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

Marlow plc's members are unhappy with their auditor, Kessler & Co, and want to remove it before its term ends. Which approach is correct under the usual company law rules?

Members can remove an auditor by ordinary resolution, provided special notice is given. The auditor then has the right to make written representations and to attend and speak at the meeting. The directors cannot remove the auditor on their own, as this would threaten independence.

  1. AThe members may remove the auditor by ordinary resolution, with special notice required and the auditor entitled to make written representationsCorrect
  2. BThe directors may remove the auditor by board resolution without notifying the auditor
  3. CThe members may remove the auditor only by a 90% written resolution
  4. DThe auditor can be removed only by the court on application of the registrar

Explanation

Members can remove an auditor by ordinary resolution, but special notice must be given and the auditor has the right to make representations and to be heard at the meeting. The directors cannot remove the auditor themselves, since that would undermine independence. No 90% threshold or court-only route applies.

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