Division 5     Auditor and Auditor’s Report
Subdivision 1    Preliminary
392.
Interpretation
In this Division—
appointment period (委任期), in relation to a financial year,
means the period of 28 days beginning on whichever is the
earlier of the following—

(a) the date on which a copy of the reporting documents
for the previous financial year is sent or provided to
every member of the company under section 430(3) or
612(1)(b) (as the case may be);
(b) the last date on which a copy of the reporting
documents for the previous financial year must be sent
or provided to every member of the company under
section 430(3) or 612(1)(b) (as the case may be);
cessation statement (停任陳述) means a statement given under
section 422(1), (2) or (3) or 423(2)(a);
practice unit (執業單位) has the meaning given by section 2(1)
of the Professional Accountants Ordinance (Cap. 50);
statement of circumstances (情況陳述) means a statement given
under section 424(a) or 425(1)(a).
 

Subdivision 2     Appointment of Auditor
393.
Eligibility for appointment
(1) Only a practice unit is eligible for appointment as auditor
of a company under this Subdivision.
(2) The following are disqualified for appointment as auditor
of a company under this Subdivision—
(a) a person who is an officer or employee of the
company;
(b) a person who is a partner or employee of a person
mentioned in paragraph (a);
(c) a person who—

(i) is, by virtue of paragraph (a) or (b), disqualified
for appointment as auditor of any other
undertaking that is a subsidiary undertaking, or a
parent undertaking, of the company or is a
subsidiary
undertaking
of
that
parent
undertaking; or
(ii) would be so disqualified if the undertaking were a
company.
(3) In this section, a reference to an officer or employee of a
company excludes an auditor of the company.
394.
Auditor must be appointed for each financial year
(1) An auditor must be appointed for each financial year of a
company.
(2) An auditor may be appointed only under this Subdivision.
395.
Appointment of first auditor by directors
(1) This section applies to—
(a) a company formed and registered under this
Ordinance; and
(b) a company formed and registered under a provision
of the predecessor Ordinance having a continuing
effect under Schedule 11 or by virtue of section 23 of
the Interpretation and General Clauses Ordinance
(Cap. 1).
(2) If the company is required to hold an annual general
meeting in accordance with section 610 in respect of its
first financial year, the directors may appoint the auditor of
the company for that first financial year at any time before
the annual general meeting.

(3) If, by virtue of section 612(1) or (2), the company is not
required to hold an annual general meeting in accordance
with section 610 in respect of its first financial year, the
directors may appoint the auditor of the company for that
first financial year at any time before the appointment
period in relation to the next financial year.
396.
Appointment of auditor by company members
(1) A company must appoint the auditor of the company for a
financial year by a resolution passed at the annual general
meeting held in respect of the previous financial year.
(2) Subsection (1) does not apply to a company that, by virtue
of section 612(2), is not required to hold an annual general
meeting in accordance with section 610 in respect of the
previous financial year.
(3) A company must appoint the auditor of the company for a
financial year by a resolution passed at a general meeting
if—
(a) by virtue of section 612(2), it is not required to hold
an annual general meeting in accordance with section
610 in respect of the previous financial year; and
(b) no person is deemed to be reappointed as auditor of
the company for the financial year under section 403.
(4) An appointment under subsection (3) must be made before
the end of the appointment period in relation to the
financial year.
(5) If, at the annual general meeting held in respect of the
previous financial year, a company has not appointed the
auditor of the company for a financial year, the company
must make the appointment by a resolution passed at
another general meeting.

 (6) A company to which section 395 applies may, by a
resolution passed at a general meeting, appoint the auditor
of the company for its first financial year if the directors
have not done so under that section.
397.
Appointment to fill casual vacancy
(1) The directors may appoint a person to fill a casual vacancy
in the office of auditor of the company.
(2) If the directors have not done so within one month after
the casual vacancy occurs, the members may, by a
resolution passed at a general meeting, appoint a person to
fill the casual vacancy.
398.
Appointment of auditor by Court
(1) The Court may, on application by a member of a company,
appoint the auditor of the company for a financial year
if—
(a) in the case of a company required to hold an annual
general meeting in accordance with section 610 in
respect of the previous financial year—
(i) at the annual general meeting, no person has been
appointed as auditor of the company for the
financial year; or
(ii) an annual general meeting has not been held in
accordance with that section; or
(b) in the case of a company not required to hold an
annual general meeting in accordance with section 610
in respect of the previous financial year by virtue of
section 612(2)—
(i) at the end of the appointment period in relation
to the financial year, no person has been
appointed as auditor of the company for the
financial year; and

