Companies Act 2006

General provisionsU.K.

492Fixing of auditor's remunerationU.K.

(1)The remuneration of an auditor appointed by the members of a company must be fixed by the members by ordinary resolution or in such manner as the members may by ordinary resolution determine.

(2)The remuneration of an auditor appointed by the directors of a company must be fixed by the directors.

(3)The remuneration of an auditor appointed by the Secretary of State must be fixed by the Secretary of State.

(4)For the purposes of this section “remuneration” includes sums paid in respect of expenses.

(5)This section applies in relation to benefits in kind as to payments of money.

493Disclosure of terms of audit appointmentU.K.

(1)The Secretary of State may make provision by regulations for securing the disclosure of the terms on which a company's auditor is appointed, remunerated or performs his duties.

Nothing in the following provisions of this section affects the generality of this power.

(2)The regulations may—

(a)require disclosure of—

(i)a copy of any terms that are in writing, and

(ii)a written memorandum setting out any terms that are not in writing;

(b)require disclosure to be at such times, in such places and by such means as are specified in the regulations;

(c)require the place and means of disclosure to be stated—

(i)in a note to the company's annual accounts (in the case of its individual accounts) or in such manner as is specified in the regulations (in the case of group accounts),

(ii)in[F1the strategic report or] the directors' report, or

(iii)in the auditor's report on the company's annual accounts.

(3)The provisions of this section apply to a variation of the terms mentioned in subsection (1) as they apply to the original terms.

(4)Regulations under this section are subject to affirmative resolution procedure.

494Disclosure of services provided by auditor or associates and related remunerationU.K.

(1)The Secretary of State may make provision by regulations for securing the disclosure of—

(a)the nature of any services provided for a company by the company's auditor (whether in his capacity as auditor or otherwise) or by his associates;

(b)the amount of any remuneration received or receivable by a company's auditor, or his associates, in respect of any such services.

Nothing in the following provisions of this section affects the generality of this power.

(2)The regulations may provide—

(a)for disclosure of the nature of any services provided to be made by reference to any class or description of services specified in the regulations (or any combination of services, however described);

(b)for the disclosure of amounts of remuneration received or receivable in respect of services of any class or description specified in the regulations (or any combination of services, however described);

(c)for the disclosure of separate amounts so received or receivable by the company's auditor or any of his associates, or of aggregate amounts so received or receivable by all or any of those persons.

(3)The regulations may—

(a)provide that “remuneration” includes sums paid in respect of expenses;

(b)apply to benefits in kind as well as to payments of money, and require the disclosure of the nature of any such benefits and their estimated money value;

(c)apply to services provided for associates of a company as well as to those provided for a company;

(d)define “associate” in relation to an auditor and a company respectively.

(4)The regulations may provide that any disclosure required by the regulations is to be made—

(a)in a note to the company's annual accounts (in the case of its individual accounts) or in such manner as is specified in the regulations (in the case of group accounts),

(b)in[F2the strategic report or] the directors' report, or

(c)in the auditor's report on the company's annual accounts.

(5)If the regulations provide that any such disclosure is to be made as mentioned in subsection (4)(a) or (b), the regulations may require the auditor to supply the directors of the company with any information necessary to enable the disclosure to be made.

(6)Regulations under this section are subject to negative resolution procedure.

[F3494ZA.The maximum engagement periodU.K.

(1)Where a person is auditor of a company for consecutive financial years, the maximum engagement period of the person as auditor of the company—

(a)begins with the first of those years (see the appropriate entry in the first column of the following Table), and

(b)ends with the financial year specified in the corresponding entry in the second column of the Table:

(2)Where the first financial year of the maximum engagement period begins on or after 17 June 2003, the maximum engagement period may be extended by a period of no more than 2 years with the approval of the competent authority.

(3)Such approval may be given by the competent authority only if it is satisfied that exceptional circumstances exist.

(4)Where the competent authority gives its approval as mentioned in subsection (2)—

(a)the second column of the Table in subsection (1) has effect with the necessary modifications, and

(b)the first appointment to be made after the end of the period as so extended must be made following a qualifying selection procedure.

(5)[F4In this section] “qualifying selection procedure” means—

(a)in the case of an appointment for a financial year beginning on or after 17 June 2016 made after the Statutory Auditors and Third Country Auditors Regulations 2017 come into force—

(i)if the company is a private company and has an audit committee, a selection procedure that complies with the requirements of section 485A(4) and (5)(a) and (b),

(ii)if the company is a public company and has an audit committee, a selection procedure that complies with the requirements of subsections 489A(4) and (5)(a) and(b), F5...

[F6(iii)if the company is a private company and does not have an audit committee, a selection procedure that complies with the requirements of section 485B(4),

(iv)if the company is a public company and does not have an audit committee, a selection procedure that complies with the requirements of section 489B(4),]

(b)in any other case, a selection procedure that substantially meets the requirements of Article 16(2) to (5) of the Audit Regulation [F7as it had effect immediately before IP completion day], having regard to the circumstances at the time (including whether the company had an audit committee).]

[F8494AInterpretationU.K.

In this Chapter—

• [F9“audit committee” means a body which performs—

  (a)

  the functions referred to in—

  (i)

  rule 7.1.3 of the Disclosure Guidance and Transparency Rules sourcebook made by the Financial Conduct Authority (audit committees and their functions) under the Financial Services and Markets Act 2000, or

  (ii)

  rule 2.4 of the Audit Committee Part of the Rulebook made by the Prudential Regulation Authority (audit committee) under that Act,

  as they have effect on IP completion day, or

  (b)

  equivalent functions.]

• F10...

• “Auditor General” means—

  (a)

  the Comptroller and Auditor General,

  (b)

  the Auditor General for Scotland,

  (c)

  the Auditor General for Wales, or

  (d)

  the Comptroller and Auditor General for Northern Ireland;

• “issuer” has the same meaning as in Part 6 of the Financial Services and Markets Act 2000 (see section 102A(6));

• “network” means an association of persons other than a firm co-operating in audit work by way of—

  (a)

  profit-sharing;

  (b)

  cost sharing;

  (c)

  common ownership, control or management;

  (d)

  common quality control policies and procedures;

  (e)

  common business strategy; or

  (f)

  use of a common name;

• “public interest [F11entity] ” means—

  (a)

  an issuer whose transferable securities are admitted to trading on a [F12UK regulated market];

  (b)

  a credit institution within the meaning given by Article 4(1)(1) of Regulation (EU) No. 575/2013 of the European Parliament and of the Council, [F13which is a CRR firm within the meaning of Article 4(1)(2A) of that Regulation];

  (c)

  [F14a person who would be an insurance undertaking as defined in Article 2(1) of Council Directive 91/674/EEC of 19 December 1991 of the European Parliament and of the Council on the annual accounts and consolidated accounts of insurance undertakings as that Article had effect immediately before IP completion day, were the United Kingdom a member State;]

• F15...

• F15...]