Removal of Auditor

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Currently, an auditor may only resign if he is not the sole auditor of the company and his resignation must be made at a general meeting of the company. If an auditor gives notice in writing to the directors of the company that he wishes to resign, the directors shall call a general meeting of the company as soon as it is practicable. This is for the purposes of appointing an auditor in place of the auditor who wishes to resign and to appoint another auditor. The resignation of the auditor shall take effect upon the appointment of another auditor. Besides, an auditor may only be removed by shareholders at the general meeting where notice of the intention to move the resolution to remove the auditor must be given to the company not less than 28 days before the meeting at which the resolution is to be moved. The auditor must be given a copy of the notice and he may make representations to the company dealing with his removal. The Bursa Malaysia Securities Berhad Listing Requirements requires that in the case of the removal of an external auditor the listed issuer must forward to the Exchange a copy of any written representations made by the external auditors at the same time as copies of such representations are sent to members of the listed issuer under section 172(5)(b) of the Companies Act 1965, unless an order is made by the Registrar of Companies under section 172(6) of the Companies Act 1965. If the company did not appoint an auditor in place of the auditor so removed, the Registrar of companies will appoint an auditor but the auditor must consent to the appointment. There are views that the current legal position in relation to the resignation and removal of auditors requires improvement. In relation to auditors' resignation, the Companies Act states that an auditor may resign if he is not the sole auditor and such resignation must be made at a general meeting. The resignation is also only effective when a new auditor is appointed by the company. In the UK Companies Act 2006, an auditor of a company may resign his office by depositing a notice in writing to that effect at the company's registered office. The notice is not effective unless it is accompanied by the statement required by section 519. The auditor may deposit with the notice a signed requisition calling on the directors of the company to forthwith duly convene an extraordinary general meeting of the company for the purposes of receiving and considering such explanation of the circumstances connected with his resignation as he may wish to place before the meeting. The notice of resignation will be effective to end the auditor's term of office as of the date on which the notice is deposited or on such later date as may be specified in it. The company shall within 14 days of the deposit of a notice of resignation send a copy of the notice to the registrar of companies. If default is made in complying with this subsection, the company and officers who are in default are guilty of an offence and liable to a fine. If the directors do not within 21 days from the date of the deposit of 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, every director who failed to take all reasonable steps to secure that a meeting was convened as mentioned above is guilty of an offence and liable to a fine. A company may by ordinary resolution at any time remove an auditor from office subject to a special notice of the resolution being given. Where a resolution removing an auditor is passed at a general meeting of a company, the company shall within 14 days give notice of that fact in the prescribed form to the Registrar. If a company fails to give the notice required by this subsection, the company and officers who are in default are guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine. In addition, if a company does...
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