 (ii) no person is deemed to be reappointed as auditor
of the company for the financial year under
section 403.
(2) The Court may, on application by a member of a company
to which section 395 applies, appoint the auditor of the
company for its first financial year if an appointment has
not been made under sections 395(2) or (3) and 396(6).
(3) The Court may, on application by a member of a company,
appoint a person to fill a casual vacancy in the office of
auditor of the company if an appointment has not been
made under section 397.
399.
Effect of appointing a firm as auditor
If a firm is appointed, by the firm name, as auditor of a
company, the appointment is to be regarded as an appointment
of those persons who—
(a) are the partners in the firm from time to time during
the currency of the appointment; and
(b) are eligible, and not disqualified, for appointment as
auditor of the company under this Subdivision.
400.
Special notice required for resolution for appointing auditor in
some cases
(1) Special notice is required for—
(a) a resolution proposed for the purposes of section
396(1), (3) or (5) for appointing a person as auditor in
place of a specified incumbent; and
(b) a resolution proposed for the purposes of section
397(2).
Note—
See also section 578 which sets out the requirements regarding special
notice.

 (2) Special notice is also required for a resolution proposed for
the purposes of section 396(1), (3) or (5) for appointing a
specified incumbent as auditor if that incumbent holds
office by virtue of an appointment by the directors to fill a
casual vacancy under section 397(1).
(3) On receipt of a special notice, the company must send a
copy of it—
(a) to the person proposed to be appointed as auditor;
and
(b) in the case of—
(i) a proposed appointment under section 396(1),
(3) or (5) of a person in place of a specified
incumbent, to that incumbent; or
(ii) a proposed appointment under section 396(1), (3)
or (5) of a specified incumbent who holds office
by virtue of an appointment under section 397(1)
or (2) to fill a casual vacancy caused by a
resignation, to the person who resigned.
(4) In this section—
specified incumbent (指明在任人) means—
(a) the person who is the last auditor of the company and
whose term of office as auditor has expired; or
(b) the person whose term of office as auditor will
expire—
(i) at the end of the general meeting; or
(ii) at the end of the appointment period in relation
to the financial year concerned.

 401.
Copies of written resolution for appointment must be sent to new
and old auditors
(1) This section applies if an appointment of an auditor
specified in subsection (2) is proposed to be effected by a
written resolution of the members of a company.
(2) The appointment is—
(a) an appointment under section 396(1), (3) or (5) of a
person in place of a specified incumbent; or
(b) an appointment under section 396(1), (3) or (5) of a
specified incumbent who holds office by virtue of an
appointment under section 397(1) or (2) to fill a casual
vacancy caused by a resignation.
(3) On receipt of a copy of the proposed resolution, the
company must send a copy of it—
(a) to the person proposed to be appointed as auditor;
and
(b) in the case of—
(i) subsection (2)(a), to the specified incumbent; or
(ii) subsection (2)(b), to the person who resigned.
(4) If a company contravenes subsection (3), the written
resolution is ineffective.
(5) In this section—
specified incumbent (指明在任人) means—
(a) the person who is the last auditor of the company and
whose term of office as auditor has expired; or
(b) the person whose term of office as auditor will expire
at the end of the appointment period in relation to the
financial year concerned.

 402.
Terms of office of auditor
(1) A person appointed as auditor of a company holds office
in accordance with the terms of the appointment.
(2) Despite subsection (1)—
(a) a person appointed as auditor of a company does not
take office until the previous auditor’s appointment is
terminated; and
(b) a person appointed as auditor of a company for a
financial year under section 395, 396, 397 or 398 holds
office until—
(i) if the company holds an annual general meeting
in accordance with section 610 in respect of the
financial year, the end of the annual general
meeting;
(ii) if, by virtue of section 612(1), the company does
not hold an annual general meeting in accordance
with section 610 in respect of the financial year,
the date of the written resolution passed for the
purposes of section 612(1); or
(iii) if, by virtue of section 612(2), the company does
not hold an annual general meeting in accordance
with section 610 in respect of the financial year,
the end of the appointment period in relation to
the next financial year.
403.
Person deemed to be reappointed as auditor
(1) If—
(a) by virtue of section 612(2), a company is not required
to hold an annual general meeting in accordance with
section 610 in respect of a financial year; and

 (b) at the end of the appointment period in relation to the
next financial year, no person has been appointed as
auditor of the company for that next financial year,
the person who is the auditor of the company as at the end
of that appointment period is deemed to be reappointed, at
that time, as auditor of the company for that next financial
year on the same terms of appointment.
(2) Despite subsection (1), the person is not deemed to be
reappointed as auditor of the company for the next
financial year if—
(a) the person was appointed as auditor under section
395 or 397(1);
(b) the company’s articles require an actual appointment;
(c) before the person is deemed to be reappointed under
that subsection, the members have by a resolution
passed at a general meeting resolved that the person
should not be reappointed as auditor for that next
financial year;
(d) the person declines the reappointment in a written
notice sent to the company at least 14 days before the
end of the appointment period in relation to that next
financial year; or
(e) members representing at least the requisite percentage
of the voting rights of all the members who would be
entitled to vote on a resolution that the person should
not be reappointed give the company a notice
complying with subsection (5).
(3) Special notice is required for a resolution proposed for the
purposes of subsection (2)(c).
Note—
See also section 578 which sets out the requirements regarding special
notice.

