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

The board of Marlow plc wishes to remove its auditor, Ketel & Co, before the end of the auditor's term because of a fee dispute. Which statement correctly describes the legal position?

Auditors are removed by the members, usually by ordinary resolution with special notice. The auditor may make representations and attend and speak at the meeting. Directors cannot remove the auditor by a board resolution alone, and no court order is needed.

  1. AThe directors may remove the auditor by board resolution, without notice to the auditor
  2. BThe members may remove the auditor by ordinary resolution, and the auditor has the right to make representations and attend the meetingCorrect
  3. CThe auditor can only be removed by the court

Explanation

Removal of an auditor is a matter for the members, normally by ordinary resolution with special notice. The auditor is entitled to make written representations and to attend and speak at the meeting. The directors cannot remove the auditor alone, and a court order is not required.

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