There have been some important changes to the way in which auditors are appointed, removed and their duties in relation to UAE companies. As was the case under the Old CCL, there is no difference in the role of an auditor for a JSC and of a LLC (other than the auditor specifications).
- Specifications: auditors of JSCs must meet certain criteria specified in more detail by SCA regulation (see Board of Directors’ Decision No. 25 of 2015 concerning the registration of auditors of public shareholding companies and mutual funds). In particular, such auditors must have at least 5 years’ experience of auditing JSCs.
- Appointment and renewal: as under the Old CCL, the general assembly may appoint one or more auditors annually; however there is a new maximum term of three successive years of appointment.
- Removal and resignation: There are new provisions relating to the removal and resignation of auditors. The general assembly may dismiss the auditor by ordinary resolution and the relevant authority must be informed of the reasons for such dismissal. The auditor may resign by written notice to the company and the relevant authority, citing the reasons for such resignation. A general assembly of the company must be convened within ten days of such resignation to consider the reasons and to appoint another auditor.
- Fees: the auditor’s fees must be specifically reflected in the company accounts.
- Auditor’s Report: there are some additional content requirements for auditor’s reports, such as the inclusion of statements as to whether the company has purchased any shares or stocks during the fiscal year and regarding transactions involving conflicts of interest and/or related parties.
- Joint Reports: as under the Old CCL, where there is more than one auditor, each must prepare a separate report and each auditor shall be “liable for his own fault”. However, there is a new requirement that such auditors shall, in addition, prepare a “common report” for which they shall be “jointly liable”. Joint auditors preparing a common report would therefore be well advised to put in place contractual contribution arrangements as between themselves in respect of such potential joint liability.
- Trading and consultancy: there is a new prohibition on auditors trading in company securities or “providing any consultancies to any person in connection with such securities”. (Note that Article 20 of Federal Law No. 12 of 2014 concerning regulation of the audit profession which came into force in March 2015 already prohibits such behaviour.)
- Whistle-blowing: there is a new requirement imposed upon auditors to notify the relevant authority of any violations of the law or of any criminal behaviour of which he becomes aware during performance of his duties within ten days’ of detection. Any auditor who contravenes this provision may be suspended, struck off or referred for prosecution.