140-145) (as amended by S.I. 2020/523, regs. 1(2), 5(a)-(f)); 2020 c. 1, Sch. 5 para. 1(1))

F1Chapter 4U.K.Removal, resignation, etc of auditors

Textual Amendments

Removal of auditorU.K.

510Resolution removing auditor from officeU.K.

(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

(b)in accordance with section 511 (special notice of resolution to remove auditor).

(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.

[F2(4)An auditor may not be removed from office before the expiration of his term of office except—

(a)by resolution under this section, or

(b)in accordance with section 511A.]

Textual Amendments

Modifications etc. (not altering text)

C9Ss. 510-512 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 43; (as amended (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 16 (with reg. 2(6)(7))

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)

511Special notice required for resolution removing auditor from officeU.K.

(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 (in Scotland, expenses) on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.

Modifications etc. (not altering text)

C11Ss. 510-512 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 43; (as amended (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 16 (with reg. 2(6)(7))

C12Ss. 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)

[F3511APublic interest companies: application to court to remove auditor from officeU.K.

(1)This section applies only to a public interest company.

(2)The competent authority may apply to the court for an order removing an auditor of a company from office if the authority considers that there are proper grounds for removing the auditor from office.

(3)The members of a company may apply to the court for an order removing an auditor of the company from office if the applicant or applicants consider that there are proper grounds for removing the auditor from office.

(4)If the court is satisfied, on hearing an application under subsection (2), that there are proper grounds for removing the auditor from office, it may make an order removing the auditor from office.

(5)If the court is satisfied, on hearing an application under subsection (3), that—

(a)the applicants represent in total—

(i)not less than 5% of the voting rights of all the members having a right to vote at a general meeting of the company, or

(ii)not less than 5% in nominal value of the company’s share capital, and

(b)there are proper grounds for removing the auditor from office,

the court may make an order removing the auditor from office.

(6)For the purposes of this section, divergence of opinions on accounting treatments or audit procedures are not to be taken to be proper grounds for removing an auditor from office.

F4(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F4S. 511A(7) 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(18)

F5512Notice to registrar of resolution removing auditor from officeU.K.

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

Textual Amendments

F5S. 512 omitted (1.10.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 2; S.I. 2015/1732, art. 2(d) (with arts. 4 6)

513Rights of auditor who has been removed from officeU.K.

(1)An auditor who has been removed by resolution under section 510 [F6or by order of the court under section 511A] has, notwithstanding his removal, the rights conferred by section 502(2) 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.

Textual Amendments

Modifications etc. (not altering text)

C13S. 513 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 44 (as amended (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 17 (with reg. 2(6)(7)))

C14Ss. 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)

Failure to re-appoint auditorU.K.

514Failure to re-appoint auditor: special procedure required for written resolutionU.K.

[F7(1)This section applies where a resolution is proposed as a written resolution of a private company whose effect would be to appoint a person as auditor in place of a person (the “outgoing auditor”) who, at the time the resolution is proposed, is an auditor of the company and who is to cease to hold office at the end of a period for appointing auditors.

But this section does not apply if the auditor is to cease to hold office by virtue of section 510 [F8 , 511A] or 516.

(2)This section also applies where a resolution is proposed as a written resolution of a private company whose effect would be to appoint a person as auditor where, at the time the resolution is proposed, the company does not have an auditor and the person proposed to be appointed is not a person (the “outgoing auditor”) who was an auditor of the company when the company last had an auditor.

But this is subject to subsection (2A).

(2A)This section does not apply (by virtue of subsection (2)) if— ”

(a)a period for appointing auditors has ended since the outgoing auditor ceased to hold office,

(b)the outgoing auditor ceased to hold office by virtue of section 510 [F9, 511A] or 516, or

(c)the outgoing auditor has previously had the opportunity to make representations with respect to a proposed resolution under subsection (4) of this section or an intended resolution under section 515(4).]

(3)[F10Where this section applies, 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 291 (resolution proposed by directors) or section 293 (resolution proposed by members).

(6)Where subsection (5) applies—

(a)the period allowed under section 293(3) for service of copies of the proposed resolution is 28 days instead of 21 days, and

(b)the provisions of section 293(5) and (6) (offences) 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 (in Scotland, expenses) 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.

Textual Amendments

F7S. 514(1)-(2A) substituted for s. 514(1) (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 14(2); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F10Words in s. 514(3) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 14(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

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)

515Failure to re-appoint auditor: special notice required for resolution at general meetingU.K.

[F11(1)Special notice is required for a resolution at a general meeting of a private company whose effect would be to appoint a person as auditor in place of a person (the “outgoing auditor”) who, at the time the notice is given, is an auditor of the company and who is to cease to hold office at the end of a period for appointing auditors.