 (4) On receipt of a special notice, the company must send a
copy of it to the person proposed not to be reappointed.
(5) A notice for the purposes of subsection (2)(e)—
(a) must state that the person should not be reappointed;
(b) must be authenticated by the member or members
giving it;
(c) must be delivered to the company in hard copy form
or electronic form; and
(d) must be received by the company before the end of the
accounting reference period immediately preceding the
time when the reappointment would have effect.
(6) This section does not affect the operation of Subdivision 6.
(7) In ascertaining the amount of any compensation or
damages payable to a person on ceasing to hold office of
auditor for any reason, no account is to be taken of any
loss of the opportunity of being deemed to be reappointed
as auditor under this section.
(8) In this section—
requisite percentage (所需百分比) means 5%, or a lower
percentage specified for the purposes of this section in the
company’s articles.
404.
Auditor’s remuneration
(1) The remuneration of an auditor of a company appointed
by the members may be fixed—
(a) by a resolution passed at a general meeting; or
(b) in the manner specified in such a resolution.
(2) The remuneration of an auditor of a company appointed
by the directors—
(a) may be fixed by the directors when making the
appointment; or

 (b) if it has not been fixed by the directors, may be fixed—
(i) by a resolution passed at a general meeting; or
(ii) in the manner specified in such a resolution.
(3) The remuneration of an auditor of a company appointed
by the Court—
(a) may be fixed by the Court when making the
appointment; or
(b) if it has not been fixed by the Court, may be fixed—
(i) by a resolution passed at a general meeting; or
(ii) in the manner specified in such a resolution.
(4) In this section—
remuneration (酬金), in relation to an auditor of a company,
includes any sum paid by the company in respect of the
expenses of the auditor.
 

Subdivision 3    Auditor’s Report
405.
Auditor’s duty to report
A company’s auditor must prepare a report for the members on
any financial statements prepared by the directors, a copy of
which is laid before the company in general meeting under
section 429, or is sent to a member under section 430 or
otherwise circulated, published or issued by the company,
during the auditor’s term of office.
406.
Auditor’s opinion on financial statements, directors’ report, etc.
(1) An auditor’s report must state, in the auditor’s opinion—
(a) whether the financial statements have been properly
prepared in compliance with this Ordinance; and
(b) in particular, whether the financial statements—

 (i) in the case of annual financial statements of a
company that does not fall within the reporting
exemption for the financial year, give a true and
fair view of the financial position and financial
performance of the company as required by
section 380; or
(ii) in the case of annual consolidated financial
statements of a company that does not fall within
the reporting exemption for the financial year,
give a true and fair view of the financial position
and financial performance of the company and
all the subsidiary undertakings as required by
section 380.
(2) If a company’s auditor is of the opinion that the
information in a directors’ report for a financial year is not
consistent with the financial statements for the financial
year, the auditor—
(a) must state that opinion in the auditor’s report; and
(b) may bring that opinion to the members’ attention at a
general meeting.
407.
Auditor’s opinion on other matters
(1) In preparing an auditor’s report, the auditor must carry out
an investigation that will enable the auditor to form an
opinion as to—
(a) whether adequate accounting records have been kept
by the company; and
(b) whether the financial statements are in agreement with
the accounting records.
(2) A company’s auditor must state the auditor’s opinion in the
auditor’s report if the auditor is of the opinion that—
(a) adequate accounting records have not been kept by the
company; or

 (b) the financial statements are not in agreement with the
accounting records in any material respect.
(3) If a company’s auditor fails to obtain all the information
or explanations that, to the best of the auditor’s knowledge
and belief, are necessary and material for the purpose of
the audit, the auditor must state that fact in the auditor’s
report.
(4) If the financial statements do not comply with section
383(1), the auditor must include in the auditor’s report, so
far as the auditor is reasonably able to do so, a statement
giving the particulars that are required to be, but have not
been, contained in the financial statements.
408.
Offences relating to contents of auditor’s report
(1) Every person specified in subsection (2) commits an offence
if the person knowingly or recklessly causes a statement
required to be contained in an auditor’s report under
section 407(2)(b) or (3) to be omitted from the report.
(2) The persons are—
(a) if the auditor who prepares the auditor’s report is a
natural person—
(i) the auditor; and
(ii) every employee and agent of the auditor who is
eligible for appointment as auditor of the
company;
(b) if the auditor who prepares the auditor’s report is a
firm, every partner, employee and agent of the auditor
who is eligible for appointment as auditor of the
company; or
(c) if the auditor who prepares the auditor’s report is a
body corporate, every officer, member, employee and
agent of the auditor who is eligible for appointment as
auditor of the company.

