Part 16Audit

Chapter 2Appointment of auditors

General provisions

492Fixing of auditor's remuneration

(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 appointment

(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)

inF1the 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 remuneration

(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)

inF2the 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.

F3494AInterpretation

In this Chapter—

“audit committee” means a body which performs the functions referred to in Article 39(6) of the Audit Directive or equivalent functions;

“Audit Directive” means Directive 2006/43/EC of the European Parliament and of the Council on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC;

“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 company” means—

(a)

an issuer whose transferable securities are admitted to trading on a 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, other than one listed in Article 2 of Directive 2013/36/EU of the European Parliament and of the Council on access to the activity of credit institutions and investment firms;

(c)

an insurance undertaking within the meaning given by Article 2(1) of Council Directive 1991/674/EEC of the European Parliament and of the Council on the annual accounts and consolidated accounts of insurance undertakings;

“regulated market” has the same meaning as in Part 6 of the Financial Services and Markets Act 2000 (see section 103(1));

“transferable securities” means anything which is a transferable security for the purposes of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments.