• 28. 28. Removal, Resignation, etc of Auditors

    Sections 479 to 483 and 485 to 499 apply to LLPs, modified so that they read as follows —

    • 479. Removal of auditor from office

      (1) The members of an LLP may remove an auditor from office at any time.
      (2) 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.
      (3) An auditor may not be removed from office before the expiration of his term of office except under this section.

    • 480. Notice of removal of auditor

      (1) No determination to remove an auditor before the expiration of his term of office may be made under section 479 unless the LLP has given 7 days' prior notice to any auditor whom it is proposed to remove.
      (2) The auditor proposed to be removed may make with respect to the proposal representations in writing to the LLP (not exceeding a reasonable length) and request their notification to members of the LLP.
      (3) The LLP must upon receipt send a copy of the representations to every member of the LLP.
      (4) Copies of the representations need not be sent out and the representations need not be sent out, on the application either of the LLP 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 LLP's costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.

    • 481. Notice to Registrar of determination removing auditor from office

      (1) Where the members of an LLP have removed an auditor from office under section 479 (removal of auditor from office), the LLP must give notice of that fact to the Registrar within 14 days.
      (2) If the LLP fails to give the notice required by this section, a contravention of the Companies Regulations is committed by —
      (a) the LLP, and
      (b) every designated member who is in default.
      (3) A person who commits the contravention referred to in subsection (2) shall be liable to a level 2 fine.

    • 482. Rights of auditor who has been removed from office

      (1) An auditor who has been removed under section 479 (removal of auditor from office) has, notwithstanding his removal, the rights conferred by section 473(1) (auditor's rights in relation to meetings) in relation to any meeting of the LLP —
      (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.

    • 483. Failure to re-appoint auditor: rights of auditor who is not reappointed

      (1) No person may be appointed as auditor in place of a person (the "outgoing auditor") whose term of office has ended or is to end at the end of the period for appointing auditors unless the LLP has given 7 days' prior notice to the outgoing auditor.
      (2) The outgoing auditor may make with respect to the proposal representations in writing to the LLP (not exceeding a reasonable length) and request their notification to members of the LLP.
      (3) The LLP must upon receipt send a copy of the representations to every member.
      (4) Copies of the representations need not be sent out if, on the application either of the LLP 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 LLP's costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not party to the application.

    • 485. Resignation of auditor

      (1) An auditor of an LLP may resign his office by depositing a notice in writing to that effect at the LLP's registered office.
      (2) The notice is not effective unless it is accompanied by the statement required by section 488 (statement by auditor to be deposited with LLP).
      (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 deposited or on such later date as may be specified in it.

    • 486. Notice to Registrar of resignation of auditor

      (1) Where an auditor resigns the LLP must within 14 days of the deposit of a notice of resignation send a copy of the notice to the Registrar of LLPs.
      (2) If default is made in complying with this section, a contravention of the Companies Regulations is committed by —
      (a) the LLP, and
      (b) every designated member of the LLP who is in default.
      (3) A person who commits the contravention referred to in subsection (2) shall be liable to a level 2 fine.

    • 487. Rights of resigning auditor

      (1) This section applies where an auditor's notice of resignation is accompanied by a statement of the circumstances connected with his resignation (see section 488 (statement by auditor to be deposited with LLP).
      (2) A resigning auditor may deposit with the notice a signed requisition calling on the members of the LLP forthwith duly to convene a meeting of the LLP for the purpose of receiving and considering such explanation of the circumstances connected with his resignation as he may wish to place before the meeting.
      (3) A resigning auditor may request the LLP to circulate to its members before the meeting convened on his requisition a statement in writing (not exceeding a reasonable length) of the circumstances connected with his resignation.
      (4) The LLP must (unless the statement is received too late for it to comply) —
      (a) in any notice of the meeting given to members of the LLP, state the fact of the statement having been made, and
      (b) send a copy of the statement to every member of the LLP to whom notice of the meeting is or has been sent.
      (5) The members must 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.
      (6) If default is made in complying with subsection (5), every member who failed to take all reasonable steps to secure that a meeting was convened commits a contravention of the Companies Regulations.
      (7) A person who commits the contravention referred to in subsection (6) shall be liable to a level 3 fine.
      (8) If a copy of the statement mentioned above is not sent out as required because received too late or because of the LLP'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 LLP 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 LLP's costs 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 473(2) (auditor's rights in relation to meetings) in relation to any such meeting of the LLP as is mentioned in subsection (3) 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.

