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Q：
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Is it legally permissible for a Malaysia company to remove its auditor prior to the end of its appointed term?
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A：
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Yes. Under Section 276(1) of the Companies Act 2016 (“CA 2016”), a company may lawfully remove the company’s auditor before the end of its term by passing an ordinary resolution (i.e., a simple majority vote of more than half) during a general meeting, or alternatively follow the procedural requirements set out in Section 277 of the CA 2016. The Board of Directors cannot remove the auditor, they can only propose the resolution.
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Q：
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Is there any notice requirement before removing an auditor?
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A：
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Special notice (at least 28 days) is required under Section 277(1) of the CA 2016. In accordance with Section 277(2) of the CA 2016, upon receiving a special notice from a member proposing the removal of an auditor, the company must, without delay, notify the auditor and the Registrar by providing them with a copy of the notice.
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Q：
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Is it permissible to remove an auditor by way of written resolution?
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A：
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No. As stipulated in Section 297(2)(b) of the CA 2016, an auditor may only be removed through a resolution passed at a general meeting. The removal by written resolution is expressly prohibited.
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Q：
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Can the removed auditor take any action?
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Yes. Upon receiving the special notice regarding its proposed removal, the auditor has up to 7 days to provide a written statement of reasonable length. The auditor may also request the company to distribute this statement to all members, in accordance with Sections 277(3) and 277(4) of the CA 2016.
If the written representation is not circulated as required, the auditor may request that it be read out during the general meeting, pursuant to Section 277(5) of the CA 2016.
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Q：
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Must a company obtain the Registrar’s approval to remove its auditor?
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A：
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No, the Registrar’s approval is not required. However, the company must notify the Registrar by filing the relevant notice pursuant to Section 278(1) of the CA 2016 within 14 days after the resolution has been passed.
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FAQ
