Auditor Resignation Requirements for a Hong Kong Company

Auditor Resignation Hong Kong Company Requirements

An auditor resigning from a Hong Kong company follows the Companies Ordinance (Cap. 622). The process is not a simple letter of resignation. It involves formal notices, statements of circumstances, and filings with the Companies Registry. Both the resigning auditor and the company must meet their statutory duties.

Hong Kong Auditor Resigns Procedure

The auditor must deposit a written resignation notice at the company’s registered office. The notice must be signed by the auditor and state the effective date. The resignation takes effect on that date. If no date is specified, it takes effect on the date the notice is deposited.

The auditor must also include a statement of any circumstances connected with the resignation that the auditor considers should be brought to the attention of the company’s members or creditors. If the auditor believes there are no such circumstances, the statement must say so. This requirement ensures shareholders and creditors are not left in the dark about potential issues that prompted the resignation.

Auditor Resignation Notice Hong Kong

The auditor resignation notice Hong Kong must be in writing and deposited at the registered office. No prescribed form exists under Cap. 622. The notice must clearly state the auditor’s intention to resign and the effective date, be addressed to the company, and be delivered to the registered office address.

Once the notice is deposited, the company must act. Within 14 days, the company must send a copy of the resignation notice and the statement of circumstances to the Companies Registry. This filing is mandatory. Failure to do so is an offence under the Ordinance.

Hong Kong Company Auditor Resignation Form

No specific Hong Kong company auditor resignation form is prescribed by the Companies Registry. The resignation is effected by the written notice described above. The company files a copy of that notice with the Registrar. The filing is not made on a standard form like NAR1 or NNC1; the company simply sends a copy of the resignation notice and the accompanying statement to the Registry.

Practitioners often use a covering letter. The key document is the resignation notice itself. Ensure the copy filed is legible and includes all pages of the original notice and statement.

Cap 622 Auditor Resignation

The statutory basis for auditor resignation is found in Cap 622 auditor resignation provisions. Section 406 of the Companies Ordinance (Cap. 622) sets out the rules. Under section 406, an auditor may resign by depositing a written notice at the company’s registered office. The notice must be accompanied by a statement of circumstances.

Section 406 also grants the resigning auditor a significant right: the auditor may requisition a general meeting of the company to explain the circumstances of the resignation. Deposit a written requisition at the registered office. The company must then convene a general meeting within 21 days. This provision lets the auditor communicate directly with shareholders if the circumstances warrant it.

Statement of Circumstances and Directors’ Response

The statement of circumstances is a critical document. The auditor must honestly set out any matters that the auditor believes should be brought to the attention of members or creditors. Common reasons include disagreements over accounting policies, concerns about the company’s ability to continue as a going concern, and unresolved issues regarding the accuracy of financial records.

The company’s directors may respond. Cap. 622 does not require a formal directors’ response, but the directors may choose to send a written explanation to the Registrar or to shareholders. If the auditor requisitions a general meeting, the directors must circulate the auditor’s statement and may include their own response.

14 Days to File with Companies Registry

File a copy of the resignation notice and the statement of circumstances with the Companies Registry within 14 days after the notice is deposited at the registered office. This deadline is strict. Send the documents by post or by hand. There is no separate fee for this filing. The documents must be received within the 14-day period.

If the company fails to file within 14 days, the company and every responsible officer commit an offence and are liable on conviction to a fine. The Registry may also take enforcement action.

Auditor’s Right to Requisition Meeting

The resigning auditor has the right to requisition a general meeting of the company under section 406(4) of Cap. 622. Deposit a written requisition at the registered office stating the purpose of the meeting: to explain the circumstances of the resignation.

Upon receiving the requisition, the directors must convene a general meeting within 21 days. If they fail to do so, the auditor may convene the meeting themselves. The company must bear the reasonable costs.

Practising Certificate and HKICPA

The auditor must hold a valid practising certificate issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). Only a practising certified public accountant can act as an auditor for a Hong Kong company. When an auditor resigns, the company must appoint a successor auditor who also holds a practising certificate. If the company fails to appoint a successor within 21 days after the resignation takes effect, the Registrar may appoint one.

Outstandng Fees and Successor Auditor

Outstandng fees are a common reason for auditor resignation. The auditor may resign if the company has not paid the fees. The resignation does not extinguish the debt; the company remains liable for fees incurred up to the date of resignation.

The successor auditor must be appointed by the directors or by the members in a general meeting. Notify the successor in writing and obtain written confirmation of acceptance. File a notice of the change of auditor with the Companies Registry using Form ND2A. This form is separate from the resignation filing and must be submitted within 15 days after the appointment.

Practical Considerations

Maintain good communication with your auditor to avoid unexpected resignations. If an auditor resigns, appoint a successor promptly so the audit for the current financial year can be completed. Review the statement of circumstances carefully and address any issues raised.

The Companies Registry maintains a public register of company documents, including resignation notices and statements of circumstances. These documents are open to public inspection. Both the auditor and the company should consider the content of the statement carefully. It becomes a public record.