Section 196 — Companies Act 1993: Appointment of auditors

196 Appointment of auditors (1) Subject to this section, a company must, at each annual meeting, appoint an auditor to— (a) Hold office from the conclusion of the meeting until the conclusion of the next annual meeting; and (b) Audit the financial statements of the company and, if the company is required to complete group financial statements, those group financial statements, for the accounting period next after the meeting. (1A) If a company is a public entity as defined in section 4 of the Public Audit Act 2001 , the Auditor-General is its auditor in accordance with that Act; and subsection (2) does not apply in respect of that company. (2) A company need not appoint an auditor in accordance with subsection (1) if, at or before the meeting, a unanimous resolution is passed by all the shareholders who would be entitled to vote on that resolution at a meeting of shareholders. Such a resolution ceases to have effect at the commencement of the next annual meeting. (3) Nothing in subsection (2) of this section applies to a company— (a) That is a subsidiary of a company or body corporate incorporated outside New Zealand; or (b) In which shares that in aggregate carry the right to exercise or control the exercise of 25 percent or more of the voting power at a meeting of the company are held by— (i) A subsidiary of a company or body corporate incorporated outside New Zealand: (ii) A company or body corporate incorporated outside New Zealand: (iii) A person not ordinarily resident in New Zealand; or (c) That is an issuer within the meaning of section 4 of the Financial Reporting Act 1993 . (3A) An auditor may resign at any time by giving written notice to the board of the company, and the company must, as soon as practicable, notify its shareholders of the auditor's resignation. (3B) If a company fails to comply with subsection (3A) , every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2) . (4) The board of a company may fill any casual vacancy in the office of auditor, but while the vacancy remains, the surviving or continuing auditor, if any, may continue to act as auditor. (5) If— (a) At an annual meeting of a company no auditor is appointed or reappointed and no resolution has been passed pursuant to subsection (2) of this section; or (b) A casual vacancy in the office of auditor is not filled within one month of the vacancy occurring,— the Registrar may appoint an auditor. (6) A company must, within 5 working days of the power becoming exercisable, give written notice to the Registrar of the fact that the Registrar is entitled to appoint an auditor under subsection (5) of this section. (7) If a company fails to comply with subsection (6) of this section,— (a) The company commits an offence and is liable on conviction to the penalty set out in section 373(2) of this Act; and (b) Every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2) of this Act. (8) For the purposes of subsection (3)(b)(iii) of this section, a person is ordinarily resident in New Zealand if that person— (a) Is domiciled in New Zealand; or (b) Is living in New Zealand and the place where that person usually lives is, and has been for the immediately preceding 12 months, in New Zealand, whether or not that person has on occasions been away from New Zealand during that period. Compare: 1955 No 63 ss 163(1), (5)-(7), 354(3)-(3C); 1969 No 128 s 2(2); 1976 No 80 s 2(1); 1982 No 152 s 19(2) Subsection (1A) was inserted, as from 1 July 2001, by section 53 Public Audit Act 2001 (2001 No 10). Subsection (2) was substituted, as from 30 June 1997, by section 15 Companies Act 1993 Amendment Act 1997 (1997 No 27). Subsection (3)(b)(i) was amended, as from 1 July 1994, by section 23 Companies Act 1993 Amendment Act 1994 (1994 No 6) by omitting the words “ or a subsidiary of that subsidiary ” . Subsections (3A) and (3B) were inserted, as from 15 April 2004, by section 10 Building Societies Amendment Act 2004 (2004 No 24).