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How a company appoints an auditor

How does a company appoint an auditor?

In private companies, the directors appoint the first auditor of the company. The members may then appoint or re-appoint an auditor at a meeting of the company's members, or by written resolution, within 28 days of the directors sending the accounts to the members. If they do not do so, however, the appointed auditor remains in office until the members pass a resolution to reappoint him or to remove him as auditor (5% of members, or fewer if the articles say so, can force the consideration of a resolution to remove an auditor). This provision about remaining in office, however, does not apply if the auditor’s most recent appointment was by the directors or the company’s articles require annual appointment. The simplest way of dealing with auditors is for the shareholders to appoint the auditor in general meeting (by way of ordinary resolution), so that they can be deemed reappointed year after year.
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