S.160 (1) –(4)
i) The auditor can only be removed from office by the shareholders.
ii) Only an ordinary resolution (over 50% majority) of the company in the general meeting is required to remove the auditor from office, but a special notice (28days) of the intended removal should be given to the company and the auditor.
iii) The auditor can make reasonable representations in writing to the shareholders and they must be circulated at the company’s expense to everyone entitled to receive notice of the meeting.
iv) If representations are not circulated for any reason, the auditor has the right to have them read out at the meeting.
In the event that the auditor is removed, he still has a right to attend the AGM at which his term of office would have expired or any meeting at which it is proposed to appoint someone to fill the vacancy created by his removal. He has a right to speak at such meetings on any matter which concerns him as the retiring auditor.
Reasons Why an Auditor might be asked to step down.
1. Disagreements over accounting policies or audit findings where the directors feel that the auditor is taking an unreasonable stance.
2. A desire by management of the holding company to rationalize the audits of the subsidiaries under one firm of auditors.
3. Basic incompatibility between management and the auditor.
4. The auditor threatens to expose management’s fraud or curb management’s unrestricted use of the company’s resources.
S.160 (1) –(4)