Article 16 Appointment of statutory auditors ...F41

United Kingdom

For the purposes of the application of F1the provisions, for the appointment of statutory auditors F2... by public-interest entities, the conditions set out in F3paragraph 3 of this Article shall apply, F4....

Where F5the provisions for the appointment of statutory auditors by public interest entities do not apply, the public-interest entity shall inform the competent authority of the use of F6applicable alternative systems or modalities F7.... In that event, F8paragraph 3 of this Article shall not apply.

F92.

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F10The recommendation of the audit committee F11... shall be prepared following a selection procedure organised by the audited entity respecting the following criteria:

F12(a)

the audited person is free to invite any persons who are eligible for appointment as statutory auditors to submit proposals for the provision of the statutory audit on the condition that—

the maximum engagement periods in the provisions for the appointment of statutory auditors by public interest entities and the restrictions on appointments in those provisions are respected; and

ii)

that the organisation of the tender process does not in any way preclude the participation in the selection procedure of firms which received less than 15 % of the total audit fees from public-interest entities concerned in the previous calendar year;

(b)

the F13audited person shall prepare tender documents for the attention of the F14invited persons. Those tender documents shall allow them to understand the business of the audited person and the type of statutory audit that is to be carried out. The tender documents shall contain transparent and non-discriminatory selection criteria that shall be used by the audited person to evaluate the proposals made by statutory auditors F15...;

(c)

the F16audited person shall be free to determine the selection procedure and may conduct direct negotiations with F17applicants in the course of the procedure;

(d)

where, in accordance with F18legislation of any part of the United Kingdom, the F19competent authorityF20requires statutory auditors to comply with certain quality standards, those standards shall be included in the tender documents;

(e)

the F21audited person shall evaluate the proposals made by the F22applicants in accordance with the selection criteria predefined in the tender documents. The audited person shall prepare a report on the conclusions of the selection procedure, which shall be validated by the audit committee. The audited person and the audit committee shall take into consideration any findings or conclusions of any inspection report on the applicant F23... referred to in Article 26(8) and published by the competent authority pursuant to point (d) of Article 28;

(f)

the F24audited person shall be able to demonstrate, upon request, to the competent authority F25... that the selection procedure was conducted in a fair manner.

The audit committee shall be responsible for the selection procedure referred to in the first subparagraph.

For the purposes of point (a) of the first subparagraph, the competent authority F26... shall make public a list of the F27persons concerned F28who are eligible for appointment as statutory auditors which shall be updated on an annual basis. The competent authority shall use the information provided by statutory auditors F29... pursuant to Article 14 to make the relevant calculations.

F304.

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Any clause of a contract entered into between a public-interest entity and a third party restricting the choice by the F31... members of that entity, F32... to certain categories or lists of F33persons who are eligible for appointment as statutory auditor, as regards the appointment of a particular statutory auditor F34... to carry out the statutory audit of that entity shall be F35of no effect.

The public-interest entity shall inform the F36competent authority directly and without delay of any attempt by a third party to impose such a contractual clause or to otherwise improperly influence the decision of the F37... members F38of the public interest entity on the selection of a statutory auditor F39....

F407.

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Annotations

Textual amendments

F1: Words in Art. 16(1) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(i)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F2: Words in Art. 16(1) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(i)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F3: Words in Art. 16(1) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(i)(cc); 2020 c. 1, Sch. 5 para. 1(1)
F4: Words in Art. 16(1) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(i)(dd); 2020 c. 1, Sch. 5 para. 1(1)
F5: Words in Art. 16(1) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(ii)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F6: Words in Art. 16(1) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(ii)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F7: Words in Art. 16(1) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(ii)(cc); 2020 c. 1, Sch. 5 para. 1(1)
F8: Words in Art. 16(1) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(a)(ii)(dd); 2020 c. 1, Sch. 5 para. 1(1)
F9: Art. 16(2) excepted from duty to publish (31.12.2020) by The Exception from the Duty to Publish (Department for Business and Trade) (No. 1) Direction 2023 (No. 1), Sch.
F10: Word in Art. 16(3) substituted (11.5.2025) by The Companies (Directors' Remuneration and Audit) (Amendment) Regulations 2025 (S.I. 2025/439), regs. 1(2), 15(5)
F11: Words in Art. 16(3) omitted (8.3.2021) by virtue of The European Grouping of Territorial Cooperation and Limited Liability Partnerships etc. (Revocations and Amendments) (EU Exit) Regulations 2021 (S.I. 2021/153), regs. 1, 19
F12: Art. 16(3)(a) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(iii); 2020 c. 1, Sch. 5 para. 1(1)
F13: Words in Art. 16(3)(b) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(iv)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F14: Words in Art. 16(3)(b) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(iv)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F15: Words in Art. 16(3)(b) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(iv)(cc); 2020 c. 1, Sch. 5 para. 1(1)
F16: Words in Art. 16(3)(c) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(v)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F17: Word in Art. 16(3)(c) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(v)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F18: Words in Art. 16(3)(d) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(vi)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F19: Words in Art. 16(3)(d) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(vi)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F20: Words in Art. 16(3)(d) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(vi)(cc); 2020 c. 1, Sch. 5 para. 1(1)
F21: Words in Art. 16(3)(e) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(vii)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F22: Word in Art. 16(3)(e) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(vii)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F23: Words in Art. 16(3)(e) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(vii)(cc); 2020 c. 1, Sch. 5 para. 1(1)
F24: Words in Art. 16(3)(f) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(viii)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F25: Words in Art. 16(3)(f) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(b)(viii)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F26: Words in Art. 16(3) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(c)(i); 2020 c. 1, Sch. 5 para. 1(1)
F27: Word in Art. 16(3) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(c)(ii); 2020 c. 1, Sch. 5 para. 1(1)
F28: Words in Art. 16(3) inserted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(c)(iii); 2020 c. 1, Sch. 5 para. 1(1)
F29: Words in Art. 16(3) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(c)(iv); 2020 c. 1, Sch. 5 para. 1(1)
F30: Art. 16(4)(5) excepted from duty to publish (31.12.2020) by The Exception from the Duty to Publish (Department for Business and Trade) (No. 1) Direction 2023 (No. 1), Sch.
F31: Words in Art. 16(6) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(i)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F32: Words in Art. 16(6) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(i)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F33: Words in Art. 16(6) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(i)(cc); 2020 c. 1, Sch. 5 para. 1(1)
F34: Words in Art. 16(6) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(i)(dd); 2020 c. 1, Sch. 5 para. 1(1)
F35: Words in Art. 16(6) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(i)(ee); 2020 c. 1, Sch. 5 para. 1(1)
F36: Words in Art. 16(6) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(ii)(aa); 2020 c. 1, Sch. 5 para. 1(1)
F37: Words in Art. 16(6) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(ii)(bb); 2020 c. 1, Sch. 5 para. 1(1)
F38: Words in Art. 16(6) inserted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(ii)(cc); 2020 c. 1, Sch. 5 para. 1(1)
F39: Words in Art. 16(6) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(d)(ii)(dd); 2020 c. 1, Sch. 5 para. 1(1)
F40: Art. 16(7)(8) omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 90(e); 2020 c. 1, Sch. 5 para. 1(1)
F41: Words in Art. 16 heading omitted (11.5.2025) by virtue of The Companies (Directors' Remuneration and Audit) (Amendment) Regulations 2025 (S.I. 2025/439), regs. 1(2), 15(4)

Notes on Title III

Textual amendments

F1: Words in Title 3 heading omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 89; 2020 c. 1, Sch. 5 para. 1(1)