Chapter 5: Auditor
Article A: Appointment of Auditor
154. (a) A company shall appoint an auditor to audit its annual financial reports and to express an opinion on them (hereinafter “an act of audit”); the Minister may prescribe that certain other acts performed by an auditor by law shall be considered acts of audit for the purposes of this Chapter.
(b) An auditor shall be appointed at every annual general meeting and shall serve in that position until the end of the following annual general meeting; however, the general meeting may, if such a provision exists in the articles of association, appoint an auditor who may serve as such for a longer period of time, which period shall not extend beyond the end of the third annual general meeting after that at which he was appointed.
(c) In a private company where the provisions of section 61 prevail, an auditor may be appointed to serve in such position until the date of completion of a single act of audit, or, if the articles of association contain a provision to such effect, until the completion of three acts of audit.
Duty to appoint auditor
155. (a) The board of directors may, at any time prior to the first annual general meeting, appoint the company’s first auditor and determine his salary; the first auditor appointed shall serve until the termination of the first annual general meeting.
(b) The provisions of section 154(c) shall apply to the termination of service of an auditor appointed by the board of directors in a private company in which the provisions of section 61 prevail.
Appointment of first auditor
156. A company may appoint several auditors to perform the act of audit jointly.
157. Where the position of auditor becomes vacant and the company has no additional auditor, the board of directors of the company shall convene a special general meeting, at the earliest possible date, on the agenda of which shall be the appointment of an auditor.
Appointment by special general meeting
158. (a) Notwithstanding the provisions of section 154, companies that are inactive and in which the public has no interest pursuant to the provisions and the conditions prescribed by the Minister under subsection (b) (hereinafter an “inactive company”) may resolve in general meeting that an auditor shall not be appointed.
(b) The Minister may prescribe provisions and conditions pursuant to which a company shall be considered an inactive company.
159. (a) Where the auditor ceases to serve a company and no other person is appointed in his stead as prescribed by section 157, the company shall notify the Registrar of such within ninety days of the date on which the auditor ceased so to serve; however, the giving of such notice to the Registrar shall not derogate from the company’s obligation to appoint an auditor, as long as an auditor is not appointed under subsection (b); where the company appoints an auditor after giving notice to the Registrar, it shall notify the Registrar of this within fourteen days.
(b) Where the Registrar receives notice of the auditor ceasing to act, as provided in subsection (a), and so long as the Registrar has not received a notice of appointment of a new auditor, the Registrar may appoint an auditor who shall serve in such position until the end of the next annual general meeting, and may determine the salary to be paid to such person by the company.
(c) The Minister may prescribe provisions and conditions for the appointment of an auditor to be appointed by the Registrar, the commencement of such person’s service and his salary.
Appointment by Registrar
Article B: Independence
160. (a) The auditor shall be independent of the company, directly and indirectly.
(b) The Minister may prescribe provisions relating to the independent status of the auditor, including provisions relating to the independence of accountants who are partners in a partnership which is the auditor, or relating to the independence of the accountants who are shareholders in a company of accountants that is an auditor.
Independence of auditor
161. Where an act of audit is performed at a time when there were relations of dependence under section 160(b), an additional audit shall be performed by another auditor, unless at the time the matter was made known to the board of directors five years have passed since the date on which the said act of audit was performed.
Duty to perform additional audit