Cap. 487 Art. 28Appointment, duties and termination of appointment of auditors.

(1) Every person enrolled under article 13 shall each year appoint an approved auditor as auditor to the company whose duty shall be to report on the financial statements of the company or the income statements of the individual, as applicable, examined by him and on financial statements or income statements prepared by the company or individual, respectively.

(2) If the enrolled person fails to appoint an auditor as required

(3) The auditor’s report shall include a statement on compliance by the enrolled person with requirements specified by means of Insurance Distribution Rules made for the purposes of this article, which may also specify the information to be contained in such statement.

(4) Every auditor of an enrolled person shall have the right to demand such information or explanation as he deems necessary in the performance of his duties from any officer or employee of, or any person under an appointment from, that enrolled person.

(5) An auditor shall immediately give notice in writing to the competent authority if -

(a) he resigns;

(b) he does not seek to be re-appointed; or

(c) he decides to qualify the audit report, and, in the situations mentioned in paragraphs (a) and (b), the auditor shall specify the reasons for so doing.

(6) An enrolled company shall give notice in writing to the competent authority immediately it receives notice of a resolution intended to be put before the company’s annual general meeting to appoint as an auditor a person other than the retiring auditor or otherwise providing expressly that the retiring auditor shall not be reappointed.

(7) Where, for any reason whatever, the appointment of an auditor comes to an end, the enrolled person shall not later than fourteen days from the termination of such appointment, give notice in writing to the competent authority stating reasons for such termination.

(8) The competent authority may require an enrolled person to change its appointed auditor where, in the competent authority’s opinion, such auditor is considered unfit for this appointment, at any time during his term of office.

(9) Before requiring an enrolled person to change the appointed auditor in the circumstances mentioned in sub-article (8), the competent authority shall notify in writing its intention to the enrolled person and the auditor concerned stating reasons for requiring such change and giving the auditor the opportunity to submit, in writing, within fourteen days from the date of serving of such notice, the reasons why his appointment with the enrolled person should not be terminated.

(10) For the purposes of this Act, an approved auditor shall be a person who is qualified to be an auditor in accordance with the Companies Act and holds the authorisation of the competent authority to act as auditor issued to him under the Insurance Business Act.

(11) Notwithstanding anything contained in the foregoing sub-carried out, the provisions of this article shall not apply to the extent that they are replaced by such arrangements.

(12) If, in his capacity as auditor of an enrolled person or branch in Malta of a foreign company enrolled under article 13 or due to a direct request by the competent authority under this Act, an auditor becomes aware of any matter which relates to and may have a serious adverse effect upon the stability and soundness of the company or the integrity of the insurance distribution activities and reinsurance distribution activities carried on in Malta by the enrolled person or branch in Malta of a foreign company enrolled under article 13, he shall immediately inform the competent authority, in the case of a company, through the intermediary’s management or, if circumstances so warrant, directly to the competent authority, and in the case of an individual, directly to the competent authority.

(13) For the purposes of sub-article (12), any matter which relates to and may have a serious adverse effect is any matter that:

(a) is likely to lead to a serious qualification or refusal of the auditor’s report on the accounts of the company or income statements of the individual; or

(b) gravely impairs the ability of the company to continue as a going concern or the ability of the enrolled person or branch in Malta of a foreign company enrolled under article 13 to continue carrying out the activities in respect of which it is enrolled; or

(c) is a material breach of the provisions of this Act, regulations or Insurance Distribution Rules which lay down the conditions governing registration or enrolment or which specifically govern the carrying out of insurance distribution activities and reinsurance distribution activities by an enrolled person.

(14) An auditor of an enrolled person or a branch in Malta of a foreign company enrolled under article 13 shall likewise have a duty to report to the competent authority any facts and decisions which relate to or have a serious adverse effect upon the stability and soundness of the company or the integrity of the insurance distribution activities and reinsurance distribution activities carried out in Malta by the enrolled person or branch in Malta of a foreign company enrolled under article 13, of which he becomes aware in his capacity as an auditor to an enrolled person or branch in Malta of a foreign company enrolled under article 13 having close links within the meaning of article 10.

(15) Without prejudice to any provision contained in this Act, the competent authority may request the auditor to provide it with such information and documentation relating to any fact or decision as specified in sub-articles (12) or (14) concerning the enrolled person or the branch in Malta of a foreign company enrolled under article 13. of his communicating in good faith to the competent authority, whether or not in response to a request from it, any information or opinion on a matter of which the auditor has become aware in his capacity as auditor and which is relevant to any functions of the competent authority under the provisions of this Act or is required to be communicated by virtue of this Act;

(b) a person appointed to make a report under any provision of this Act may be subject, shall be regarded as contravened by reason of his communicating in good faith to the competent authority, whether or not in response to a request made by it, on any matter which relates to the business or affairs of an enrolled company in relation to which a report is made.