How does a Hong Kong company appoint its auditor each year?

Normal route (s.396) The company appoints the auditor for a financial year by a resolution passed at the AGM held in respect of the previous financial year. If the AGM did not appoint one, the company must appoint at another general meeting.

If the company does not hold an AGM (s.612(2))

• The company must appoint by resolution at a general meeting before the end of the "appointment period" for that year (s.396(3)-(4)), unless the incumbent is deemed reappointed (s.403).
• Deemed reappointment applies on the same terms if no one has been appointed by the end of the appointment period.

When deemed reappointment does not apply (s.403(2))

• The person was appointed as first auditor by the directors or filled a casual vacancy.
• The articles require an actual appointment.
• The members resolved at a general meeting (on special notice) that the person should not be reappointed.
• The auditor declines in writing.
• Members holding at least 5% of voting rights (or a lower percentage set in the articles) give notice that the person should not be reappointed.

Fees The remuneration of an auditor appointed by members is fixed by resolution at a general meeting or in the manner that resolution sets (s.404).

Practical tip Record the reappointment in the board or members' minutes each year so the file shows an unbroken appointment.