• PART 15 PART 15 AUDIT

    • CHAPTER 1 CHAPTER 1 REQUIREMENT FOR AUDITED ACCOUNTS

      • Requirement for audited accounts

        • 447. Requirement for audited accounts and public interest entities and financial institutions

          (1) A company's annual accounts for a financial year must be audited in accordance with this Part unless the company is exempt from audit under—

          section 449 (small companies),

          section 452 (subsidiary companies),

          or section 455 (dormant companies).
          (2) A company is not entitled to any such exemption unless its balance sheet contains a statement by the directors to that effect.
          (3) A company is not entitled to exemption under any of the provisions mentioned in subsection (1) unless its balance sheet contains a statement by the directors to the effect that—
          (a) the members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 448 (right of members to require audit), and
          (b) the directors acknowledge their responsibilities for complying with the requirements of these Regulations with respect to accounting records and the preparation of accounts.
          (4) The statement required by subsection (2) or (3) must appear on the balance sheet above the signature required by section 399 (approval and signing of accounts).
          (5) In this Part, "public interest entity" and "financial institution" shall have the meaning given to them in section 372 (public interest entities and financial institutions).
          (6) This Part does not apply to restricted scope companies who shall be exempt from audit for the purposes of these Regulations.

        • 448. Right of members to require audit

          (1) The members of a company that would otherwise be entitled to exemption from audit under any of the provisions mentioned in section 447(1) (exemptions from audit of annual accounts) may by notice under this section require it to obtain an audit of its accounts for a financial year.
          (2) The notice must be given by—
          (a) members holding shares representing not less in total than 10% of the total number of shares or any class of shares issued by the company, or
          (b) if the company does not have a share capital, not less than 10% in number of the members of the company.
          (3) The notice may not be given before the financial year to which it relates and must be given not later than one month before the end of that year.

        • 449. Small companies: conditions for exemption from audit

          (1) A company that qualifies as a small company in relation to a financial year is exempt from the requirements of these Regulations relating to the audit of accounts for that year.

          For the purposes of this section whether a company qualifies as a small company shall be determined in accordance with section 369 (companies qualifying as small).
          (2) This section has effect subject to—

          section 447 (2) and (3) (requirements as to statements to be contained in balance sheet),

          section 448 (right of members to require audit),

          section 450 (companies excluded from small companies exemption), and

          section 451 (availability of small companies exemption in case of group company).

        • 450. Companies excluded from small companies exemption

          A company is not entitled to the exemption conferred by section 449 (small companies) if it was at any time within the financial year in question—

          (a) a public interest entity, or
          (b) a financial institution.

        • 451. Availability of small companies exemption in case of group company

          (1) A company is not entitled to the exemption conferred by section 449 (small companies) in respect of a financial year during any part of which it was a group company unless—
          (a) the group—
          (i) qualifies as a small group in relation to that financial year, and
          (ii) was not at any time in that year an ineligible group, or
          (b) subsection (2) applies.
          (2) A company is not excluded by subsection (1) if, throughout the whole of the period or periods during the financial year when it was a group company, it was both a subsidiary undertaking and dormant.
          (3) In this section—
          (a) "group company" means a company that is a parent company or a subsidiary undertaking, and
          (b) "the group", in relation to a group company, means that company together with all its associated undertakings.
          For this purpose undertakings are associated if one is a subsidiary undertaking of the other or both are subsidiary undertakings of a third undertaking.
          (4) For the purposes of this section—
          (a) whether a group qualifies as small shall be determined in accordance with section 370 (companies qualifying as small: parent companies), and
          (b) "ineligible group" has the meaning given by section 371 (2) and Error! Reference source not found. (companies excluded from the small companies regime)
          (5) The provisions mentioned in subsection (4) apply for the purposes of this section as if all the bodies corporate in the group were companies.

        • 452. Subsidiary companies: conditions for exemption from audit

          (1) A company is exempt from the requirements of these Regulations relating to the audit of individual accounts for a financial year if—
          (a) it is itself a subsidiary undertaking, and
          (b) its parent undertaking is established under the law of the Abu Dhabi Global Market.
          (2) Exemption is conditional upon compliance with all of the following conditions—
          (a) all members of the company must agree to the exemption in respect of the financial year in question,
          (b) the parent undertaking must give a guarantee under section 454 (parent undertaking declaration of guarantee) in respect of that year,
          (c) the company must be included in the consolidated accounts drawn up for that year or to an earlier date in that year by the parent undertaking in accordance with international accounting standards,
          (d) the parent undertaking must disclose in the notes to the consolidated accounts that the company is exempt from the requirements of these Regulations relating to the audit of individual accounts by virtue of this section, and
          (e) the directors of the company must deliver to the Registrar on or before the date that they file the accounts for that year—
          (i) a written notice of the agreement referred to in subsection (2)(a),
          (ii) the statement referred to in section 454 (1),
          (iii) a copy of the consolidated accounts referred to in subsection (2)(c),
          (iv) a copy of the auditor's report on those accounts, and
          (v) a copy of the consolidated annual report drawn up by the parent undertaking.
          (3) This section has effect subject to—

          section 447(2) and (3) (requirements as to statements contained in balance sheet), and

          section 448 (right of members to require audit).