    • 488. Statement by auditor to be deposited with LLP

      (1) Where an auditor of an LLP ceases for any reason to hold office, he must deposit at the LLP's registered office a statement of the circumstances connected with his ceasing to hold office, unless he considers that there are no circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the LLP.
      (2) If he considers that there are no circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the LLP, he must deposit at the LLP's registered office a statement to that effect.
      (3) The statement required by this section must be deposited —
      (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.
      (4) A person ceasing to hold office as auditor who fails to comply with this section commits a contravention of the Companies Regulations.
      (5) A person does not commit the contravention referred to in subsection (4) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
      (6) A person who commits the contravention referred to in subsection (4) shall be liable to a fine of up to level 4.
      (7) Where a contravention under this section is committed by a body corporate, every officer of the body who is in default also commits the contravention.

      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.

    • 489. LLP's duties in relation to statement

      (1) This section applies where the statement deposited under section 488 (statement by auditor to be deposited with LLP) states the circumstances connected with the auditor's ceasing to hold office.
      (2) The LLP must within 14 days of the deposit of the statement either —
      (a) send a copy of it to every person who under section 405 (duty to circulate copies of annual accounts and auditor's report) is entitled to be sent copies of the accounts, or
      (b) apply to the Court.
      (3) If it applies to the Court, the LLP must notify the auditor of the application.
      (4) If the Court is satisfied that the auditor is using the provisions of section 488 (statement by auditor to be deposited with LLP) 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 LLP's costs 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 LLP 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 LLP 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 a contravention of the Companies Regulations is committed by every designated member of the LLP who is in default.
      (7) A person does not commit the contravention referred to in subsection (6) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
      (8) A person who commits the contravention referred to in subsection (6) shall be liable to a level 3 fine.

    • 490. Copy of statement to be sent to Registrar

      (1) Unless within 21 days beginning with the day on which he deposited the statement under section 488 (statement by auditor to be deposited with LLP) the auditor receives notice of an application to the Court under section 489 (LLP's duties in relation to statement), 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 489 (LLP's duties in relation to statement) and the auditor subsequently receives notice under subsection (3) 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 a contravention of the Companies Regulations.
      (4) A person does not commit the contravention referred to in subsection (3) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
      (5) A person who commits the contravention referred to in subsection (3) shall be liable to a level 2 fine.
      (6) Where a contravention under this section is committed by a body corporate, every officer of the body who is in default also commits the contravention.

      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.

    • 491. Duty of auditor to notify appropriate audit authority

      (1) Where —
      (a) in the case of a major audit, an auditor ceases for any reason to hold office, or
      (b) in the case of an audit that is not a major audit, an auditor ceases to hold office before the end of his term of office,
      (c) the auditor ceasing to hold office must notify the appropriate audit authority and the Registrar.
      (2) The notice must —
      (a) inform the appropriate audit authority that he has ceased to hold office, and
      (b) be accompanied by a copy of the statement deposited by him at the LLP's registered office in accordance with section 488 (statement by auditor to be deposited with LLP).
      (3) If the statement so deposited is to the effect that he considers that there are no circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the LLP, the notice must also be accompanied by a statement of the reasons for his ceasing to hold office.
      (4) The auditor must comply with this section —
      (a) in the case of a major audit, at the same time as he deposits a statement at the LLP's registered office in accordance with section 488 (statement by auditor to be deposited with LLP),
      (b) in the case of an audit that is not a major audit, at such time (not being earlier than the time mentioned in subsection (4)(a)) as the appropriate audit authority or the Registrar may require.
      (5) In this section, "major audit" means an audit conducted under this Part in respect of —
      (a) an LLP whose securities have been listed on a recognised investment exchange, and
      (b) any other person in whose financial condition there is a major public interest.
      (6) In determining whether an audit is a major audit within subsection 5(b), regard shall be had to any guidance issued by the Registrar.
      (7) A person ceasing to hold office as auditor who fails to comply with this section commits a contravention of the Companies Regulations.
      (8) If that person is a firm a contravention is committed by:
      (a) the firm, and
      (b) every officer of the firm who is in default.
      (9) A person does not commit the contravention referred to in subsection (7) if he shows that he took all reasonable steps and exercised all due diligence to avoid the commission of the contravention.
      (10) A person who commits the contravention referred to in subsection (7) shall be liable to a level 2 fine.

