We are considering removing the statutory auditor of the company and want to know how we can do this correctly?
A company may remove a statutory auditor and appoint, in his or her place, any other person or persons by ordinary resolution of the members. The removed auditor may be replaced by any other person who are qualified to be statutory auditors of the company.
If a member is considering removing the statutory auditor I would encourage to seek the appropriate advice before commencing the process.
Ways to remove a statutory auditor
A statutory auditor may be removed by the following procedures in accordance with Section 394 of the Act:-
(a) a resolution passed at an EGM removing a statutory auditor from office,
(b) a resolution at an annual general meeting appointing somebody other than the retiring statutory auditor as statutory auditor,
(c) a resolution providing expressly that the retiring statutory auditor shall not be re-appointed.
The statutory auditor may also be removed where audit exemption is being availed of in accordance with Section 399 of the Companies Act 2014. See note on availing of audit exemption
Resignation of the statutory auditor
The statutory auditors may resign on their own accord in writing in accordance with Section 400 of the Companies Act 2014. The statutory auditor must serve notice on the company stating their intention to resign and confirm whether there are or are not circumstances to bring to the notice of the members or creditors of the company.
Reasons for Removal
Any resolution to remove a statutory auditor shall not be effective unless:-
- There are good and substantial grounds for the removal related to the conduct of the auditor with regard to the performance of his or her duties as auditor of the company
- The passing of the resolution is in the company’s opinion, in the best interests of the company. The best interests of the company cannot be a diverging opinions on accounting treatments or audit procedures or any illegal or improper motive with regard to avoiding disclosures or detection of any failure by the company to comply with the Companies Act 2014.
Extended Notice of the resolution to remove
The resolution to remove a statutory auditor must be proposed by a member and extended notice of at least 28 days must be provided by the member to the company of any intention to move the resolution.
Extended notice must be given for any of the following:-
(a) a resolution at an annual general meeting of a company appointing as statutory auditors any persons other than the incumbent statutory auditors or providing expressly that the incumbent statutory auditors shall not be re-appointed;
(b) a resolution at a general meeting of a company removing statutory auditors from office; and
(c) a resolution at a general meeting of a company filling a casual vacancy in the office of statutory auditor.
Right of statutory auditors to make written representation
The statutory auditors may make written representations (not exceeding reasonable length) and request their notification to be sent to member of the company.
(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 relevant meeting is sent (whether before or after receipt of the representations by the company).
Where representations have been received late the statutory auditor may require the representations to be read out at the meeting.
If a member is considering removing the statutory auditor I would encourage to seek the appropriate advice before commencing the process. If you have any queries, please contact any of the Co Sec Team on 059 9186776 or cosec@clscs.ie
Please Note:
Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.
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