        • 453. Companies excluded from the subsidiary companies audit exemption

          A company is not entitled to the exemption conferred by section 452 (subsidiary companies) if it was at any time within the financial year in question—

          (a) a company listed on a recognised investment exchange, or
          (b) a financial institution.

        • 454. Subsidiary companies audit exemption: parent undertaking declaration of guarantee

          (1) A guarantee is given by a parent undertaking under this section when the directors of the subsidiary company deliver to the Registrar a statement by the parent undertaking that it guarantees the subsidiary company under this section.
          (2) The statement under subsection (1) must be authenticated by the parent undertaking and must specify—
          (a) the name of the parent undertaking and its registered number,
          (b) the name and registered number of the subsidiary company in respect of which the guarantee is being given,
          (c) the date of the statement, and
          (d) the financial year to which the guarantee relates.
          (3) A guarantee given under this section has the effect that—
          (a) the parent undertaking guarantees all outstanding liabilities to which the subsidiary company is subject at the end of the financial year to which the guarantee relates, until they are satisfied in full, and
          (b) the guarantee is enforceable against the parent undertaking by any person to whom the subsidiary company is liable in respect of those liabilities.

        • 455. Dormant companies: conditions for exemption from audit

          (1) A company is exempt from the requirements of these Regulations relating to the audit of accounts in respect of a financial year if—
          (a) it has been dormant since its formation, or
          (b) it has been dormant since the end of the previous financial year and the following conditions are met.
          (2) The conditions are that the company—
          (a) as regards its individual accounts for the financial year in question—
          (i) is entitled to prepare accounts in accordance with the small companies regime (see sections 368 (companies subject to the small companies regime) to 371 (companies excluded from the small companies regime)), and
          (ii) is not required to prepare group accounts for that year.
          (3) This section has effect subject to—

          section 447(2) and (3) (requirements as to statements to be contained in balance sheet),

          section 448 (right of members to require audit), and

          section 456 (companies excluded from dormant companies exemption).

        • 456. Companies excluded from dormant companies exemption

          A company is not entitled to the exemption conferred by section 455 (dormant companies) if it was at any time within the financial year in question licensed under the Commercial Licensing Regulations 2015 as a financial institution.

    • CHAPTER 2 CHAPTER 2 APPOINTMENT OF AUDITORS

      • Private companies

        • 457. Appointment of auditors of private company: general

          (1) An auditor or auditors of a private company must be appointed for each financial year of the company, unless the directors reasonably resolve otherwise on the ground that audited accounts are unlikely to be required.
          (2) For each financial year for which an auditor or auditors is or are to be appointed (other than the company's first financial year), the appointment must be made before the end of the period of 28 days beginning with—
          (a) the end of the time allowed for sending out copies of the company's annual accounts and reports for the previous financial year (see section 406 (time allowed for sending out copies of accounts and reports)), or
          (b) if earlier, the day on which copies of the company's annual accounts and reports for the previous financial year are sent out under section 405 (duty to circulate copies of annual accounts and reports).
          This is the "period for appointing auditors".
          (3) The directors may appoint an auditor or auditors of the company—
          (a) at any time before the company's first period for appointing auditors,
          (b) following a period during which the company (being exempt from audit) did not have any auditor, at any time before the company's next period for appointing auditors, or
          (c) to fill a casual vacancy in the office of auditor.
          (4) The members may appoint an auditor or auditors by ordinary resolution—
          (a) during a period for appointing auditors,
          (b) if the company should have appointed an auditor or auditors during a period for appointing auditors but failed to do so, or
          (c) where the directors had power to appoint under subsection (3) but have failed to make an appointment.
          (5) An auditor or auditors of a private company may only be appointed—
          (a) in accordance with this section,
          (b) in accordance with section 458 (default power of Registrar), or
          This is without prejudice to any deemed re-appointment under section 459 (term of office of auditors of private company).

