BL – Nov 2015 – L2 – SB – Q2c – Company Law

Describe two ways a company can remove its auditor.

Question

Explain briefly TWO ways of removing an auditor of a company.
(5 Marks)

Answer

Removal by Shareholders at the Annual General Meeting (AGM):
Shareholders can pass an ordinary resolution at an AGM to remove the auditor before the expiration of their term. Proper notice must be given to the shareholders, and the auditor must be given the opportunity to present their case to the meeting before the vote is held.
Removal by Board of Directors in Case of Auditor’s Disqualification:
The Board of Directors can remove an auditor if they become disqualified under the provisions of the Companies and Allied Matters Act (CAMA). This includes situations where the auditor becomes bankrupt or is convicted of an offense involving fraud or dishonesty, making them ineligible to continue in their role.