    • 492. Effect of casual vacancies

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

    • 493. Voidness of provisions protecting auditors from liability

      (1) This section applies any provision —
      (a) for exempting an auditor of an LLP (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the LLP occurring in the course of the audit of accounts, or
      (b) by which an LLP directly or indirectly provides an indemnity (to any extent) for an auditor of the LLP, or of an associated LLP, against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the LLP of which he is auditor occurring in the course of the audit of accounts.
      (2) Any such provision is void, except as permitted by —
      (a) section 494 (indemnity for costs successfully defending proceedings), or
      (b) sections 495 to 497 (liability limitation agreements).
      (3) This section applies to any provision, whether contained in an LLP's LLP agreement or in any contract with the LLP or otherwise.
      (4) For the purposes of this section LLPs are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate.

    • 494. Indemnity for costs of successfully defending proceedings

      Section 493 (voidness of provisions protecting auditors from liability) does not prevent an LLP from indemnifying an auditor against any liability incurred by him in defending proceedings (whether civil or criminal) in which judgment is given in his favour or he is acquitted.

    • 495. Liability limitation agreements

      (1) A "liability limitation agreement" is an agreement that purports to limit the amount of a liability owed to an LLP by its auditor in respect of any negligence, default, breach of duty or breach of trust, occurring in the course of the audit of accounts, of which the auditor may be guilty in relation to the LLP.
      (2) Section 493 (voidness of provisions protecting auditors from liability) does not affect the validity of a liability limitation agreement that —
      (a) complies with section 496 (terms of liability limitation agreement) and of any rules made by the Board under that section, and
      (b) is authorised by the members of the LLP (see section 497 (authorisation of agreement by members of an LLP)).
      (3) Such an agreement is effective to the extent provided by section 498 (effect of liability limitation agreement).

    • 496. Terms of liability limitation agreement

      (1) A liability limitation agreement —
      (a) must not apply in respect of acts or omissions occurring in the course of the audit of accounts for more than one financial year, and
      (b) must specify the financial year in relation to which it applies.
      (2) The Board may make rules —
      (a) requiring liability limitation agreements to contain specified provisions or provisions of a specified description, and
      (b) prohibiting liability limitation agreements from containing specified provisions or provisions of a specified description.
      "Specified" here means specified in the rules.
      (3) Without prejudice to the generality of the power conferred by subsection (2), that power may be exercised with a view to preventing adverse effects on competition.
      (4) Subject to the preceding provisions of this section, it is immaterial how a liability limitation agreement is framed.

      In particular, the limit on the amount of the auditor's liability need not be a sum of money, or a formula, specified in the agreement.

    • 497. Authorisation of agreement by members of the LLP

      (1) A liability limitation agreement is authorised by the members of the LLP if it has been authorised under this section and that authorisation has not been withdrawn.
      (2) A liability limitation agreement between an LLP and its auditor may be authorised —
      (a) by the members of the LLP passing a resolution, before it enters into the agreement, waiving the need for approval,
      (b) by the members of the LLP passing a resolution, before it enters into the agreement, approving the agreement's principal terms, or
      (c) by the members of the LLP passing a resolution, after it enters into the agreement, approving the agreement.
      (3) The "principal terms" of an agreement are terms specifying, or relevant to the determination of —
      (a) the kind (or kinds) of acts or omissions covered,
      (b) the financial year to which the agreement relates, or
      (c) the limit to which the auditor's liability is subject.
      (4) Authorisation under this section may be withdrawn by the members of the LLP passing a resolution to that effect —
      (a) at any time before the company enters into the agreement, or
      (b) if the LLP has already entered into the agreement, before the beginning of the financial year to which the agreement relates.
      Subsection (4)(b) has effect notwithstanding anything in the agreement.

    • 498. Effect of liability limitation agreement

      (1) A liability limitation agreement is not effective to limit the auditor's liability to less than such amount as is fair and reasonable in all the circumstances of the case having regard (in particular) to —
      (a) the auditor's responsibilities under this Part,
      (b) the nature and purpose of the auditor's contractual obligations to the LLP, and
      (c) the professional standards expected of him.
      (2) A liability limitation agreement that purports to limit the auditor's liability to less than the amount mentioned in subsection (1) shall have effect as if it limited his liability to that amount.
      (3) In determining what is fair and reasonable in all the circumstances of the case no account is to be taken of —
      (a) matters arising after the loss or damage in question has been incurred, or
      (b) matters (whenever arising) affecting the possibility of recovering compensation from other persons liable in respect of the same loss or damage.

    • 499. Disclosure of agreement by LLP

      (1) An LLP which has entered into a liability limitation agreement must make such disclosure in connection with the agreement as may be required under rules made by the Board.
      (2) The rules may provide, in particular, that any disclosure required by the rules shall be made in a note to the LLP's annual accounts (in the case of its individual accounts) or in such manner as is specified in the rules (in the case of group accounts)."