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Company Law Reform Bill [HL]


Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 3 — Auditors General

418

 

(b)   

the Auditor General’s performance of his functions as a statutory

auditor.

(3)   

A notice under subsection (1) must—

(a)   

be in writing, and

(b)   

state the date on which it takes effect (which must be after the period of

5

three months beginning with the date on which it is issued).

(4)   

Before issuing a notice under subsection (1), the Independent Supervisor

must—

(a)   

give written notice of its intention to do so to the Auditor General, and

(b)   

publish the notice mentioned in paragraph (a) in such manner as it

10

thinks appropriate for bringing it to the attention of any other persons

who are likely to be affected.

(5)   

A notice under subsection (4) must—

(a)   

state the reasons for which the Independent Supervisor proposes to act,

and

15

(b)   

give particulars of the rights conferred by subsection (6).

(6)   

A person within subsection (7) may, within the period of three months

beginning with the date of service or publication of the notice under subsection

(4) or such longer period as the Independent Supervisor may allow, make

written representations to the Independent Supervisor and, if desired, oral

20

representations to a person appointed for that purpose by the Independent

Supervisor.

(7)   

The persons within this subsection are—

(a)   

the Auditor General, and

(b)   

any other person who appears to the Independent Supervisor to be

25

affected.

(8)   

The Independent Supervisor must have regard to any representations made in

accordance with subsection (6) in determining—

(a)   

whether to issue a notice under subsection (1), and

(b)   

the terms of any such notice.

30

(9)   

If in any case the Independent Supervisor considers it appropriate to do so in

the public interest it may issue a notice under subsection (1), without regard to

the restriction in subsection (3)(b), even if—

(a)   

no notice has been given or published under subsection (4), or

(b)   

the period of time for making representations in pursuance of such a

35

notice has not expired.

(10)   

On issuing a notice under subsection (1), the Independent Supervisor must—

(a)   

give a copy of the notice to the Auditor General, and

(b)   

publish the notice in such manner as it thinks appropriate for bringing

it to the attention of persons likely to be affected.

40

(11)   

In this section “specified” means specified in, or of a description specified in,

the suspension notice in question.

864     

Effect of suspension notices

(1)   

An Auditor General must not act as a statutory auditor at any time when a

suspension notice issued to him in respect of the audited person has effect.

45

 
 

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 3 — Auditors General

419

 

(2)   

If at any time during an Auditor General’s term of office as a statutory auditor

a suspension notice issued to him in respect of the audited person takes effect,

he must immediately—

(a)   

resign his office (with immediate effect), and

(b)   

give notice in writing to the audited person that he has resigned by

5

reason of his becoming ineligible for appointment.

(3)   

A suspension notice does not make an Auditor General ineligible for

appointment as a statutory auditor for the purposes of section 842 (effect of

ineligibility: criminal offences).

865     

Compliance orders

10

(1)   

If at any time it appears to the Independent Supervisor that an Auditor General

has failed to comply with an obligation imposed on him by or by virtue of this

Part, the Independent Supervisor may make an application to the court under

this section.

(2)   

If on an application under this section the court decides that the Auditor

15

General has failed to comply with the obligation in question, it may order the

Auditor General to take such steps as the court directs for securing that the

obligation is complied with.

(3)   

In this section “the court” means the High Court or, in Scotland, the Court of

Session.

20

Proceedings

866     

Proceedings involving the Independent Supervisor

(1)   

If the Independent Supervisor is an unincorporated association, any relevant

proceedings may be brought by or against it in the name of any body corporate

whose constitution provides for the establishment of the body.

25

(2)   

For this purpose “relevant proceedings” means proceedings brought in or in

connection with the exercise of any function by the body as the Independent

Supervisor.

(3)   

Where an appointment under section 857 is revoked, the revoking order may

make such provision as the Secretary of State thinks fit with respect to pending

30

proceedings.

Grants

867     

Grants to the Independent Supervisor

In section 16 of the Companies (Audit, Investigations and Community

Enterprise) Act 2004 (c. 27) (grants to bodies concerned with accounting

35

standards etc), after subsection (2)(k) insert—

“(ka)   

exercising functions of the Independent Supervisor appointed

under Chapter 3 of Part 35 of the Company Law Reform Act

2006;”.

 
 

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 4 — The register of auditors etc

420

 

Chapter 4

The register of auditors etc

868     

The register of auditors

(1)   

The Secretary of State must make regulations requiring the keeping of a

register of—

5

(a)   

the persons eligible for appointment as a statutory auditor, and

(b)   

third country auditors (see Chapter 5) who apply to be registered in the

specified manner and in relation to whom specified requirements are

met.

