Companies Act 2006

Holding of appropriate qualification U.K.

6 (1) The body must have rules to the effect that a person is not eligible for appointment as a statutory auditor unless— U.K.

(a) in the case of an individual [F1 other than [F2 a third country auditor]], he holds an appropriate qualification,

[F3 (aa) in the case of an individual who is [F4 a third country auditor]—

(i) he holds an appropriate qualification,

(ii) he has been authorised on or before 5 April 2008 to practise the profession of company auditor pursuant to the European Communities (Recognition of Professional Qualifications) (First General System) Regulations 2005 ( S.I. 2005/18) and has fulfilled any requirements imposed pursuant to regulation 6 of those Regulations, or

[F5 (iii) he meets the requirements of sub-paragraph (1A).]]

(b) in the case of a firm F6 ...—

(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).

F7 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F8 (1A) The requirements of this sub-paragraph are that—

(a) the individual holds a professional qualification which covers all the subjects that are covered by a recognised professional qualification and that are subjects of which knowledge is essential for the pursuit of the profession of statutory auditor, or

(b) the individual is an EEA auditor who—

(i) on or before IP completion day, holds a professional qualification which does not cover all those subjects,

(ii) on or before IP completion day, has been approved by the body or is in the process of seeking approval from the body, and

(iii) has met whichever of the requirements of sub-paragraph (1B) is specified in the body's rules.]

[F9 (1B) For the purposes of sub-paragraph (1A)(b)(iii), the body's rules must specify one of the following requirements—

(a) a requirement to pass an aptitude test in accordance with sub-paragraph (2),

(b) a requirement to complete an adaptation period in accordance with sub-paragraphs (2B) and (2C), or

(c) a requirement either to pass an aptitude test in accordance with sub-paragraph (2) or to complete an adaptation period in accordance with sub-paragraphs (2B) and (2C), according to the choice of the individual.]

[F10 (2) The aptitude test—

(a) must test the person's knowledge of subjects—

(i) that are covered by a recognised professional qualification,

(ii) that are not covered by the professional qualification already held by the person, and

(iii) the knowledge of which is essential for the pursuit of the profession of statutory auditor;

(b) may test the person's knowledge of rules of professional conduct;

(c) must not test the person's knowledge of any other matters.

F11 (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F12 (2B) An adaptation period is a period, not exceeding three years, in which the individual (“the applicant”) pursues the profession of statutory auditor under the supervision of an individual who holds an appropriate qualification, subject to an assessment (“the ability assessment”) of the applicant’s ability to pursue the profession of statutory auditor in the United Kingdom.

(2C) Where the body’s rules specify [F13 a requirement that may or must be met by completing an adaptation period]—

(a) the body must have rules governing the adaptation period and the ability assessment, having regard to the circumstances of each applicant and, in particular, to the fact that each applicant is a qualified professional in [F14 an EEA State],

(b) the applicant may be required to undergo further training during the adaptation period,

(c) the applicant’s performance during the adaptation period must be assessed by the body, and

(d) the body must determine the applicant’s professional status during the adaptation period.]

(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.]

Textual Amendments

F1 Words in Sch. 10 para. 6(1)(a) inserted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 17(2)

F2 Words in Sch. 10 para. 6(1)(a) substituted (31.12.2020) by S.I. 2019/177, regs. 2, 28(za) (as inserted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(e)(i)); 2020 c. 1, Sch. 5 para. 1(1)

F3 Sch. 10 para. 6(1)(aa) inserted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 17(3)

F4 Words in Sch. 10 para. 6(1)(a) substituted (31.12.2020) by S.I. 2019/177, regs. 2, 28(za) (as inserted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(e)(i)); 2020 c. 1, Sch. 5 para. 1(1)

F5 Sch. 10 para. 6(1)(aa)(iii) substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 57(2)

F6 Words in Sch. 10 para. 6(1)(b) omitted (31.12.2020) by virtue of S.I. 2019/177, regs. 2, 28(zc) (as inserted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(e)(i)); 2020 c. 1, Sch. 5 para. 1(1)

F7 Sch. 10 para. 6(1)(c) omitted (31.12.2020) by virtue of S.I. 2019/177, regs. 2, 28(a) (as substituted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(e)(ii)); 2020 c. 1, Sch. 5 para. 1(1)

F8 Sch. 10 para. 6(1A) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 28(b) (as amended by S.I. 2019/1392, regs. 1(2), 6 (as amended by S.I. 2020/523, regs. 1(2), 27)); 2020 c. 1, Sch. 5 para. 1(1)

F9 Sch. 10 para. 6(1B) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 28(c) (as amended by S.I. 2020/335, regs. 1, 7); 2020 c. 1, Sch. 5 para. 1(1)

F10 Sch. 10 para. 6(2)(2A) substituted (6.4.2008) for Sch. 10 para. 6(2) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 17(4)

F11 Sch. 10 para. 6(2A) omitted (17.6.2016) by virtue of The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 57(6)

F12 Sch. 10 para. 6(2B)(2C) 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. 57(7)

F13 Words in Sch. 10 para. 6(2C) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 28(d); 2020 c. 1, Sch. 5 para. 1(1)

F14 Words in Sch. 10 para. 6(2C)(a) substituted (31.12.2020) by S.I. 2019/177, regs. 2, 28(da) (as inserted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(e)(iii)); 2020 c. 1, Sch. 5 para. 1(1)

7 (1) This paragraph explains what is meant in paragraph 6(1)(b) by a firm being “controlled by qualified persons”. U.K.

(2) In this paragraph references to a person being qualified are—

[F15 (a) in relation to an individual, to that individual's—

(i) holding an appropriate qualification, or

(ii) being a third country auditor and meeting the requirements of paragraph 6(1)(aa)(ii) or 6(1A);]

(b) in relation to a firm, to its—

(i) being eligible for appointment as a statutory auditor, F16 ...

F16 (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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.

Textual Amendments

F15 Sch. 10 para. 7(2)(a) substituted (31.12.2020) by S.I. 2019/177, regs. 2, 29(a) (as substituted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(f)); 2020 c. 1, Sch. 5 para. 1(1)

F16 Sch. 10 para. 7(2)(b)(ii) and word omitted (31.12.2020) by virtue of S.I. 2019/177, regs. 2, 29(b) (as substituted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(f)); 2020 c. 1, Sch. 5 para. 1(1); and (E.W.) (1.1.2021) by virtue of The Local Audit (England and Wales) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/504), regs. 1(3), 2

[F17 7A. (1) The body must have rules and practices governing the adaptation period and the ability assessment referred to in section 1221 (approval of third country qualifications), and the following provisions of this paragraph apply in any case within that section. U.K.

(2) The body must have regard to the circumstances of each applicant in relation to the adaptation period, and the ability assessment, to be required of the applicant.

(3) The applicant may be required to undergo further training during the adaptation period.

(4) The applicant’s performance during the adaptation period must be assessed by the body.

(5) The body must determine the applicant’s professional status during the adaptation period.]

Textual Amendments

F17 Sch. 10 para. 7A inserted (6.4.2018) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 22 (with reg. 2(6)(7))