Appointment of Auditor in Malaysia
Before directors of the company appoint a proposed auditor or audit firm in Malaysia as the company's auditor, they must obtain an approved consent in writing from the proposed audit firm in Malaysia.
Under the provisions of the Companies Act, an approved company auditor shall not knowingly consent to be appointed and act as auditor of any company nor shall he prepare for an on behalf of a company any report if that person is:
indebted to the company, its holding company or subsidiaries in an amount exceeding RM2,500;
a. An officer of the company
b. A partner, employer or employee of an officer of the company
c. A partner or employee of an employee of an officer of the company
d. A shareholder or his spouse is a shareholder of a corporation whose employee is an officer of the company
e. If he is responsible for or is the partner, employer or employee of a person responsible for the keeping of the register of members or the register of holders of debentures of the company.
At the same time, audit firms in Malaysia shall not knowingly give consent to act as auditor of the company nor shall he prepare for on behalf of the company any report unless:
All the partners of the firm resident in Malaysia are approved company auditors, and that none of the partner is disqualified under paragraphs 1,2 and 3 above; and
Where the audit firm is not registered as a firm under any law of the time being in force, a return showing the full names and addresses of all partners of the firm has been lodged with the Registrar of Companies.
For public interest entities, the provisions of the Securities Commission Act 1993 states that an approved company auditor must register with the Audit Oversight Board before he can act as an auditor of a public interest entity.
Public interest entities includes the following;
1. A public listed company or one listed in the stock exchange
2. A licensed institution licensed under the Banking and Financial Institutions act 1989
3. An insurance company licensed under the Insurance Act 1996
4. A takaful operator registered under the Takaful Act 1984
APPOINTMENT OF FIRST AUDITORS IN MALAYSIA
Every company is required to appoint an auditor at any time before the first annual general meeting. It is the directors' responsibility to appoint auditors and this can be made by either a circular resolution of the board or at a board meeting.
The auditor's term is until the conclusion of the annual general meeting (AGM). If directors have not appointed an auditor, the shareholders may appoint the auditors at a general meeting.
REAPPOINTMENT AND SUBSEQUENT APPOINTMENT OF AUDITORS
At each annual general meeting, companies in Malaysia are required to appoint an auditor and such auditor shall hold office until the next general meeting.
Casual vacancies from removal or resignation of auditors must be filled by company at general meeting.
An auditor in Malaysia may resign at a general meeting.
An auditor needs to give notice in writing to the directors that he intends to resign and the directors must proceed to call for a general meeting as soon as practicable for the purpose of appointing an auditor in place of the resigning auditor.
The resignation is only effective on the appointment of another auditor. At the same time, the auditor needs to give a written explanation to the Registrar of Companies stating the reasons for resignation. For auditors of public listed entities, he will also need to submit the written explanation to the Bursa Malaysia.
Removal of auditors in Malaysia needs to be performed at a general meeting where special notice has been given. This special notice needs to be given to the Registrar of Companies and to the auditor.
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