        • 458. Appointment of auditors of private company: default power of Registrar

          (1) If a private company fails to appoint an auditor or auditors in accordance with section 457 (appointment of auditors of private company: general), the Registrar may appoint one or more persons to fill the vacancy.
          (2) Where subsection (2) of that section applies and the company fails to make the necessary appointment before the end of the period for appointing auditors, the company must within one week of the end of that period give notice to the Registrar of its power having become exercisable.
          (3) If a company fails to give the notice required by this section, a contravention of these Regulations is committed by—
          (a) the company, and
          (b) every officer of the company who is in default.
          (4) A person who commits the contravention referred to in subsection (3) shall be liable to a level 3 fine.

        • 459. Term of office of auditors of private company

          (1) An auditor or auditors of a private company hold office in accordance with the terms of their appointment, subject to the requirements that—
          (a) they do not take office until any previous auditor or auditors cease to hold office, and
          (b) they cease to hold office at the end of the next period for appointing auditors unless re-appointed.
          (2) Where no auditor has been appointed by the end of the next period for appointing auditors, any auditor in office immediately before that time is deemed to be re-appointed at that time, unless—
          (a) he was appointed by the directors, or
          (b) the company's articles require actual re-appointment, or
          (c) the deemed re-appointment is prevented by the members under section 460 (prevention by members of deemed re-appointment of auditor), or
          (d) the members have resolved that he should not be re-appointed, or
          (e) the directors have resolved that no auditor or auditors should be appointed for the financial year in question.
          (3) This is without prejudice to the provisions of this Part as to removal and resignation of auditors.
          (4) No account shall be taken of any loss of the opportunity of deemed reappointment under this section in ascertaining the amount of any compensation or damages payable to an auditor on his ceasing to hold office for any reason.

        • 460. Prevention by members of deemed re-appointment of auditor

          (1) An auditor of a private company is not deemed to be re-appointed under section 459(2) if the company has received notices under this section from members representing at least the requisite percentage of the total voting rights of all members who would be entitled to vote on a resolution that the auditor should not be re-appointed.
          (2) The "requisite percentage" is 5%, or such lower percentage as is specified for this purpose in the company's articles.
          (3) A notice under this section—
          (a) may be in hard copy or electronic form,
          (b) must be authenticated by the person or persons giving it, and
          (c) must be received by the company before the end of the accounting reference period immediately preceding the time when the deemed re-appointment would have effect.

        • 461. Appointment of auditors of public company: general

          (1) An auditor or auditors of a public company must be appointed for each financial year of the company, unless the directors reasonably resolve otherwise on the ground that audited accounts are unlikely to be required.
          (2) For each financial year for which an auditor or auditors is or are to be appointed (other than the company's first financial year), the appointment must be made before the end of the accounts meeting of the company at which the company's annual accounts and reports for the previous financial year are laid.
          (3) The directors may appoint an auditor or auditors of the company—
          (a) at any time before the company's first accounts meeting,
          (b) following a period during which the company (being exempt from audit) did not have any auditor, at any time before the company's next accounts meeting,
          (c) to fill a casual vacancy in the office of auditor.
          (4) The members may appoint an auditor or auditors by ordinary resolution—
          (a) at an accounts meeting,
          (b) if the company should have appointed an auditor or auditors at an accounts meeting but failed to do so,
          (c) where the directors had power to appoint under subsection (3) but have failed to make an appointment.
          (5) An auditor or auditors of a public company may only be appointed—
          (a) in accordance with this section, or
          (b) in accordance with section 462 (default power of Registrar).

        • 462. Appointment of auditors of public company: default power of Registrar

          (1) If a public company fails to appoint an auditor or auditors in accordance with section 461 (appointment of auditors of public company: general), the Registrar may appoint one or more persons to fill the vacancy.
          (2) Where subsection (2) of that section applies and the company fails to make the necessary appointment before the end of the accounts meeting, the company must within one week of the end of that meeting give notice to the Registrar of its power having become exercisable.
          (3) If a company fails to give the notice required by this section, a contravention of these Regulations is committed by—
          (a) the company, and
          (b) every officer of the company who is in default.
          (4) A person who commits the contravention referred to in subsection (3) shall be liable to a fine of up to level 5.

        • 463. Term of office of auditors of public company

          (1) The auditor or auditors of a public company hold office in accordance with the terms of their appointment, subject to the requirements that—
          (a) they do not take office until the previous auditor or auditors have ceased to hold office, and
          (b) they cease to hold office at the conclusion of the accounts meeting next following their appointment, unless re-appointed.
          (2) This is without prejudice to the provisions of this Part as to removal and resignation of auditors.

        • 464. Fixing of auditor's remuneration

          (1) The remuneration of an auditor appointed by the members of a company must be fixed by the members by ordinary resolution or in such manner as the members may by ordinary resolution determine.
          (2) The remuneration of an auditor appointed by the directors of a company must be fixed by the directors.
          (3) The remuneration of an auditor appointed by the Registrar must be fixed by the Registrar.
          (4) For the purposes of this section "remuneration" includes sums paid in respect of expenses.
          (5) This section applies in relation to benefits in kind as to payments of money.