(2)   

The regulations must require each person’s entry in the register to contain—

10

(a)   

his name and address,

(b)   

in the case of an individual eligible for appointment as a statutory

auditor, the specified information relating to any firm on whose behalf

he is responsible for statutory audit work,

(c)   

in the case of a firm eligible for appointment as a statutory auditor, the

15

specified information relating to the individuals responsible for

statutory audit work on its behalf,

(d)   

in the case of an individual or firm eligible for appointment as a

statutory auditor by virtue of Chapter 2, the name of the relevant

supervisory body, and

20

(e)   

in the case of a firm eligible for appointment as a statutory auditor by

virtue of Chapter 2 or a third country auditor, the information

mentioned in subsection (3),

   

and may require each person’s entry to contain other specified information.

(3)   

The information referred to in subsection (2)(e) is—

25

(a)   

in relation to a body corporate, except where paragraph (b) applies, the

name and address of each person who is a director of the body or holds

any shares in it;

(b)   

in relation to a limited liability partnership, the name and address of

each member of the partnership;

30

(c)   

in relation to a corporation sole, the name and address of the individual

for the time being holding the office by the name of which he is the

corporation sole;

(d)   

in relation to a partnership, the name and address of each partner.

(4)   

The regulations may provide that different parts of the register are to be kept

35

by different persons.

(5)   

The regulations may impose such obligations as the Secretary of State thinks fit

on—

(a)   

recognised supervisory bodies,

(b)   

any body designated by order under section 881 (delegation of

40

Secretary of State’s functions),

(c)   

persons eligible for appointment as a statutory auditor,

(d)   

third country auditors,

(e)   

any person with whom arrangements are made by one or more

recognised supervisory bodies, or by any body designated by order

45

under section 881, with respect to the keeping of the register, or

 
 

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 4 — The register of auditors etc

421

 

(f)   

the Independent Supervisor appointed under section 857.

(6)   

The regulations may include—

(a)   

provision requiring that specified entries in the register be open to

inspection at times and places specified or determined in accordance

with the regulations;

5

(b)   

provision enabling a person to require a certified copy of specified

entries in the register;

(c)   

provision authorising the charging of fees for inspection, or the

provision of copies, of such reasonable amount as may be specified or

determined in accordance with the regulations.

10

(7)   

The Secretary of State may direct in writing that the requirements imposed by

the regulations in accordance with subsections (2)(e) and (3), or such of those

requirements as are specified in the direction, are not to apply, in whole or in

part, in relation to a particular registered third country auditor or class of

registered third country auditors.

15

(8)   

The obligations imposed by regulations under this section on such persons as

are mentioned in subsection (5)(b) or (e) are enforceable on the application of

the Secretary of State by injunction or, in Scotland, by an order under section

45 of the Court of Session Act 1988 (c. 36).

(9)   

In this section “specified” means specified by regulations under this section.

20

(10)   

Regulations under this section are subject to negative resolution procedure.

869     

Information to be made available to public

(1)   

The Secretary of State may make regulations requiring a person eligible for

appointment as a statutory auditor, or a member of a specified class of such

persons, to keep and make available to the public specified information,

25

including information regarding—

(a)   

the person’s ownership and governance,

(b)   

the person’s internal controls with respect to the quality and

independence of its audit work,

(c)   

the person’s turnover, and

30

(d)   

the audited persons of whom the person has acted as statutory auditor.

(2)   

Regulations under this section may—

(a)   

impose such obligations as the Secretary of State thinks fit on persons

eligible for appointment as a statutory auditor;

(b)   

require the information to be made available to the public in a specified

35

manner.

(3)   

In this section “specified” means specified by regulations under this section.

(4)   

Regulations under this section are subject to negative resolution procedure.

 
 

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 5 — Registered third country auditors

422

 

Chapter 5

Registered third country auditors

Introductory

870     

Meaning of “third country auditor”, “registered third country auditor” etc

(1)   

In this Part—

5

“third country auditor” means the auditor of the accounts of a traded non-

Community company, and the expressions “third country audit” and

“third country audit work” are to be construed accordingly;

“registered third country auditor” means a third country auditor who is

entered in the register kept in accordance with regulations under

10

section 868(1).

(2)   

In subsection (1) “traded non-Community company” means a body

corporate—

(a)   

which is incorporated or formed under the law of a country or territory

which is not a member State or part of a member State,

15

(b)   

whose transferable securities are admitted to trading on a regulated

market situated or operating in the United Kingdom, and

(c)   

which has not been excluded, or is not of a description of bodies

corporate which has been excluded, from this definition by an order

made by the Secretary of State.

