Step 1. Service of notice of intention and resolution to convene a general meeting

An auditor of a company may be removed by resolution of the company at a general meeting only if a notice of intention under section 329(1A) has been given to the company.

While the form of the notice of intention is not prescribed by the Corporations Act, an example is:

The purpose of the notice of intention is to advise the company – not its members – of the intention to propose a resolution to remove the company’s auditor.

The notice is given to the secretary by a director or a person who is normally authorised to request that a meeting be convened (e.g. members holding 5% of the votes or at least 100 members entitled to vote at the meeting).

If the members of the company wish to seek the removal of the auditor, they should include a request for the company to convene a general meeting in the notice of intention. Alternatively, in certain circumstances, the members may be able to convene the meeting themselves; however, they may have to pay the expenses of calling and holding the meeting: see sections 249D–249F.

The notice of intention must be served on the company secretary at least two months before the meeting is to be held: see section 329(1A).

However, if the company calls the meeting after the notice of intention is given, the meeting can be held less than two months after the notice of intention is received – provided the members and others are given the required amount of notice that the meeting will be held: see Step 4.

Step 2. Advice to the auditor and ASIC

On receipt of the notice of intention, the company must send a copy of the notice to the auditor and lodge a copy with ASIC as soon as possible: see section 329(2).

Note: It is a copy of the notice of intention that is required, not the notice of meeting or notice of resolution sent to members by the company.

The ASIC copy should be posted to:

Australian Securities and Investments Commission
PO Box 4000
Gippsland Mail Centre
VIC 3841

Step 3. Representations by the auditor to the company

Within seven days of receiving a copy of the notice of intention, the auditor may make representations in writing to the company and request that a copy of the representations be sent by the company (at its expense) to every member to whom notice of the meeting is sent: see section 329(3). The auditor can also require that the representations be read out at the meeting.

The company must comply with the auditor’s request; however, it can apply to ASIC for this requirement to be waived: see section 329(4).

Step 4. Notice of the meeting and notice of nomination of a new auditor

The company must give a notice of meeting to persons entitled to receive such notice. These persons include the company’s directors, members and auditor(s): see sections 249J and 249K.

The notice period for the meeting is 28 days for a listed company: see section 249HA; and 21 days for an unlisted company: see section 249H. Shorter notice of the meeting cannot be given: see section 249H(4).

Before the meeting is held, either a director or a member of the company can nominate a’ new auditor whose appointment can be considered at the meeting. If a member has nominated a new auditor, the company must give a notice of that nomination to persons entitled to notice of the meeting and the nominated auditor(s) at the time notice of the meeting is given, or not less than seven days before the meeting: see section 328B(3) and (4).

Step 5. Advice to ASIC if the resolution is carried

The resolution to remove an auditor is an ordinary resolution that must be passed by a simple majority of those voting in person at the meeting, or by proxy if allowed.

If the resolution is carried, the company must lodge notice of the removal of the auditor (Form 315 Notification of resignation, removal or cessation of auditor – there is no fee) with ASIC within 14 days after removing the auditor.

The company is not required to lodge the minutes of the meeting.

Where there is a trustee for holders of debentures of the company, the company must give the trustee a copy of the Form 315 within 14 days after removing the auditor: see section 329(11).

Step 6. Appointment of a new auditor and notification to ASIC

When an auditor is removed from a company, the company must appoint a new auditor at a general meeting: see section 327D. Section 327D(2) provides that at a general meeting (without adjournment) the company may pass a special resolution to ‘immediately appoint an individual, firm or company as auditor of the company if a copy of the notice of nomination has been sent to the individual, firm or company’ under section 328B(3).

If the company does not pass the special resolution, it can appoint a new auditor by an ordinary resolution under section 327D(3).

ASIC is notified of the appointment of the new auditor when the company next lodges its financial report (Form 388 Copy of financial statements and reports), where applicable.