        • 465. Disclosure of terms of audit appointment

          (1) The Board may make rules for securing the disclosure of the terms on which a company's auditor is appointed, remunerated or performs his duties.

          Nothing in the following provisions of this section affects the generality of this power.
          (2) The rules may—
          (a) require disclosure of—
          (i) a copy of any terms that are in writing, and
          (ii) a written memorandum setting out any terms that are not in writing,
          (b) require disclosure to be at such times, in such places and by such means as are specified in the rules
          (c) require the place and means of disclosure to be stated—
          (i) in a note to the company'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),
          (ii) in the directors' report, or
          (iii) in the auditor's report on the company's annual accounts.
          (3) The provisions of this section apply to a variation of the terms mentioned in subsection (1) as they apply to the original terms.

        • 466. Disclosure of services provided by auditor or associates and related remuneration

          (1) The Board may make rules for securing the disclosure of—
          (a) the nature of any services provided for a company by the company's auditor (whether in his capacity as auditor or otherwise) or by his associates,
          (b) the amount of any remuneration received or receivable by a company's auditor, or his associates, in respect of any such services.
          Nothing in the following provisions of this section affects the generality of this power.
          (2) The rules may provide—
          (a) for disclosure of the nature of any services provided to be made by reference to any class or description of services specified in the rules (or any combination of services, however described),
          (b) for the disclosure of amounts of remuneration received or receivable in respect of services of any class or description specified in the rules (or any combination of services, however described),
          (c) for the disclosure of separate amounts so received or receivable by the company's auditor or any of his associates, or of aggregate amounts so received or receivable by all or any of those persons.
          (3) The rules may—
          (a) provide that "remuneration" includes sums paid in respect of expenses,
          (b) apply to benefits in kind as well as to payments of money, and require the disclosure of the nature of any such benefits and their estimated money value,
          (c) apply to services provided for associates of a company as well as to those provided for a company,
          (d) define "associate" in relation to an auditor and a company respectively.
          (4) The rules may provide that any disclosure required by the rules is to be made—
          (a) in a note to the company'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),
          (b) in the directors' report, or
          (c) in the auditor's report on the company's annual accounts.
          (5) If the rules provide that any such disclosure is to be made as mentioned in subsection (4)(a) or (b), the rules may require the auditor to supply the directors of the company with any information necessary to enable the disclosure to be made.

    • CHAPTER 3 CHAPTER 3 FUNCTIONS OF AUDITOR

      • Auditor's report

        • 467. Auditor's report on company's annual accounts

          (1) A company's auditor must make a report to the company's members on all annual accounts of the company of which copies are, during his tenure of office—
          (a) in the case of a private company, to be sent out to members under section 405 (duty to circulate copies of annual accounts and reports),
          (b) in the case of a public company, to be laid before the company in general meeting under section 413 (public companies: laying of accounts and reports before general meeting).
          (2) The auditor's report must include—
          (a) an introduction identifying the annual accounts that are the subject of the audit and the financial reporting framework that has been applied in their preparation, and
          (b) a description of the scope of the audit identifying the auditing standards in accordance with which the audit was conducted.
          (3) The report must state clearly whether, in the auditor's opinion, the annual accounts—
          (a) fairly present—
          (i) in the case of an individual balance sheet, the state of affairs of the company as at the end of the financial year,
          (ii) in the case of an individual profit and loss account, the profit or loss of the company for the financial year,
          (iii) in the case of group accounts, the state of affairs as at the end of the financial year and of the profit or loss for the financial year of the undertakings included in the consolidation as a whole, so far as concerns members of the company,
          (b) have been properly prepared in accordance with the relevant financial reporting framework, and
          (c) have been prepared in accordance with the requirements of these Regulations.
          Expressions used in this subsection or subsection (4) that are defined for the purposes of Part 14 (see sections 437 (accounting standards), 444 (meaning of "annual accounts" and related expressions) and 446 (minor definitions)) have the same meaning as in that Part.
          (4) The following provisions apply to the auditors of a company which qualifies as a micro-entity in relation to a financial year (see sections 373 (companies qualifying as micro-entities) and 374 (companies excluded from being treated as micro-entities)) in their consideration of whether the individual accounts of the company for that year give a fair representation as mentioned in subsection (3)(a)—
          (a) where the accounts comprise only micro-entity minimum accounting items, the auditors must disregard any provision of an accounting standard which would require the accounts to contain information additional to those items,
          (b) in relation to a micro-entity minimum accounting item contained in the accounts, the auditors must disregard any provision of an accounting standard which would require the accounts to contain further information in relation to that item, and
          (c) where the accounts contain an item of information additional to the micro-entity minimum accounting items, the auditors must have regard to any provision of an accounting standard which relates to that item.
          (5) The auditor's report—
          (a) must be either unqualified or qualified, and
          (b) must include a reference to any matters to which the auditor wishes to draw attention by way of emphasis without qualifying the report.