 (3) A person who commits an offence under subsection (1) is
liable to a fine of $150,000.
409.
Auditor’s reports to be signed
(1) An auditor’s report must be signed—
(a) if the auditor is a natural person, by the auditor; or
(b) if the auditor is a firm or body corporate, by a natural
person authorized to sign the auditor’s name on the
auditor’s behalf.
(2) An auditor’s report must state the auditor’s name.
(3) Every copy of an auditor’s report laid before a company in
general meeting under section 429, or sent to a member
under section 430 or otherwise circulated, published or
issued by the company, must state the auditor’s name.
(4) If subsection (3) is contravened, the company, and every
responsible person of the company, commit an offence, and
each is liable to a fine at level 4.
 

Subdivision 4     Auditor’s Rights and Privileges, etc.
410.
Qualified privileges
(1) In the absence of malice, an auditor of a company is not
liable to any action for defamation at the suit of any person
in respect of any statement made by the auditor in the
course of performing duties as auditor of the company.
(2) In the absence of malice, a person is not liable to any
action for defamation at the suit of any person in respect
of the publication of any document—
(a) prepared by an auditor of a company in the course of
performing duties as auditor of the company; and
(b) required by this Ordinance—

 (i) to be delivered to the Registrar; or
(ii) to be sent to any member of the company or any
other person.
(3) This section does not limit or affect any other right,
privilege or immunity that an auditor of a company, or any
other person, has as defendant in an action for defamation.
(4) In this section, a reference to performing duties as auditor
of a company includes—
(a) making a cessation statement, giving the statement to
the company, and requesting the company to comply
with the requirement specified in section 422(5) in
relation to the statement; and
(b) making a statement of circumstances, and giving the
statement to the company.
411.
Rights in relation to general meeting
(1) A person appointed as auditor of a company is entitled—
(a) to attend any of the company’s general meetings; and
(b) to be heard, at any of the company’s general meetings,
on any part of the business of the meeting that
concerns the person as auditor of the company.
(2) A person’s entitlement under subsection (1)(a) or (b) is, if
the person is a firm or body corporate, exercisable by a
natural person authorized by the person to act as the
person’s representative at the meeting.
412.
Rights in relation to information
(1) An auditor of a company has a right of access to the
company’s accounting records.
(2) An auditor of a company may require a person that is a
related entity of the company, or was a related entity of the
company at the time to which the information or
explanation relates, to provide the auditor with any

 information or explanation that the auditor reasonably
requires for the performance of the duties as auditor of the
company.
(3) If an auditor has required a person to provide any
information or explanation under subsection (2), the person
must provide the information or explanation as soon as
practicable after being required.
(4) If a subsidiary undertaking of a company is not a company
incorporated in Hong Kong, an auditor of the company
may require the company to obtain from any of the
persons specified in subsection (5) any information or
explanation that the auditor reasonably requires for the
performance of the duties as auditor of the company.
(5) The persons are—
(a) the subsidiary undertaking;
(b) a person who—
(i) is an officer or auditor of the subsidiary
undertaking; or
(ii) was an officer or auditor of the subsidiary
undertaking at the time to which the information
or explanation relates; and
(c) a person who—
(i) holds or is accountable for any of the subsidiary
undertaking’s accounting records; or
(ii) held or was accountable for the subsidiary
undertaking’s accounting records at the time to
which the information or explanation relates.
(6) If an auditor has required a company to obtain any
information or explanation from a person under subsection
(4), the company must take all reasonable steps to obtain
the information or explanation as soon as practicable after
being required.

