Sch 3 para 6
(1) Section 487 (term of office of auditors of private company) is amended as follows. (2) After subsection (1) insert— (1A) The terms of appointment of an auditor or auditors of a private company which is also a public interest entity are subject to the additional requirement that the auditor or auditors cease to hold office on the expiry of the period for appointing auditors in respect of the first complete financial year that follows the expiry of the maximum engagement period. (1B) But subsection (1A) does not apply to an Auditor General. (1C) In this section— “ the maximum engagement period ” means, subject to subsection (1D) and section 487A (which makes transitional provision in relation to auditors appointed before 17th June 2016), whichever of the following periods is longest— the period of ten years beginning with the first day of the first financial year in respect of which the auditor was appointed, the period of twenty years beginning with the first day of the first financial year in respect of which the auditor was appointed, if the selection requirements are satisfied for at least one financial year which begins every ten years in that period, or such other period of no more than twenty years beginning with the first day of the first financial year in respect of which the auditor was appointed and ending on the last day of the relevant ten year period; “ the relevant ten year period ” means the period of ten years beginning with the first day of the last financial year— which begins within ten years of the first day of the first financial year in respect of which the auditor was appointed, and in respect of which the auditor was reappointed following the carrying out of a selection procedure in accordance with the selection requirements; and “ the selection requirements ” means— the requirements of section 485A(4) and (5) if the company has an audit committee, or the requirements of section 485B(4) if the company does not have an audit committee. (1D) The maximum engagement period may be extended by a period of up to two years with the approval of the competent authority, provided that— (a) in a case where the period within paragraph (a) of the definition of “the maximum engagement period” is being extended, the appointment of the auditor for the first complete financial year following the end of that period is made following the carrying out of a selection procedure in accordance with the selection requirements; and (b) in all cases, the competent authority is satisfied that exceptional circumstances exist. (1E) An auditor is ineligible for appointment as auditor of a private company which is also a public interest entity if— (a) within the four years preceding the start of the financial year to which that appointment relates the auditor has ceased by virtue of subsection (1A) to hold office as auditor of that company, or (b) the auditor is a member of the same network as an auditor who within the four years preceding the start of the financial year to which that appointment relates has ceased by virtue of that subsection to hold office as auditor of that company. (3) In subsection (2), at the end of paragraph (e) insert— , or (f) the auditor has ceased to hold office by virtue of subsection (1A).