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ACCA Applied Skills · Corporate and Business Law (Global) · Other company officers

Dalmore Ltd's shareholders wish to remove the company's auditor, Pryce & Co, before the end of the auditor's term of office. Under the general company law approach in the LW Global syllabus, which statement is correct?

The shareholders may remove the auditor by ordinary resolution, and the auditor has the right to make written representations and to be heard at the meeting. A court order is unnecessary, and the directors cannot remove the auditor, because the shareholders appoint the auditor.

  1. AThe auditor can be removed only by a court order
  2. BThe shareholders may remove the auditor by an ordinary resolution, and the auditor is entitled to make written representations and to be heard at the meetingCorrect
  3. CThe directors may remove the auditor by a board resolution without involving the shareholders

Explanation

Auditors are appointed by the shareholders, so they are removed by the shareholders using an ordinary resolution with special notice. The auditor has a right to make representations and to attend and speak at the meeting. A court order is not needed, and the directors have no power to remove the auditor alone.

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