 (7) A statement made by a person in response to a requirement
under subsection (2) or (4) may not be used in evidence
against the person in any criminal proceedings except
proceedings for an offence under section 413.
(8) This section does not compel a person to disclose
information in respect of which a claim to legal
professional privilege could be maintained in legal
proceedings.
(9) In this section—
related entity (有關連實體), in relation to a company, means—
(a) an officer of the company;
(b) a subsidiary undertaking of the company that is a
company incorporated in Hong Kong;
(c) an officer or auditor of such a subsidiary undertaking;
or
(d) a person holding or accountable for any of the accounting
records of the company or such a subsidiary undertaking.
413.
Offences relating to section 412
(1) A person who contravenes section 412(3) commits an
offence and is liable to a fine at level 4 and, in the case of a
continuing offence, to a further fine of $700 for each day
during which the offence continues.
(2) If a person is charged with an offence under subsection (1),
it is a defence to establish that it was not reasonably practicable
for the person to provide the information or explanation.
(3) A person commits an offence if—
(a) the person makes a statement to an auditor of a
company that conveys or purports to convey any
information or explanation that the auditor requires,
or is entitled to require, under section 412(2) or (4);

 (b) the statement is misleading, false or deceptive in a
material particular; and
(c) the person knows that, or is reckless as to whether or
not, the statement is misleading, false or deceptive in a
material particular.
(4) A person who commits an offence under subsection (3) is
liable—
(a) on conviction on indictment to a fine of $150,000 and
to imprisonment for 2 years; or
(b) on summary conviction to a fine at level 5 and to
imprisonment for 6 months.
(5) If a company contravenes section 412(6), the company, and
every responsible person of the company, commit an
offence, and each is liable to a fine at level 4 and, in the
case of a continuing offence, to a further fine of $700 for
each day during which the offence continues.
(6) If a person is charged with an offence under subsection (5)
for failing to obtain any information or explanation from a
subsidiary undertaking or another person, it is a defence to
establish that—
(a) it would be an offence under the law of a place outside
Hong Kong for the subsidiary undertaking or that
other person to provide the information or explanation
to the defendant; and
(b) the subsidiary undertaking or that other person did
not provide the information or explanation to the
defendant on that ground.
(7) This section does not affect an auditor’s right to apply for
an injunction to enforce any of the auditor’s rights under
section 412.

 414.
Auditor may provide information to incoming auditor without
contravening duties
(1) A person who is or has been an auditor of a company does
not contravene any duty owed by the person as such
auditor in law by reason only that the person gives work-
related information to another person—
(a) who is an auditor of the company;
(b) who has been appointed as auditor of the company
but whose term of office has not yet begun; or
(c) to whom the company has offered the position as
auditor but who has not yet been appointed.
(2) Subsection (1) does not apply unless the person who gives
work-related information to another person—
(a) does so in good faith; and
(b) reasonably believes that the information is relevant to
the performance of that other person’s duties as
auditor of the company.
(3) In this section—
work-related information (工作資料), in relation to a person who
is or has been an auditor of a company, means information
of which the person became aware in the capacity of
auditor.
 

Subdivision 5     Auditor’s Liability
415.
Avoidance of provisions protecting auditor from liability
(1) This section applies to a provision contained in a
company’s articles, or in a contract entered into by a
company, or otherwise.

 (2) If a provision purports to exempt an auditor of the
company from any liability that would otherwise attach to
the auditor in connection with any negligence, default,
breach of duty or breach of trust occurring in the course
of performance of the duties as auditor in relation to the
company, the provision is void.
(3) If, by a provision, the company directly or indirectly
provides an indemnity for an auditor of the company, or
an auditor of an associated company of the company,
against any liability attaching to the auditor in connection
with any negligence, default, breach of duty or breach of
trust occurring in the course of performance of the duties
as auditor in relation to the company or associated
company (as the case may be), the provision is void.
(4) Subsection (3) does not prevent a company from taking out
and keeping in force insurance for an auditor of the
company, or an auditor of an associated company of the
company, against—
(a) any liability to any person attaching to the auditor in
connection with any negligence, default, breach of
duty or breach of trust (except for fraud) occurring in
the course of performance of the duties of auditor in
relation to the company or associated company (as the
case may be); or
(b) any liability incurred by the auditor in defending any
proceedings (whether civil or criminal) taken against
the auditor for any negligence, default, breach of duty
or breach of trust (including fraud) occurring in the
course of performance of the duties of auditor in
relation to the company or associated company (as the
case may be).
(5) Subsection (3) does not prevent a company from
indemnifying an auditor of the company against any
liability incurred by the auditor—

 (a) in defending any proceedings (whether civil or
criminal) in which judgment is given in the auditor’s
favour or the auditor is acquitted; or
(b) in connection with an application under section 903 or
904 in which relief is granted to the auditor by the
Court.
(6) In this section, a reference to performance of the duties of
auditor includes—
(a) making a cessation statement, giving the statement to
the company, and requesting the company to comply
with the requirement specified in section 422(5) in
relation to the statement; and
(b) making a statement of circumstances, and giving the
statement to the company.
 

