Malta · General meetings, directors, the secretary and the auditors

Appoint, pay, remove or replace the auditors

the Companies Act, Chapter 386 · articles 151, 151A and 152, articles 154 and 156, and articles 157 to 161

The appointment of auditors is an annual act taken at the general meeting at which the accounts are laid, and the Registrar has to be told whenever a new auditor is appointed. A casual vacancy has its own route under article 152, and a company that simply carries the same firm forward without a resolution has no appointment at all.

The second trap is removal and resignation. Both give the auditor rights: to have representations circulated, to require a statement of circumstances to be sent to members, and to have the company act within fixed periods of fourteen and twenty one days. A company that removes an auditor without following article 157 to 161 has not removed the auditor cleanly.

A company must, at each general meeting at which the annual accounts are laid, appoint auditors as article 151(1) requires. In the case specified in article 151(4), the company must act within two weeks under article 151(5). Article 151(8) governs the application of the article to the appointment named there, and whenever a new auditor is appointed the step required by article 151(9) must be taken.

A public-interest entity must appoint an auditor or an audit firm for an initial engagement of at least one year (article 151A(1)(a)), and neither that initial engagement nor its renewal may exceed the maximum durations in article 151A(1)(b), which may be extended in the circumstances in article 151A(4). The key audit partners responsible for carrying out a statutory audit must cease their participation not later than seven years from the date of their appointment (article 151A(6)(a)). From the dates named in article 151A(8) and (9), a public-interest entity may not enter into or renew the engagements described in those provisions.

The directors may at any time before the general meeting act under article 152(1), and where it is proposed to appoint an auditor to fill a casual vacancy or to take the other steps named, article 152(3) applies.

A subsidiary undertaking registered in Malta and its auditors are subject to article 154(3), and a parent company having a subsidiary undertaking not registered in Malta is subject to article 154(4). The remuneration of auditors appointed by the company in general meeting is fixed as article 156(1) requires. The notes to the accounts must state the amount of the remuneration required by article 156(2), and the article applies to benefits in kind under article 156(4). The notes must also state separately the totals required by article 156(5).

Where a resolution removing an auditor is passed at a general meeting, article 157(2)(a) applies. Notice specifying the text of and reasons for a proposed resolution must be given under article 158(1), and the company must circulate representations under article 158(3) unless they are received too late. The company must within fourteen days of the deposit of a notice of resignation act under article 159(3). The company must circulate the auditor's statement under article 160(4) unless it is received too late, and if the directors do not act within twenty one days from the deposit, article 160(5) applies. Where the statement is of circumstances which the auditor requests to be brought to notice, article 161(3) applies, and if the court is not satisfied the company must act within fourteen days under article 161(7).

Working files 27, 28 and 29 of the MT-COMPANY agent toolkit cover the audit relationship end to end. Working file 27 asks for the date of each appointment, whether the company is a public-interest entity, the date the key audit partner was first appointed and the length of the engagement, then applies the one-year minimum, the maximum durations and the seven-year partner rotation in article 151A. Working file 28 checks the remuneration disclosures in the notes under article 156 and the flow of information from group undertakings under article 154. Working file 29 walks a removal or a resignation and asks for the date of every notice and every circulation, then measures the fourteen-day and twenty-one-day periods in articles 159, 160 and 161.

• Working file 27 · Appointment of auditors and audit engagement rotation for public-interest entities
• Working file 28 · Auditors' remuneration, fees disclosure and information from group undertakings
• Working file 29 · Removal and resignation of auditors

ComplianceSME tracks the Companies Act, Chapter 386, and updates the toolkit on your account through the Compliance Complete account, so that you are never working from a superseded version. Compliance Complete

• Convene the annual general meeting, give notice and record the resolutions
• Appoint directors and a company secretary, and keep them within their duties

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