But special notice is not required under this subsection if the auditor is to cease to hold office by virtue of section 510 [F12, 511A] or 516.

(1A)Special notice is required for a resolution at a general meeting of a public company whose effect would be to appoint a person as auditor in place of a person (the “outgoing auditor”) who, at the time the notice is given, is an auditor of the company and who is to cease to hold office at the end of an accounts meeting.

But special notice is not required under this subsection if the auditor is to cease to hold office by virtue of section 510 [F13, 511A] or 516.

(2)Special notice is required for a resolution at a general meeting of a company whose effect would be to appoint a person as auditor where, at the time the notice is given, the company does not have an auditor and the person proposed to be appointed is not a person (the “outgoing auditor”) who was an auditor of the company when the company last had an auditor.

But this is subject to subsection (2A).

(2A)Special notice is not required under subsection (2) if—

(a)a period for appointing auditors has ended or (as the case may be) an accounts meeting of the company has been held since the outgoing auditor ceased to hold office,

(b)the outgoing auditor ceased to hold office by virtue of section 510 [F14, 511A] or 516, or

(c)the outgoing auditor has previously had the opportunity to make representations with respect to an intended resolution under subsection (4) of this section or a proposed resolution under section 514(4).]

(3)On receipt of notice of F15... an intended resolution[F16mentioned in subsection (1), (1A) or (2)] 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 (in Scotland, expenses) 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.

Textual Amendments

F11S. 515(1)-(2A) substituted for s. 515(1)(2) (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 15(2); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F15Word in s. 515(3) omitted (1.10.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 15(3)(a); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C16Ss. 515-518 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 45; (as amended (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 18 (with reg. 2(6)(7))

C17Ss. 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)

Resignation of auditorU.K.

516Resignation of auditorU.K.

(1)An auditor of a company may resign his office by [F17sending a notice to that effect to the company].

(2)[F18Where the company is a public interest company, the] notice is not effective unless it is accompanied by the statement required by section 519.

(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 [F19received] or on such later date as may be specified in it.

Textual Amendments

F17Words in s. 516(1) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 16(2); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F18Words in s. 516(2) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 3; S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F19Word in s. 516(3) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 16(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C18Ss. 515-518 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 45; (as amended (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 18 (with reg. 2(6)(7))

C19Ss. 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)

F20517Notice to registrar of resignation of auditorU.K.

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

Textual Amendments

518Rights of resigning auditorU.K.

(1)This section applies where an [F21auditor's (A's) notice of resignation is accompanied by a statement under section 519 except where—.

(a)the company is a non-public interest company, and

(b)the statement includes a statement to the effect that A considers that none of the reasons for A's ceasing to hold office, and no matters (if any) connected with A's ceasing to hold office, need to be brought to the attention of members or creditors of the company (as required by section 519(3B)).]

(2)He may [F22send] with the notice [F23an authenticated] 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 [F24reasons for, and matters connected with,] his resignation as he may wish to place before the meeting.

(3)He 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 [F25reasons for, and matters 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 [F26on which the company receives] 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 an offence.

(7)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction to a fine not exceeding the statutory maximum.

(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 (in Scotland, expenses) 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 502(2) 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.

Textual Amendments

F21Words in s. 518(1) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 5(2); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F22Word in s. 518(2) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 17(2)(a); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F23Words in s. 518(2) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 17(2)(b); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F24Words in s. 518(2) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 5(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F25Words in s. 518(3) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 5(4); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F26Words in s. 518(5) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 17(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C20Ss. 515-518 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 45; (as amended (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 18 (with reg. 2(6)(7))

C21Ss. 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)

Statement by auditor on ceasing to hold officeU.K.

519Statement by auditor to be [F27sent to] companyU.K.

[F28(1)An auditor of a public interest company who is ceasing to hold office (at any time and for any reason) must send to the company a statement of the reasons for doing so.

(2)An auditor (“A”) of a non-public interest company who is ceasing to hold office must send to the company a statement of the reasons for doing so unless A satisfies the first or second condition.

(2A)The first condition is that A is ceasing to hold office—

(a)in the case of a private company, at the end of a period for appointing auditors;

(b)in the case of a public company, at the end of an accounts meeting.

(2B)The second condition is that—

(a)A's reasons for ceasing to hold office are all exempt reasons (as to which see section 519A(3)), and

(b)there are no matters connected with A's ceasing to hold office that A considers need to be brought to the attention of members or creditors of the company.

(3)A statement under this section must include—

(a)the auditor's name and address;

(b)the number allocated to the auditor on being entered in the register of auditors kept under section 1239;

(c)the company's name and registered number.