Subdivision 6     Termination of Auditor’s Appointment
416.
When appointment is terminated
(1) A person’s appointment as auditor of a company is
terminated if—
(a) the term of office expires;
(b) the person resigns from office under section 417(1);
(c) the person ceases to be auditor under section 418;
(d) the person is removed from office under section 419(1);
or
(e) a winding up order is made in respect of the company.
(2) Where a firm is appointed, by the firm name, as auditor of
a company, the appointment is also terminated if every
person who is regarded as being appointed as auditor by
virtue of section 399—

 (a) ceases to be a partner in the firm before the term of
office expires; or
(b) ceases to be eligible, or becomes disqualified, for
appointment as auditor of the company under
Subdivision 2 before the term of office expires.
(3) Where a body corporate is appointed as auditor of a
company, the appointment is also terminated if the body
corporate is dissolved.
(4) If 2 or more persons are appointed as auditor of a
company, and the appointment of any of the persons
is terminated, the termination does not affect the
appointment of the other person.
417.
Resignation of auditor
(1) A person may resign from the office of auditor by giving
the company a notice in writing that is accompanied by a
statement required to be given under section 424.
(2) Such a person’s term of office expires—
(a) at the end of the day on which notice is given to the
company under subsection (1); or
(b) if the notice specifies a time on a later day for the
purpose, at that time.
(3) Within 15 days beginning on the date on which a company
receives a notice of resignation, the company must deliver a
notification in the specified form of that fact to the
Registrar for registration.
(4) If a company contravenes subsection (3), the company, and
every responsible person of the company, commit an
offence, and each is liable to a fine at level 5 and to
imprisonment for 6 months and, in the case of a continuing
offence, to a further fine of $1,000 for each day during
which the offence continues.

 418.
Cessation of office
(1) If, while holding office as auditor of a company, a person
ceases to be eligible, or becomes disqualified, for
appointment as auditor of the company under Subdivision
2, the person—
(a) immediately ceases to be auditor of the company; and
(b) must notify the company of the cessation in writing
within 14 days from the date of the cessation.
(2) A person who contravenes subsection (1)(b) commits an
offence and is liable to a fine at level 4.
(3) If a person is charged with an offence under subsection (2),
it is a defence to establish that the person did not know,
and had no reason to believe, that the person had ceased to
be eligible, or had become disqualified, for appointment as
auditor of the company under Subdivision 2.
419.
Company may remove auditor
(1) A company may by an ordinary resolution passed at a
general meeting remove a person from the office of auditor
despite—
(a) any agreement between the person and the company;
or
(b) anything in the company’s articles.
(2) Special notice is required for an ordinary resolution
proposed for the purposes of subsection (1).
Note—
See also section 578 which sets out the requirements regarding special
notice.
(3) On receipt of a special notice, the company must send a
copy of it to the person proposed to be removed.

 (4) If an ordinary resolution for the removal is passed, the
company must deliver a notice in the specified form of that
fact to the Registrar for registration within 15 days
beginning on the date on which it is passed.
(5) If a company contravenes subsection (4), the company, and
every responsible person of the company, commit an
offence, and each is liable to a fine at level 3 and, in the
case of a continuing offence, to a further fine of $300 for
each day during which the offence continues.
420.
Removed auditor not deprived of compensation, damages, etc.
Section 419 does not deprive a person of compensation or
damages payable to the person in respect of the person
ceasing—
(a) to hold office as auditor of a company; or
(b) to hold any appointment that is terminated with the
termination of the person’s appointment as auditor.

Subdivision 7     Outgoing Auditor’s Right to Requisition Meeting of Company and Make Representation
421.
Resigning auditor may requisition meeting
(1) If a person gives under section 417(1) a notice of
resignation that is accompanied by a statement of
circumstances given under section 424(a), the person may,
by another notice given to the company with the notice of
resignation, require the directors to convene a general
meeting of the company for receiving and considering the
explanation of the circumstances connected with the
resignation that the person places before the meeting.

 (2) Within 21 days beginning on the date on which the
company receives that other notice, the directors must
convene a general meeting for a date falling within 28 days
after the date on which the notice convening the meeting is
given.
(3) If the directors of a company contravene subsection (2),
every director who failed to take all reasonable steps to
secure that a general meeting was convened as required by
that subsection commits an offence and is liable—
(a) on conviction on indictment to a fine of $150,000 and
to imprisonment for 2 years; or
(b) on summary conviction to a fine at level 5 and to
imprisonment for 6 months.
422.
Cessation statement in relation to, and attendance at, general
meeting
(1) If a general meeting is convened under section 421(2), the
person who resigns from the office of auditor—
(a) may give the company a statement by the person that
sets out in reasonable length the circumstances
surrounding the resignation;
(b) may request the company to comply with the
requirement specified in subsection (5) in relation to
the statement; and
(c) is entitled—
(i) to be given every notice of, and every other item
of communication, relating to the general
meeting, that a member of the company is entitled
to be given;
(ii) to attend the general meeting; and

