14 - Corporate transparency - barely comes up!

Question 1

3 benefits of disclosure of company information

Answer 1

• Persons dealing with company are more informed
• Shares are accurately priced, allowing more efficient market operation
• Shareholders can hold company and its directors to account

Question 2

7 registers which must be kept by companies

Answer 2

Members
Directors
Res addresses
Secretaries
PSCs
Register of interests disclosed
Register of overseas entities

Question 3

2 registers which companies can choose to keep

Answer 3

Charges
Debentures

Question 4

Which companies can make an election to either only maintain its own register or to keep all relevant info on the register at CH?

Answer 4

Only private companies

Question 5

4 types of companies not requiring audit

Answer 5

• Small companies
• Subsidiaries which meet certain conditions
• Dormant companies
• Non-profit companies subject to public sector audits

Question 6

3 conditions that must be satisfied to qualify for appointment as auditor

Answer 6

• Member of a recognised supervisory body
• Eligible for appointment under rules of supervisory body
• Not prohibited from acting as auditor through lack of independence

Question 7

How are auditors of a private company appointed?

Answer 7

• By directors in first year
• By ordinary resolution in subsequent years (otherwise deemed to have been reappointed)

Question 8

How are auditors of a public company appointed?

Answer 8

• By directors in first year
• By ordinary resolution in subsequent years (no deemed reappointment)
• audit committee will often be responsible for appointment *

Question 9

2 key powers given to auditor to enable completion of duties

Answer 9

• Right of access to company’s books, accounts and vouchers
• Right to require specified persons to provide such information and explanations as auditor deems necessary

Question 10

Principal duty of an auditor is to carry out investigations as will enable them to form an opinion as to:

Answer 10

• whether adequate accounting records have been kept
• whether accounts are in agreement with accounting records and returns
• [quoted co’s] whether auditable part of dir. remuneration report is in agreement with accounting records and returns

Question 11

What must auditor state in audit report (3)

Answer 11

If they are of the opinion that:
- Adequate accounting records have been kept
- Company’s individual accounts are not in agreement with accounting records and returns
- [quoted co’s] Directors’ remuneration report is not in agreement with accounting records or returns

Question 12

4 ways in which auditor can vacate office

Answer 12

• Resignation
• Removal
• Replacement
• Rotation

Question 13

How does an auditor resign?

Answer 13

By sending notice to the company to that effect

Question 14

When does resigning auditor’s term end?

Answer 14

On the date the company receives the notice, or such later date as may be specified in the notice

Question 15

What must often accompany notice of auditor’s resignation for it to be effective?

Answer 15

Statement setting out reasons for resigning

Question 16

How is an auditor removed from office?

Answer 16

By the passing of an ordinary resolution of members of the company
WR cannot be used
Special notice of resolution must have been provided

Question 17

For which companies must auditor’s statement setting out reasons for resigning always be given?

Answer 17

Public Interest companies

Question 18

2 exceptions to requirement to provide statement setting out reasons for resigning (not relevant if public interest company)

Answer 18

• Ceasing to hold office at end of period for appointing, or (public co’s) end of accounts meeting
• Reasons for ceasing are exempt reasons or need not be brought to attention of members or creditors

Question 19

2 methods by which auditor can be replaced

Answer 19

• [Private co’s] Where term as auditor expires and they are not reappointed, written resolution can be passed to appoint replacement
• Passing of a resolution at a general meeting special notice of resolution must have been provided