20

(3)   

For this purpose—

“regulated market” has the meaning given by Article 4.1(14) of Directive

2004/39/EC of the European Parliament and of the Council on markets

in financial instruments;

“transferable securities” has the meaning given by Article 4.1(18) of that

25

Directive.

(4)   

An order under this section is subject to negative resolution procedure.

Duties

871     

Duties of registered third country auditors

(1)   

A registered third country auditor must participate in—

30

(a)   

arrangements within paragraph 1 of Schedule 12 (arrangements for

independent monitoring of audits of traded non-Community

companies), and

(b)   

arrangements within paragraph 2 of that Schedule (arrangements for

independent investigation for disciplinary purposes of public interest

35

cases).

(2)   

A registered third country auditor must—

(a)   

take such steps as may be reasonably required of it to enable its

performance of third country audits to be monitored by means of

inspections carried out under the arrangements mentioned in

40

subsection (1)(a), and

 
 

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 5 — Registered third country auditors

423

 

(b)   

comply with any decision as to disciplinary action to be taken against

it made under the arrangements mentioned in subsection (1)(b).

(3)   

Schedule 12 makes further provision with respect to the arrangements in

which registered third country auditors are required to participate.

(4)   

The Secretary of State may direct in writing that subsections (1) to (3) are not to

5

apply, in whole or in part, in relation to a particular registered third country

auditor or class of registered third country auditors.

Information

872     

Matters to be notified to the Secretary of State

(1)   

The Secretary of State may require a registered third country auditor—

10

(a)   

to notify him immediately of the occurrence of such events as he may

specify in writing and to give him such information in respect of those

events as is so specified;

(b)   

to give him, at such times or in respect of such periods as he may

specify in writing, such information as is so specified.

15

(2)   

The notices and information required to be given must be such as the Secretary

of State may reasonably require for the exercise of his functions under this Part.

(3)   

The Secretary of State may require information given under this section to be

given in a specified form or verified in a specified manner.

(4)   

Any notice or information required to be given under this section must be

20

given in writing unless the Secretary of State specifies or approves some other

manner.

873     

The Secretary of State’s power to call for information

(1)   

The Secretary of State may by notice in writing require a registered third

country auditor to give him such information as he may reasonably require for

25

the exercise of his functions under this Part.

(2)   

The Secretary of State may require that any information which he requires

under this section is to be given within such reasonable time and verified in

such manner as he may specify.

Enforcement

30

874     

Compliance orders

(1)   

If at any time it appears to the Secretary of State that a registered third country

auditor has failed to comply with an obligation imposed on him by or by virtue

of this Part, the Secretary of State may make an application to the court under

this section.

35

(2)   

If on an application under this section the court decides that the auditor has

failed to comply with the obligation in question, it may order the auditor to

take such steps as the court directs for securing that the obligation is complied

with.

 
 

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 6 — Supplementary and general

424

 

(3)   

In this section “the court” means the High Court or, in Scotland, the Court of

Session.

875     

Removal of third country auditors from the register of auditors

(1)   

The Secretary of State may, by regulations, confer on the person keeping the

register in accordance with regulations under section 868(1) power to remove

5

a third country auditor from the register.

(2)   

Regulations under this section must require the person keeping the register, in

determining whether to remove a third country auditor from the register, to

have regard to the auditor’s compliance with obligations imposed on him by

or by virtue of this Part.

10

(3)   

Where provision is made under section 868(4) (different parts of the register to

be kept by different persons), references in this section to the person keeping

the register are to the person keeping that part of the register which relates to

third country auditors.

(4)   

Regulations under this section are subject to negative resolution procedure.

15

876     

Grants to bodies concerned with arrangements under Schedule 12

In section 16 of the Companies (Audit, Investigations and Community

Enterprise) Act 2004 (c. 27) (grants to bodies concerned with accounting

standards etc), after subsection (2)(ka) (inserted by section 867) insert—

“(kb)   

establishing, maintaining or carrying out arrangements within

20

paragraph 1 or 2 of Schedule 12 to the Company Law Reform

Act 2006;”.

Chapter 6

Supplementary and general

Power to require second company audit

25

877     

Secretary of State’s power to require second audit of a company

(1)   

This section applies where a person appointed as statutory auditor of a

company was not an appropriate person for any part of the period during

which the audit was conducted.

30

(2)   

The Secretary of State may direct the company concerned to retain an

appropriate person—

(a)   

to conduct a second audit of the relevant accounts, or

(b)   

to review the first audit and to report (giving his reasons) whether a

second audit is needed.

35

(3)   

For the purposes of subsections (1) and (2) a person is “appropriate” if he—

(a)   

is eligible for appointment as a statutory auditor or, if the person is an

Auditor General, for appointment as statutory auditor of the company,

and

 
 

 
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