        • 468. Auditor's report on directors' report

          The auditor must state in his report on the company's annual accounts whether in his opinion the information given in the directors' report for the financial year for which the accounts are prepared is consistent with those accounts.

        • 469. Duties of auditor

          (1) A company's auditor, in preparing his report, must carry out such investigations as will enable him to form an opinion as to—
          (a) whether adequate accounting records have been kept by the company and returns adequate for their audit have been received from branches not visited by him, and
          (b) whether the company's individual accounts are in agreement with the accounting records and returns.
          (2) If the auditor is of the opinion—
          (a) that adequate accounting records have not been kept, or that returns adequate for their audit have not been received from branches not visited by him, or
          (b) that the company's individual accounts are not in agreement with the accounting records and returns,
          the auditor shall state that fact in his report.
          (3) If the auditor fails to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit, he shall state that fact in his report.
          (4) If—
          (a) the requirements of rules made by the Board under section 397 (information about directors' benefits: remuneration, pensions, end-of-service gratuity payments and compensation for loss of office) are not complied with in the annual accounts,
          (b) the auditor must include in his report, so far as he is reasonably able to do so, a statement giving the required particulars.
          (5) If the directors of the company—
          (a) have prepared accounts in accordance with the small companies regime, or
          (b) have taken advantage of small companies exemption in preparing the directors' report,
          and in the auditor's opinion they were not entitled to do so, the auditor shall state that fact in his report.

        • 470. Auditor's general right to information

          (1) An auditor of a company—
          (a) has a right of access at all times to the company's books, accounts and vouchers (in whatever form they are held), and
          (b) may require any of the following persons to provide him with such information or explanations as he thinks necessary for the performance of his duties as auditor.
          (2) Those persons are—
          (a) any officer or employee of the company,
          (b) any person holding or accountable for any of the company's books, accounts or vouchers,
          (c) any subsidiary undertaking of the company which is a body corporate incorporated in the Abu Dhabi Global Market,
          (d) any officer, employee or auditor of any such subsidiary undertaking or any person holding or accountable for any books, accounts or vouchers of any such subsidiary undertaking,
          (e) any person who fell within any of subsection (2)(a) to (d) at a time to which the information or explanations required by the auditor relates or relate.
          (3) Nothing in this section compels a person to disclose information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

        • 471. Auditor's right to information from overseas subsidiary undertakings

          (1) Where a parent company has a subsidiary undertaking that is not a body corporate incorporated in the Abu Dhabi Global Market, the auditor of the parent company may require it to obtain from any of the following persons such information or explanations as he may reasonably require for the purposes of his duties as auditor.
          (2) Those persons are—
          (a) the undertaking,
          (b) any officer, employee or auditor of the undertaking,
          (c) any person holding or accountable for any of the undertaking's books, accounts or vouchers,
          (d) any person who fell within subsection (2)(b) or (c) at a time to which the information or explanations relates or relate.
          (3) If so required, the parent company must take all such steps as are reasonably open to it to obtain the information or explanations from the person concerned.
          (4) Nothing in this section compels a person to disclose information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

        • 472. Auditor's rights to information: contraventions

          (1) A person commits a contravention of these Regulations who knowingly or recklessly makes to an auditor of a company a statement (oral or written) that—
          (a) conveys or purports to convey any information or explanations which the auditor requires, or is entitled to require, under section 470 (auditor's general right to information), and
          (b) is misleading, false or deceptive in a material particular.
          (2) A person who commits the contravention referred to in subsection (1) shall be liable to a fine of up to level 5.
          (3) A person who fails to comply with a requirement under section 470 (auditor's general right to information) without delay commits a contravention of these Regulations unless it was not reasonably practicable for him to provide the required information or explanations.
          (4) If a parent company fails to comply with section 471 (auditor's right to information from overseas subsidiary undertakings), a contravention of these Regulations is committed by—
          (a) the company, and
          (b) every officer of the company who is in default.
          (5) A person who commits the contravention referred to in subsection (3) shall be liable to a fine of up to level 4.
          (6) A person who commits the contravention referred to in subsection (4) shall be liable to a level 3 fine.
          (7) Nothing in this section affects any right of an auditor to apply for an injunction to enforce any of his rights under section 470 (general right to information) or 471 (right to information from overseas subsidiary undertakings).

