Companies Act 2006

General provisions U.K.

492 Fixing of auditor's remuneration U.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.

Modifications etc. (not altering text)

C1 Pts. 1-39 modified (31.12.2020) by Regulation (EC) No. 2157/2001, Art. AAA1(3) (as inserted by The European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1298), regs. 1, 97 (with regs. 140-145) (as amended by S.I. 2020/523, regs. 1(2), 5(a)-(f)); 2020 c. 1, Sch. 5 para. 1(1))

C2 S. 492 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 37

C3 Ss. 484-539 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

493 Disclosure of terms of audit appointment U.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[F1 the 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.

Textual Amendments

F1 Words in s. 493(2)(c)(ii) inserted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (S.I. 2013/1970), reg. 1(2)(3), Sch. para. 19

Modifications etc. (not altering text)

C4 Ss. 484-539 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

Commencement Information

I1 S. 493 wholly in force at 6.4.2008; s. 493 not in force at Royal Assent, see s. 1300; s. 493 in force for specified purposes at 20.1.2007 by S.I. 2006/3428, art. 3(3) (subject to art. 5, Sch. 1 and with arts. 6, 8, Sch. 5); s. 493 in force at 6.4.2008 by S.I. 2007/3495, art. 3(1)(d) (with arts. 7, 12, Sch. 4 paras. 9-19)

494 Disclosure of services provided by auditor or associates and related remuneration U.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[F2 the 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.

Textual Amendments

F2 Words in s. 494(4)(b) inserted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (S.I. 2013/1970), reg. 1(2)(3), Sch. para. 20

Modifications etc. (not altering text)

C5 S. 494 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 38

C6 Ss. 484-539 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

Commencement Information

I2 S. 494 wholly in force at 6.4.2008; s. 494 not in force at Royal Assent, see s. 1300; s. 494 in force for specified purposes at 20.1.2007 by S.I. 2006/3428, art. 3(3) (subject to art. 5, Sch. 1 and with arts. 6, 8, Sch. 5); s. 494 in force at 6.4.2008 by S.I. 2007/3495, art. 3(1)(d) (with arts. 7, 12, Sch. 4 paras. 9-19)

[F3 494ZA. The maximum engagement period U.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:

First financial year of the maximum engagement period	Last financial year of the maximum engagement period
A financial year of the company beginning before 17 June 1994	The last financial year of the company to begin before 17 June 2020.
A financial year of the company beginning— (a) on or after 17 June 1994, and (b) before 17 June 2003	The last financial year of the company to begin before 17 June 2023.
A financial year of the company beginning— (a) on or after 17 June 2003, and (b) before 17 June 2016	No qualifying selection procedure Where neither the first financial year of the maximum engagement period nor any subsequent financial year is one for which the auditor has been appointed following the carrying out of a qualifying selection procedure, the later of- (a) the last financial year of the company to begin before 17 June 2016, and (b) the last financial year of the company to begin within the period of 10 years beginning with the first day of the first financial year of the maximum engagement period. No qualifying selection procedure within 10 years Where the last day of the last financial year of the company to begin within the period of 10 years beginning with the first day of the last financial year of the company for which the auditor was appointed following a qualifying selection procedure is before 17 June 2016— (a) the last financial year of the company to begin before 17 June 2016, unless (b) the auditor is appointed following a qualifying selection procedure for the first financial year of the company to begin on or after 17 June 2016, in which case it is the last financial year of the company to begin within the period of 20 years beginning with the first day of the first financial year of the maximum engagement period. Qualifying selection procedure within 10 years In any other case, the earlier of- (a) the last financial year of the company to begin within the period of 10 years beginning with the first day of the last financial year of the company for which the auditor was appointed following a qualifying selection procedure, and (b) the last financial year of the company to begin within the period of 20 years beginning with the first day of the first financial year of the maximum engagement period.
A financial year of the company beginning on or after 17 June 2016	The earlier of— (a) the last financial year of the company to begin within the period of 10 years beginning with the first day of the last financial year of the company for which the auditor was appointed following a qualifying selection procedure, and (b) the last financial year of the company to begin within the period of 20 years beginning with the first day of the first financial year of the maximum engagement period.

(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) [F4 In 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 [F7 as it had effect immediately before IP completion day], having regard to the circumstances at the time (including whether the company had an audit committee).]

Textual Amendments

F3 S. 494ZA inserted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(14)

F4 Words in s. 494ZA(5) substituted (1.1.2018) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 20 (with reg. 2(6)(7))

F5 Word in s. 494ZA(5)(a)(ii) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 5(a); 2020 c. 1, Sch. 5 para. 1(1)

F6 S. 494ZA(5)(a)(iii)(iv) substituted for s. 494ZA(5)(a)(iii) (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 5(b); 2020 c. 1, Sch. 5 para. 1(1)

F7 Words in s. 494ZA(5)(b) inserted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 5(c) (as amended by S.I. 2020/523, regs. 1(2), 14(a)); 2020 c. 1, Sch. 5 para. 1(1)

Modifications etc. (not altering text)

C7 S. 494ZA applied (with modifications) by S.I. 2008/565, reg. 6(1)(1A) (as substituted (with effect in accordance with reg. 2(4) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 2 para. 6(a) (with reg. 2(6)(7)))

C8 Ss. 494A, 494ZA applied (with modifications) by S.I. 2008/1911, regs. 38A, 38B (as inserted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 12 (with reg. 2(6)(7))) (as amended (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 51(a); 2020 c. 1, Sch. 5 para. 1(1))

[F8 494A Interpretation U.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 [F11 entity] ” means—

  (a)

  an issuer whose transferable securities are admitted to trading on a [F12 UK 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, [F13 which is a CRR firm within the meaning of Article 4(1)(2A) of that Regulation];

  (c)

  [F14 a 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 ...]

Textual Amendments

F8 S. 494A inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 12 (with reg. 1(12))

F9 Words in s. 494A substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 6(a) (as amended by S.I. 2020/523, regs. 1(2), 14(b)(i)); 2020 c. 1, Sch. 5 para. 1(1)

F10 Words in s. 494A omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 6(b); 2020 c. 1, Sch. 5 para. 1(1)

F11 Word in s. 494A substituted (with effect in accordance with reg. 1(6)(8) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 12(15)

F12 Words in s. 494A substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 6(c)(i); 2020 c. 1, Sch. 5 para. 1(1)

F13 Words in s. 494A substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 6(c)(ii); 2020 c. 1, Sch. 5 para. 1(1)

F14 Words in s. 494A substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 6(c)(iii) (as amended by S.I. 2020/523, regs. 1(2), 14(b)(ii)); 2020 c. 1, Sch. 5 para. 1(1)

F15 Words in s. 494A omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 6(d); 2020 c. 1, Sch. 5 para. 1(1)

Modifications etc. (not altering text)

C9 Ss. 494A, 494ZA applied (with modifications) by S.I. 2008/1911, regs. 38A, 38B (as inserted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 12 (with reg. 2(6)(7))) (as amended (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 51(b); 2020 c. 1, Sch. 5 para. 1(1))