(3A)Where there are matters connected with an auditor's ceasing to hold office that the auditor considers need to be brought to the attention of members or creditors of the company, the statement under this section must include details of those matters.

(3B)Where—

(a)an auditor (“A”) of a non-public interest company is required by subsection (2) to send a statement, and

(b)A considers that none of the reasons for A's ceasing to hold office, and no matters (if any) connected with A's ceasing to hold office, need to be brought to the attention of members or creditors of the company,

A's statement under this section must include a statement to that effect.]

(4)[F29A statement under this section] must be [F30sent]—

(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.

(5)A person ceasing to hold office as auditor who fails to comply with this section commits an offence.

(6)In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

(7)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding the statutory maximum.

[F31(8)Where an offence under this section is committed by a body corporate, every officer of the body who is in default also commits the offence. 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.]

Textual Amendments

F27Words in s. 519 heading substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 18(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F28S. 519(1)-(3B) substituted for s. 519(1)-(3) (1.10.2015) by Deregulation Act 2015 (c. 20), ss. 18(2), 115(7); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F29Words in s. 519(4) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 6; S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F30Word in s. 519(4) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 18(2); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C22Ss. 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)

[F32519AMeaning of “public interest company”, “non-public interest company” and “exempt reasons”U.K.

(1)In this Chapter—

[F37(2)For the purposes of the definition of “public interest company”—

(3)In the application of this Chapter to an auditor (“A”) of a company ceasing to hold office, the following are “exempt reasons”—

(a)A is no longer to carry out statutory audit work within the meaning of Part 42 (see section 1210(1));

(b)the company is, or is to become, exempt from audit under section 477, 479A or 480, or from the requirements of this Part under section 482, and intends to include in its balance sheet a statement of the type described in section 475(2);

(c)the company is a subsidiary undertaking of a parent undertaking that is incorporated in the United Kingdom and—

(i)the parent undertaking prepares group accounts, and

(ii)A is being replaced as auditor of the company by the auditor who is conducting, or is to conduct, an audit of the group accounts;

(d) the company is being wound up under Part 4 of the Insolvency Act 1986 or Part 5 of the Insolvency (Northern Ireland) Order 1989 ( S.I. 1989/2405 (N.I. 19)), whether voluntarily or by the court, or a petition under Part 4 of that Act or Part 5 of that Order for the winding up of the company has been presented and not finally dealt with or withdrawn.

(4)But the reason described in subsection (3)(c) is only an exempt reason if the auditor who is conducting, or is to conduct, an audit of the group accounts is also conducting, or is also to conduct, the audit (if any) of the accounts of each of the subsidiary undertakings (of the parent undertaking) that is incorporated in the United Kingdom and included in the consolidation.

(5)The Secretary of State may by order amend the definition of “public interest company” in subsection (1).

(6)An order under subsection (5) is subject to negative resolution procedure.]

Textual Amendments

520Company's duties in relation to statementU.K.

(1)This section applies where [F39a company receives from an auditor (“A”) who is ceasing to hold office a statement under section 519 except where—

(a)the company is a non-public interest company, and

(b)the statement includes a statement to the effect that A considers that none of the reasons for A's ceasing to hold office, and no matters (if any) connected with A's ceasing to hold office, need to be brought to the attention of members or creditors of the company (as required by section 519(3B)).]

(2)[F40Where this section applies, the] company must within 14 days of the [F41receipt] of the statement either—

(a)send a copy of it to every person who under section 423 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 519 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 (in Scotland, expenses) 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 an offence is committed by every officer of the company who is in default.

(7)In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

(8)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding the statutory maximum.

Textual Amendments

F39Words in s. 520(1) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 7(2); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F40Words in s. 520(2) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 7(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F41Word in s. 520(2) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 19; S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C24Ss. 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)

521Copy of statement to be sent to registrarU.K.

[F42(A1)This section applies where an auditor (“A”) of a company sends a statement to the company under section 519 except where—

(a)the company is a non-public interest company, and

(b)the statement includes a statement to the effect that A considers that none of the reasons for A's ceasing to hold office, and no matters (if any) connected with A's ceasing to hold office, need to be brought to the attention of members or creditors of the company (as required by section 519(3B)).]

(1)[F43Where this section applies, unless] within 21 days beginning with the day on which he [F44sent] the statement under section 519 the auditor receives notice of an application to the court under section 520, 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 520 and the auditor subsequently receives notice under subsection (5) 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 an offence.

(4)In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

(5)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding the statutory maximum.

[F45(6)Where an offence under this section is committed by a body corporate, every officer of the body who is in default also commits the offence. 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.]