        • 473. Auditor's rights in relation to resolutions and meetings

          (1) In relation to a written resolution proposed to be agreed to by a private company, the company's auditor is entitled to receive all such communications relating to the resolution as, by virtue of any provision of Chapter 2 of Part 13 of these Regulations, are required to be supplied to a member of the company.
          (2) A company's auditor is entitled—
          (a) to receive all notices of, and other communications relating to, any general meeting which a member of the company is entitled to receive,
          (b) to attend any general meeting of the company, and
          (c) to be heard at any general meeting which he attends on any part of the business of the meeting which concerns him as auditor.
          (3) Where the auditor is a firm, the right to attend or be heard at a meeting is exercisable by an individual authorised by the firm in writing to act as its representative at the meeting.

        • 474. Signature of auditor's report

          (1) The auditor's report must state the name of the auditor and be signed and dated.
          (2) Where the auditor is an individual, the report must be signed by him.
          (3) Where the auditor is a firm, the report must be signed by the senior auditor in his own name, for and on behalf of the auditor.

        • 475. Senior auditor

          (1) The senior auditor means the individual identified by the firm as senior auditor in relation to the audit in accordance with—
          (a) standards issued by the Board, or
          (b) if there is no applicable standard so issued, any relevant guidance issued by—
          (i) the Board, or
          (ii) a body appointed by the Board.
          (2) The person identified as senior auditor must be eligible for appointment as auditor of the company in question (see Chapter 2 of Part 35 of these Regulations).
          (3) The senior auditor is not, by reason of being named or identified as senior auditor or by reason of his having signed the auditor's report, subject to any civil liability to which he would not otherwise be subject.

        • 476. Names to be stated in published copies of auditor's report

          (1) Every copy of the auditor's report that is published by or on behalf of the company must—
          (a) state the name of the auditor and (where the auditor is a firm) the name of the person who signed it as senior auditor, or
          (b) if the conditions in section 477 (circumstances in which names may be omitted) are met, state that a resolution has been passed and notified to the Board in accordance with that section.
          (2) For the purposes of this section a company is regarded as publishing the report if it publishes, issues or circulates it or otherwise makes it available for public inspection in a manner calculated to invite members of the public generally, or any class of members of the public, to read it.
          (3) If a copy of the auditor's report is published without the statement required by this section, a contravention of these Regulations is committed by—
          (a) the company, and
          (b) every officer of the company who is in default.
          (4) A person who commits the contravention referred to in subsection (3) shall be liable to a level 3 fine.

        • 477. Circumstances in which names may be omitted

          (1) The auditor's name and, where the auditor is a firm, the name of the person who signed the report as senior auditor, may be omitted from—
          (a) published copies of the report, and
          (b) the copy of the report delivered to the Registrar under Chapter 8 of Part 14 (filing of accounts and reports),
          (c) if the following conditions are met.
          (2) The conditions are that the company—
          (a) considering on reasonable grounds that statement of the name would create or be likely to create a serious risk that the auditor or senior auditor, or any other person, would be subject to violence or intimidation, has resolved that the name should not be stated, and
          (b) has given notice of the resolution to the Registrar, stating—
          (i) the name and registered number of the company,
          (ii) the financial year of the company to which the report relates, and
          (iii) the name of the auditor and (where the auditor is a firm) the name of the person who signed the report as senior auditor.

        • 478. Contraventions in connection with auditor's report

          (1) A person to whom this section applies commits a contravention of these Regulations if he knowingly or recklessly causes a report under section 467 (auditor's report on company's annual accounts) to include any matter that is misleading, false or deceptive in a material particular.
          (2) A person to whom this section applies commits a contravention of these Regulations if he knowingly or recklessly causes such a report to omit a statement required by—
          (a) section 469(2)(b) (statement that company's accounts do not agree with accounting records and returns),
          (b) section 469(3) (statement that necessary information and explanations not obtained), or
          (c) section 469(5) (statement that directors wrongly took advantage of exemption from obligation to prepare group accounts).
          (3) This section applies to—
          (a) where the auditor is an individual, that individual and any employee or agent of his who is eligible for appointment as auditor of the company,
          (b) where the auditor is a firm, any director, member, employee or agent of the firm who is eligible for appointment as auditor of the company.
          (4) A person who commits the contraventions referred to in subsection (1) and (2) shall be liable to a fine of up to level 5.

