Schedule 5: Auditors ceasing to hold office Part 2: Miscellaneous
552.Paragraph 14 substitutes, for subsections (1) and (2) of section 514 of the 2006 Act, subsections (1), (2) and (2A). Generally speaking, this section applies where a resolution is proposed as a written resolution of a private company whose effect is the appointment, at the end of the “period for appointing auditors” (see section 485 of the 2006 Act), of a new auditor in place of the current auditor or, where the company does not have an auditor, of an individual (or firm) who was not the auditor when the company last had an auditor. Section 514 sets out a special procedure that must be followed where such a resolution is proposed, which includes the sending by the company of a copy of the written resolution to both the current/last auditor and the new auditor, and allowing the former to make representations. The amendments make it clearer when section 514 does and does not apply. The special procedure will not apply where the current/last auditor already has or had analogous rights to make representations under section 511 (there has been a resolution at a general meeting removing the auditor) or 518 (the auditor has resigned). In cases where the company does not have an auditor, the special procedure is also not applicable where the previous auditor has already had the opportunity to make representations under section 514 (or 515 – see below) or where a period for appointing auditors has already ended since the departure.
553.Paragraph 15 amends section 515 by substituting new subsections (1), (1A), (2) and (2A) for existing subsections (1) and (2). Section 515 makes similar provision to section 514 where a resolution is proposed at a shareholder meeting whose effect would be to appoint a new auditor in place of the incumbent or, where the company does not have an auditor, an individual (or firm) other than the individual (or firm) who (or which) was the last auditor. Section 515 stipulates that special notice of such a resolution is required and provides for the sending by the company of a copy of the intended resolution to both the current/last auditor and the new auditor. It gives the former the opportunity to make representations. Like the amendments being made to section 514, the paragraph 15 amendments make it clearer when special notice and the related rights to make representations etc do and do not apply. Special notice etc will not apply where the current/last auditor has or had analogous rights to make representations under section 511 or 518. In cases where the company does not have an auditor, special notice etc is also not applicable where the individual (or firm) who was the last auditor has already had the opportunity to make representations under section 515 (or 514 – see above) or where, in the case of a private company, a period for appointing auditors has already ended or, in the case of a public company, an accounts meeting has already taken place since the departure.
554.Broadly speaking, paragraphs 16 to 20 replace references to documents being “deposited” (e.g. at the company’s registered office) with references to documents being “sent” or “received”. The effect is to facilitate electronic communication by engaging section 1143 of, and Schedules 4 and 5 to, the 2006 Act.
555.Schedule 5 comes into force on a day to be appointed by the Secretary of State in a commencement order.