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

Zentra Ltd's directors dislike the external auditor's critical reports and propose to remove her before her term ends. Under the general company law rules in the Global variant of LW, which statement is correct about the auditor's position?

The members, not the directors, can remove an auditor by ordinary resolution. The auditor is entitled to make written representations and to be heard at the meeting, which protects independence from pressure by the board.

  1. AThe auditor can be removed only by the court on application by the directors
  2. BThe auditor can be removed by ordinary resolution of the members, and has the right to make written representations and to be heard at the meetingCorrect
  3. CThe auditor can be removed by the board alone, provided the directors give 14 days' notice
  4. DThe auditor cannot be removed before the term ends unless she resigns

Explanation

Auditors are appointed by the members and the usual rule is that they may be removed by the members through an ordinary resolution with special notice. The auditor may make written representations and speak at the meeting. The board alone has no power to remove, so the board-only option is wrong.

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