    • CHAPTER 4 CHAPTER 4 REMOVAL, RESIGNATION, ETC. OF AUDITORS

      • Removal of auditor

        • 479. Resolution removing auditor from office

          (1) The members of a company may remove an auditor from office at any time.
          (2) This power is exercisable only—
          (a) by ordinary resolution at a meeting and in accordance with section 480 (special notice required for resolution removing auditor from office), or
          (b) in the case of a company with only one member, by written resolution or a decision taken as mentioned in section 362 (records of decisions by sole member).
          (3) 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.
          (4) An auditor may not be removed from office before the expiration of his term of office except by resolution under this section.

        • 480. Special notice required for resolution removing auditor from office

          (1) Special notice is required for a resolution at a general meeting of a company removing an auditor from office.
          (2) On receipt of notice of such an intended resolution the company must immediately send a copy of it to the auditor proposed to be removed.
          (3) The auditor proposed to be removed may make with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and request their notification to members of the company.
          (4) The company must (unless the representations are received by it too late for it to do so)—
          (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 meeting is or has been sent.
          (5) If a copy of any such representations is not sent out as required because received too late or because of the company's default, the auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.
          (6) Copies of the representations need not be sent out and the representations need not be read at the meeting if, on the application either of the company 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 company'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 resolution removing auditor from office

          (1) Where a resolution is passed or a decision is taken under section 479 (resolution or decision removing auditor from office), the company must give notice of that fact to the Registrar within 14 days.
          (2) If a company fails to give the notice required by this section, a contravention of these Regulations is committed by—
          (a) the company, and
          (b) every officer of it 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 by resolution under section 479 (resolution or decision removing auditor from office) has, notwithstanding his removal, the rights conferred by section 473(2) (auditor's rights in relation to resolutions and meetings) in relation to any general meeting of the company—
          (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: special procedure required for written resolution

          (1) This section applies where a resolution is proposed as a written resolution of a private company with more than one member whose effect would be to appoint a person as auditor in place of a person (the "outgoing auditor") whose term of office has expired, or is to expire, at the end of the period for appointing auditors.
          (2) The following provisions apply if—
          (a) no period for appointing auditors has ended since the outgoing auditor ceased to hold office, or
          (b) such a period has ended and an auditor or auditors should have been appointed but were not.
          (3) The company must send a copy of the proposed resolution to the person proposed to be appointed and to the outgoing auditor.
          (4) The outgoing auditor may, within 14 days after receiving the notice, make with respect to the proposed resolution representations in writing to the company (not exceeding a reasonable length) and request their circulation to members of the company.
          (5) The company must circulate the representations together with the copy or copies of the resolution circulated in accordance with section 308 (circulation of written resolutions proposed by directors) or section 310 (circulation of written resolutions proposed by members).
          (6) Where subsection (5) applies—
          (a) the period allowed under section 310(3) for service of copies of the proposed resolution is 28 days instead of 21 days, and
          (b) the provisions of section 310(5) and (6) (contraventions) apply in relation to a failure to comply with that subsection as in relation to a default in complying with that section.
          (7) Copies of the representations need not be circulated if, on the application either of the company 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 company'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.
          (8) If any requirement of this section is not complied with, the resolution is ineffective.

        • 484. Failure to re-appoint auditor: special notice required for resolution at general meeting

          (1) This section applies to a resolution at a general meeting of a company with more than one member whose effect would be to appoint a person as auditor in place of a person (the "outgoing auditor") whose term of office has ended, or is to end—
          (a) in the case of a private company, at the end of the period for appointing auditors,
          (b) in the case of a public company, at the end of the next accounts meeting.
          (2) Special notice is required of such a resolution if—
          (a) in the case of a private company—
          (i) no period for appointing auditors has ended since the outgoing auditor ceased to hold office, or
          (ii) such a period has ended and an auditor or auditors should have been appointed but were not,
          (b) in the case of a public company—
          (i) there has been no accounts meeting of the company since the outgoing auditor ceased to hold office, or
          (ii) there has been an accounts meeting at which an auditor or auditors should have been appointed but were not.
          (3) On receipt of notice of such an intended resolution the company shall forthwith send a copy of it to the person proposed to be appointed and to the outgoing auditor.
          (4) The outgoing auditor may make with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and request their notification to members of the company.
          (5) The company must (unless the representations are received by it too late for it to do so)—
          (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 meeting is or has been sent.
          (6) If a copy of any such representations is not sent out as required because received too late or because of the company's default, the outgoing auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.
          (7) Copies of the representations need not be sent out and the representations need not be read at the meeting if, on the application either of the company 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 company's costs on the application to be paid in whole or in part by the outgoing auditor, notwithstanding that he is not a party to the application.

