Question proposed: "That section 187 stand part of the Bill."

Section 187 contains amendments to section 160 of the Principal Act of 1963. It states that a company may by ordinary resolution at a general meeting remove an auditor and appoint in his place any other person who has been nominated for appointment as auditor. If the company at a general meeting can simply remove an auditor, leave the position lie, and before a subsequent general meeting, appoint his replacement, can there be a gap? If there is a gap, is that to be treated as a casual vacancy which can be filled by the directors for the purposes of the new subsection (7)?

Section 164 of the 1963 Act empowers the Minister to appoint a company auditor where one is not appointed or reappointed at a company's AGM. Section 165 of the Act requires the company to notify the Minister where such a hiatus arose within a week or face a default fine of £250.

Section 187 is the new section 160 (5) of the 1963 Act. The idea being introduced here is that a company may, at any general meeting, remove its auditor and appoint another in his place. This is new in so far as at present an auditor may only be replaced at the annual general meeting. The idea is to give the company shareholders an even greater say in the day to day running of the company they own. Maybe that covers the Deputy's point. Is the Deputy concerned about the reappointment or whether the company can leave a vacancy, and for how long?

The directors can fill a casual vacancy. I do not want a situation to arise where the company can call a general meeting to remove its auditor and deliberately leave a casual vacancy which can be filled by the directors for an interim period.

No, the right is given to members at a general meeting to remove an auditor and nominate another person for appointment by a member of the company.

The way I read it, that is ambiguous. Obviously, the intention of the draftsman is that the general meeting referred to in the new subsection (5) will remove the auditor and appoint his replacement at the same meeting.

That is the intention.

I do not think the section makes that quite clear. I think it is open to the directors to arrange a subsequent general meeting to appoint his replacement. That could give rise to difficulties for reasons that will become obvious when we move to subsequent sections.

Is the Deputy saying the section is not specific enough?

The intention is that the appointment would be made immediately, but is the Deputy concerned that that would be deferred?

I do not know whether we can do something about that, but it says specifically, "to appoint in his place any other person who has been nominated for appointment by a member of the company". The Deputy is asking when; he is trying to tighten that up.

Am I correct in saying that at present one of the items on the agenda of an AGM is the appointment of the auditor? Is it not true that at that meeting somebody can propose somebody other than the existing auditor? What we are doing here is introducing a new system whereby, if one wants to propose a different name, one has to go through a whole new procedure. Does that position still remain?

If at a meeting I propose that auditors be appointed to a certain company, where do the brother, sister, father, mother or child of an officer of a company come into it?

Such a person proposed can be fully qualified but he would not qualify for appointment.

If he is working with a firm of accountants?

That is in section 191. I have some queries on it.

I take it that if a person who falls into any of those categories happens to be a member of a firm of auditors, that would not exclude the firm of auditors. It would suggest that the firm of auditors were behaving in a prudent way and, if they wished to stay within the law, simply not appoint a person who was so related to an officer of the company to carry out the audit.

Question put and agreed to.