COMPANIES ACT 1965 cont

Sec 172- appointment of auditors

For first auditor;

- Appoint by director at any time before first AGM. - Advisable to appoint asap, in order to complete the audit of the accounts 14 days before AGM. - If director do not appoint, shareholders may appoint the first auditor at general meeting

Comps Act 1965 (cont) Approved comp auditor

i) necessary qualification Ii) applied to Minister of Finance Iii)good character and is competent to perform the duties of an auditor under CA 1965. in practice most of the appointments of auditors are in the name of the firm. Approval of the Minister is renewable every 2 years. Every partner of the firm must individually be an approved comp auditor under s 8.

Sec 172 - Removal of auditors

Sec 172 (4) Can be removed from office by ordinary resolution with special notice passed at the general meeting of the comp. Sec 172 (5) Once, the comp receives the resolution of auditors removal,
a) Comp is required to send a copy of the resolution to auditor and Registrar, and b) an auditor, within 7 days after receiving the notice can write a representation letter to the comp and asking for circulation among members before the AGM

Sec 172 - Removal (cont)

Sec 172 (7) The comp may fill the vacancy so created by removal: - a) At the same general meeting (2/3 majority from members). - b) Or at adjourned general meeting (not earlier than 21 days and not later than 30 days after the meeting). Sec 172 (8) Comp is required to provide a written notice to Registrar immediately after the removal, and if the comp failed to appoint during the AGM the Registrar will appoint a new auditor for the comp

Sec 172(14) - Resignation of auditors

There are 2 instances where an auditor can resign:
a) If he is not the sole auditor of the comp or b) At general meeting of the comp.

o When an auditor gives notice in writing to the directors that he desires to resign, the directors of the comp must call a general meeting asap for the purpose of appointing replacement auditor.

o The resignation will take effect on the appointment of another auditor.

Sec 172 (16) - Remuneration of auditors

(a) appoint by comp in AGM- fixed by comp in AGM (b) appoint by directors or Registrar- fixed by directors or Registrar

Sec 174 Auditors Rights (cont)

7) The entitlement to attend any general meeting of the comp and to speak
on any part of the business of the meeting that concerns him in his capacity as auditors
7) Right to receive all notices of any other communication relating to any general meeting

Sec 174 (8) - Duties to report fraud, offences and contravention of law
IF the auditor discovers any breach or non-observance of any of the provision of CA 1965; comment in his report on the accounts or consolidated accounts or by bringing to the attention of the board. He must forthwith report the matter in writing to CCM. Failure of the auditor to report would render him guilty of an offence against the CA 1965. Penalty for this offence is imprisonment for 2 years or max fine of RM30,000 or both.

Duties to report (cont)

Sec 47 (1) If during his performance of his duties, he is aware of any matter which in his professional opinion, may constitute a breach of any provision or of any irregularities that may have a material effect on the ability of the borrower to repay any amount under the debenture, he must immediately report the matter to SC. Failure to do so would render him guilty of offence, and liable on conviction to be punished with a fine not exceeding RM100 000 or imprisonment for a term not exceeding 5 years or both.