        • 485. Resignation of auditor

          (1) An auditor of a company may resign his office by depositing a notice in writing to that effect at the company'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 company).
          (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 company must within 14 days of the deposit of a notice of resignation send a copy of the notice to the Registrar of companies.
          (2) If default is made in complying with this section, a contravention of these Regulations is committed by—
          (a) the company, and
          (b) every officer of the company 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 company).
          (2) A resigning auditor may deposit with the notice a signed requisition calling on the directors of the company forthwith duly to convene a general meeting of the company 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 company to circulate to its members—
          (a) before the meeting convened on his requisition, or
          (b) before any general meeting at which his term of office would otherwise have expired or at which it is proposed to fill the vacancy caused by his resignation,
          a statement in writing (not exceeding a reasonable length) of the circumstances connected with his resignation.
          (4) The company must (unless the statement is received too late for it to comply)—
          (a) in any notice of the meeting given to members of the company, state the fact of the statement having been made, and
          (b) send a copy of the statement to every member of the company to whom notice of the meeting is or has been sent.
          (5) The directors 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 director who failed to take all reasonable steps to secure that a meeting was convened commits a contravention of these 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 company'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 company 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 company'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 resolutions and meetings) in relation to any such general meeting of the company as is mentioned in subsection (3)(a) or (b) 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 company

          (1) Where an auditor of a company ceases for any reason to hold office, he must deposit at the company'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 company.
          (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 company, he must deposit at the company'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 these 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. Company's duties in relation to statement

          (1) This section applies where the statement deposited under section 488 (statement by auditor to be deposited with company) states the circumstances connected with the auditor's ceasing to hold office.
          (2) The company 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 reports) is entitled to be sent copies of the accounts, or
          (b) apply to the Court.
          (3) If it applies to the Court, the company 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 company) 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 company'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 company 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 company 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 these Regulations is committed by every officer of the company 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 company) the auditor receives notice of an application to the Court under section 489 (company'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 (company'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 these 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 company's registered office in accordance with section 488 (statement by auditor to be deposited with company).
          (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 company, 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 company's registered office in accordance with section 488 (statement by auditor to be deposited with company),
          (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) a listed company; 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 these 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.

    • CHAPTER 5 CHAPTER 5 AUDITORS' LIABILITY

      • Voidness of provisions protecting auditors from liability

        • 493. Voidness of provisions protecting auditors from liability

          (1) This section applies to any provision—
          (a) for exempting an auditor of a company (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 company occurring in the course of the audit of accounts, or
          (b) by which a company directly or indirectly provides an indemnity (to any extent) for an auditor of the company, or of an associated company, against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company 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 of successfully defending proceedings), or
          (b) sections 495 to 497 (liability limitation agreements).
          (3) This section applies to any provision, whether contained in a company's articles or in any contract with the company or otherwise.
          (4) For the purposes of this section companies 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 (general voidness of provisions protecting auditors from liability) does not prevent a company 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 a company 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 company.
          (2) Section 493 (general 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 company (see section 497 (authorisation of agreement by members of the company)).
          (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 company

          (1) A liability limitation agreement is authorised by the members of the company if it has been authorised under this section and that authorisation has not been withdrawn.
          (2) A liability limitation agreement between a private company and its auditor may be authorised—
          (a) by the company passing a resolution, before it enters into the agreement, waiving the need for approval,
          (b) by the company passing a resolution, before it enters into the agreement, approving the agreement's principal terms, or
          (c) by the company passing a resolution, after it enters into the agreement, approving the agreement.
          (3) A liability limitation agreement between a public company and its auditor may be authorised—
          (a) by the company passing a resolution in general meeting, before it enters into the agreement, approving the agreement's principal terms, or
          (b) by the company passing a resolution in general meeting, after it enters into the agreement, approving the agreement.
          (4) 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.
          (5) Authorisation under this section may be withdrawn by the company passing an ordinary resolution to that effect—
          (a) at any time before the company enters into the agreement, or
          (b) if the company has al entered into the agreement, before the beginning of the financial year to which the agreement relates.
          Subsection (5)(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 company, 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 company

          (1) A company 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—
          (a) in a note to the company'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), or
          (b) in the directors' report.

    • CHAPTER 6 CHAPTER 6 SUPPLEMENTARY PROVISIONS

      • 500. Minor definitions

        In this Part—

        "qualified", in relation to an auditor's report (or a statement contained in an auditor's report), means that the report or statement does not state the auditor's unqualified opinion that the accounts have been properly prepared in accordance with these Regulations or, in the case of an undertaking not required to prepare accounts in accordance with these Regulations, under any corresponding legislation under which it is required to prepare accounts,

        "turnover", in relation to a company, means the amounts derived from the provision of goods and services falling within the company's ordinary activities, after deduction of—

        (a) trade discounts,
        (b) value added tax, and
        (c) any other taxes based on the amounts so derived.