Textual Amendments

F43Words in s. 521(1) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 8(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F44Word in s. 521(1) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 20; S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C25Ss. 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)

522Duty of auditor to [F46send statement to] appropriate audit authorityU.K.

[F47(1)Where an auditor of a company sends a statement under section 519, the auditor must at the same time send a copy of the statement to the appropriate audit authority.]

(5)A person ceasing to hold office as auditor who fails to comply with this section commits an offence.

(6)If that person is a firm an offence is committed by—

(a)the firm, and

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

(7)In proceedings for an offence under this section it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

(8)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding the statutory maximum.

Textual Amendments

F46Words in s. 522 heading substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 9(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F47S. 522(1) substituted for s. 522(1)-(4) (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 9(2); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C26Ss. 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)

523Duty of company to notify appropriate audit authorityU.K.

[F48(1)This section applies if an auditor is ceasing to hold office—

(a)in the case of a private company, at any time other than at the end of a period for appointing auditors;

(b)in the case of a public company, at any time other than at the end of an accounts meeting.

(1A)But this section does not apply if the company reasonably believes that the only reasons for the auditor's ceasing to hold office are exempt reasons (as to which see section 519A(3)).

(2)Where this section applies, the company must give notice to the appropriate audit authority that the auditor is ceasing to hold office.

(2A)The notice is to take the form of a statement by the company of what the company believes to be the reasons for the auditor's ceasing to hold office and must include the information listed in section 519(3).

This is subject to subsection (2C).

(2B)Subsection (2C) applies where—

(a)the company receives a statement from the auditor under section 519,

(b)the statement is sent at the time required by section 519(4), and

(c)the company agrees with the contents of the statement.

(2C)Where this subsection applies, the notice may instead take the form of a copy of the statement endorsed by the company to the effect that it agrees with the contents of the statement.

(3)A notice under this section must be given within the period of 28 days beginning with the day on which the auditor ceases to hold office.]

(4)If a company fails to comply with this section, an offence is committed by—

(a)the company, and

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

(5)In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

(6)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding the statutory maximum.

Textual Amendments

F48S. 523(1)-(3) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), ss. 18(4), 115(7); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C27Ss. 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)

524[F49Provision of information] to accounting authoritiesU.K.

[F50(1)Where the appropriate audit authority receives a statement under section 522 or a notice under section 523, the authority may forward to the accounting authorities—

(a)a copy of the statement or notice, and

(b)any other information the authority has received from the auditor or the company concerned in connection with the auditor's ceasing to hold office.]

(2)The accounting authorities are—

(a)the Secretary of State, and

(b)any person authorised by the Secretary of State for the purposes of section 456 (revision of defective accounts: persons authorised to apply to court).

F51(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)If the court has made an order under section 520(4) directing that copies of the statement need not be sent out by the company, sections 460 and 461 (restriction on further disclosure) apply in relation to the copies sent to the accounting authorities as they apply to information obtained under section 459 (power to require documents etc).

Textual Amendments

F49Words in s. 524 heading substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 10(4); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F51S. 524(3) omitted (1.10.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 10(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C28Ss. 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)

525Meaning of “appropriate audit authority” F52...U.K.

(1)In sections 522, 523 and 524 “appropriate audit authority” means—

(a)[F53in relation to an auditor of a public interest company (other than an Auditor General)]—

(i)the Secretary of State, or

(ii)if the Secretary of State has delegated functions under section 1252 to a body whose functions include receiving the [F54statement or] notice in question, that body;

[F55(a)in the case of a major audit (other than one conducted by an Auditor General), the Financial Reporting Council Limited;]

(b)[F56in relation to an auditor of a non-public interest company (other than an Auditor General)], the relevant supervisory body.

[F57(c)[F58in relation to] an Auditor General, the Independent Supervisor.]

[F59 “Supervisory body” and “Independent Supervisor” have the same meaning] as in Part 42 (statutory auditors) (see [F60sections 1217 and 1228]).

F61(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F61(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F52Words in s. 525 heading omitted (1.10.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 11(4); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F53Words in s. 525(1)(a) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 11(2)(a)(i); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F54Words in s. 525(1)(a)(ii) inserted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 11(2)(a)(ii); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F56Words in s. 525(1)(b) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 11(2)(b); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F58Words in s. 525(1)(c) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 11(2)(c); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

F61S. 525(2)(3) omitted (1.10.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(7), Sch. 5 para. 11(3); S.I. 2015/1732, art. 2(d) (with arts. 4 6)

Modifications etc. (not altering text)

C30Ss. 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)

SupplementaryU.K.

526Effect of casual vacanciesU.K.

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

Modifications etc. (not altering text)

C31Ss. 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)