Valid from 06/04/2008
Prospective
6(1)The body must have rules to the effect that a person is not eligible for appointment as a statutory auditor unless—
(a)in the case of an individual, he holds an appropriate qualification,
(b)in the case of a firm—
(i)each individual responsible for statutory audit work on behalf of the firm is eligible for appointment as a statutory auditor, and
(ii)the firm is controlled by qualified persons (see paragraph 7 below).
(2)Sub-paragraph (1) does not prevent the body from imposing more stringent requirements.
(3)A firm which has ceased to comply with the conditions mentioned in sub-paragraph (1)(b) may be permitted to remain eligible for appointment as a statutory auditor for a period of not more than three months.
Prospective
7(1)This paragraph explains what is meant in paragraph 6(1)(b) by a firm being “controlled by qualified persons”.
(2)In this paragraph references to a person being qualified are—
(a)in relation to an individual, to his holding—
(i)an appropriate qualification, or
(ii)a corresponding qualification to audit accounts under the law of a member State, or part of a member State, other than the United Kingdom;
(b)in relation to a firm, to its—
(i)being eligible for appointment as a statutory auditor, or
(ii)being eligible for a corresponding appointment as an auditor under the law of a member State, or part of a member State, other than the United Kingdom.
(3)A firm is to be treated as controlled by qualified persons if, and only if—
(a)a majority of the members of the firm are qualified persons, and
(b)where the firm's affairs are managed by a board of directors, committee or other management body, a majority of that body are qualified persons or, if the body consists of two persons only, at least one of them is a qualified person.
(4)A majority of the members of a firm means—
(a)where under the firm's constitution matters are decided upon by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters;
(b)in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution.
(5)A majority of the members of the management body of a firm means—
(a)where matters are decided at meetings of the management body by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters at such meetings;
(b)in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution.
(6)Paragraphs 5 to 11 of Schedule 7 to this Act (rights to be taken into account and attribution of rights) apply for the purposes of this paragraph.