 (iii) to be heard at the general meeting on any part of
the business of the meeting that concerns the
person as auditor or former auditor of the
company.
(2) If special notice is given under section 400(1)(a) for a
resolution for appointing a person as auditor in place of
another person, that other person—
(a) may give the company a statement by that other
person that sets out in reasonable length the
circumstances surrounding the termination of the
appointment as auditor;
(b) may request the company to comply with the
requirement specified in subsection (5) in relation to
the statement; and
(c) is entitled—
(i) to be given every notice of, and every other item
of communication, relating to the general
meeting, that a member of the company is entitled
to be given;
(ii) to attend the general meeting; and
(iii) to be heard at the general meeting on any part of
the business of the meeting that concerns the
person as auditor or former auditor of the
company.
(3) If special notice is given under section 419(2) for an
ordinary resolution for removing a person from the office
of auditor, the person—
(a) may give the company a statement by the person that
sets out in reasonable length the circumstances
surrounding the proposed removal; and

 (b) may request the company to comply with the
requirement specified in subsection (5) in relation to
the statement.
(4) A person’s entitlement under subsection (1)(c)(ii) or (iii) or
(2)(c)(ii) or (iii) is, if the person is a firm or body corporate,
exercisable by a natural person authorized by the person to
act as the person’s representative at the meeting.
(5) The requirement specified for the purposes of subsection
(1)(b), (2)(b) or (3)(b) is—
(a) if the company receives the statement on a date that is
more than 2 days before the last day on which notice
may be given under section 571(1) to call the general
meeting, the requirement—
(i) to state, in every notice of the meeting given to
the members, that the statement has been made;
and
(ii) to send a copy of the statement to every member
to whom a notice of the meeting is or has been
given; or
(b) if the company has not sent a copy of the statement to
every member to whom a notice of the meeting is or
has been given, the requirement to ensure that the
statement is read out at the meeting.
(6) Unless exempted by an order under subsection (7), the
company must comply with a request made under
subsection (1)(b), (2)(b) or (3)(b).
(7) On application by the company or by anyone who claims
to be aggrieved, the Court may order that the company
is exempted from complying with the request, if it is
satisfied that the person who has given a statement and
made a request under subsection (1)(a) and (b), (2)(a) and
(b) or (3)—
(a) has abused the right to do so; or

 (b) has used such a right to secure needless publicity for
defamatory matter.
(8) If a company contravenes subsection (6), the company, and
every responsible person of the company, commit an
offence, and each is liable to a fine at level 5.
423.
Cessation statement in relation to written resolution
(1) This section applies if a company sends a copy of a written
resolution to a person under section 401(3)(b)(i).
(2) The person may, within 14 days after receiving a copy of
the written resolution from the company—
(a) give the company a statement by the person that sets
out in reasonable length the circumstances surrounding
the termination of the appointment as auditor; and
(b) require the company to send a copy of the statement
to every member at the same time when the written
resolution is circulated under section 550 or 552.
(3) Section 553 applies to the circulation of the written
resolution as if the reference to 21 days in section 553(3)
were replaced by a reference to 28 days.
(4) Unless exempted by an order under subsection (5), the
company must comply with a requirement made under
subsection (2)(b).
(5) On application by the company or by anyone who claims
to be aggrieved, the Court may order that the company is
exempted from complying with the requirement, if it is
satisfied that the person who has given a statement and
made a requirement under subsection (2)—
(a) has abused the right to do so; or
(b) has used such a right to secure needless publicity for
defamatory matter.

 (6) If a company contravenes subsection (4), the written
resolution is ineffective.
 

Subdivision 8     Outgoing Auditor’s Statement of Circumstances
424.
Duty of resigning auditor to give statement
A person who resigns from office under section 417(1) must, on
the resignation, give the company—
(a) if the person considers that there are circumstances
connected with the resignation that should be brought
to the attention of the company’s members or
creditors, a statement of those circumstances; or
(b) if the person considers that there are no such
circumstances, a statement to that effect.
425.
Duty of auditor who retires or is removed to give statement
(1) Subject to subsection (3), a person whose appointment as
auditor is terminated under section 416(1)(a) or (d) must,
on the termination, give the company—
(a) if the person considers that there are circumstances
connected with the termination that should be brought
to the attention of the company’s members or
creditors, a statement of those circumstances; or
(b) if the person considers that there are no such
circumstances, a statement to that effect.
(2) Such a person must send a statement mentioned in
subsection (1) to the company so that it will be received by
the company—

 (a) where the person’s term of office expires because the
person is not deemed to be reappointed as auditor
under section 403(2)(d), at least 14 days before the end
of the appointment period in relation to the next
financial year; or
(b) in any other case, within 14 days beginning on the date
of termination.
(3) Subsection (1) does not apply if—
(a) the person’s appointment is terminated under section
416(1)(a); and
(b) the person—
(i) is appointed as auditor of the company for a term
immediately following the term of office that
expires; or
(ii) is deemed by section 403 to be reappointed as
auditor of the company for the next financial
year.
(4) A person who contravenes subsection (1) or (2) commits an
offence and is liable to a fine at level 3 and, in the case of a
continuing offence, to a further fine of $300 for each day
during which the offence continues.
(5) If a person is charged with an offence under subsection (4),
it is a defence to establish that the person took all
reasonable steps to secure compliance with subsection (1)
or (2) (as the case may be).
426.
Company’s and aggrieved person’s responses to statement of
circumstances
(1) If a company is given a statement of circumstances, the
company must, within 14 days beginning on the date on
which it receives the statement—

 (a) send a copy of the statement to every member of the
company; or
(b) apply to the Court for an order directing that
copies of the statement are not to be sent under
paragraph (a).
(2) If a company makes an application under subsection (1)(b),
it must give notice of the application to the person who has
given the statement of circumstances to the company.
(3) A person who claims to be aggrieved by a statement of
circumstances may, within 14 days beginning on the date
on which the company receives the statement, apply to the
Court for an order directing that copies of the statement
are not to be sent under subsection (1)(a).
(4) If a person makes an application under subsection (3), the
person must give notice of the application to—
(a) the company; and
(b) the person who has given the statement of
circumstances to the company.
(5) If—
(a) a
person
gives
a
company
a
statement
of
circumstances; and
(b) within 21 days beginning on the date on which the
company receives the statement, the person has not
received notice of an application under subsection (2)
or (4),
the person must within the next 7 days deliver a copy of
the statement to the Registrar for registration.
(6) If a company contravenes subsection (1), the company, and
every responsible person of the company, commit an
offence, and each is liable—

 (a) on conviction on indictment to a fine of $150,000 and
to imprisonment for 2 years; or
(b) on summary conviction to a fine at level 5 and to
imprisonment for 6 months.
(7) If a person contravenes subsection (5), the person commits
an offence and is liable to a fine at level 3 and, in the case
of a continuing offence, to a further fine of $300 for each
day during which the offence continues.
(8) If a person is charged with an offence under subsection (7),
it is a defence to establish that the person took all
reasonable steps to secure compliance with subsection (5).
427.
Court may order statement of circumstances not to be sent
(1) This section applies if an application has been made under
section 426(1)(b) or (3) in relation to a statement of
circumstances given by a person to a company.
(2) If the Court is satisfied that the person has abused the use
of the statement of circumstances or is using the statement
to secure needless publicity for defamatory matter, the
Court—
(a) must direct that copies of the statement are not to be
sent under section 426(1)(a); and
(b) may order the person, though not a party to the
application, to pay the applicant’s costs on the
application in whole or in part.
(3) If the Court gives directions under subsection (2)(a), the
company must, within 15 days beginning on the date on
which the directions are given—
(a) send a notice setting out the effect of the directions
to—
(i) every member of the company; and

 (ii) unless already named as a party to the
proceedings, the person who has given the
statement of circumstances to the company; and
(b) deliver a copy of the notice to the Registrar for
registration.
(4) If the Court decides not to grant the application, the
company must, within 15 days beginning on the date on
which the decision is made or on which the proceedings are
discontinued for any reason—
(a) give notice of the decision to the person who has given
the statement of circumstances to the company; and
(b) send a copy of the statement of circumstances to every
member of the company and to that person.
(5) Within 7 days beginning on the date on which a person
receives a notice under subsection (4)(a), the person must
deliver a copy of the statement of circumstances to the
Registrar for registration.
428.
Offences relating to section 427
(1) If a company contravenes section 427(3) or (4), the
company, and every responsible person of the company,
commit an offence, and each is liable—
(a) on conviction on indictment to a fine of $150,000 and
to imprisonment for 2 years; or
(b) on summary conviction to a fine at level 5 and to
imprisonment for 6 months.
(2) A person who contravenes section 427(5) commits an
offence and is liable to a fine at level 3 and, in the case of a
continuing offence, to a further fine of $300 for each day
during which the offence continues.

 (3) If a person is charged with an offence under subsection (2)
for contravening section 427(5), it is a defence to establish
that the person took all reasonable steps to secure
compliance with that section.

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