# Changing Auditors: Removal, Resignation and Special Notice

> The statutory procedure and timeline for removing or replacing the auditor of a Malaysian company, the auditor's right to make representations, the statement of circumstances, and the professional clearance step that sits outside the Act.

- Category: audit
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/audit/changing-auditors

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Nobody changes auditor for a neutral reason. Either the fee moved, the group
restructured, the relationship broke, or somebody did not like the questions being
asked. The Companies Act 2016 assumes the last of those and builds the whole
procedure around giving the departing auditor a channel to say so — to the
members, and to the Registrar.

That is why a removal is not a board decision, and why the file at SSM ends up
telling a story.

## Removal: the 28-day clock

Section 276(1) allows members to remove an auditor from office **at any time**, by
ordinary resolution at a general meeting, in accordance with s.277. Section 276(3)
closes the alternatives: an auditor may not be removed before the expiration of
his term except by a resolution under that section. Section 276(2) preserves any
compensation or damages payable for termination of the appointment.

The procedural spine is special notice.

| Step | Who | When | Section |
| --- | --- | --- | --- |
| Special notice of the intended resolution given to the company | A member | At least **28 days** before the meeting | s.322(1) |
| Copy sent to the auditor proposed to be removed **and to the Registrar** | Company | **Immediately** on receipt | s.277(2) |
| Written representation of reasonable length, with a request to circulate | Auditor | Within **7 days** of receiving the special notice | s.277(3) |
| Copy of the representation sent to every member entitled to notice | Company | With the meeting notice | s.277(4) |
| Notice of the resolution given to members | Company | With the notice of meeting; or at least **14 days** before by advertisement if not practicable | s.322(3), s.322(4) |
| Copy of the representation sent to the Registrar, and to the stock exchange if quoted | **Auditor** | Within **7 days** of making the representation | s.284 |
| Notice to the Registrar that the resolution was passed | Company | Within **14 days** | s.278(1) |

Two of those rows are the ones companies get wrong.

**The Registrar gets the special notice at the same time as the auditor.** Section
277(2) is a single obligation covering both recipients, and it says *immediately*.
The regulator therefore knows a removal is proposed before the meeting is held,
not after.

**The auditor files independently.** Section 284 puts the duty on the auditor, not
the company, to send the written representation to the Registrar within seven
days. The company cannot suppress it by not filing.

If the company fails to circulate the representation, s.277(5) lets the auditor
require it to be read out at the meeting, without prejudice to being heard orally.
The only escape is s.277(6): on application by the company or an aggrieved person,
the Court may relieve the company of circulation if satisfied the auditor is using
the section to secure needless publicity, or that the matter is defamatory, or on
other grounds the Court thinks reasonable.

Section 322(5) contains a trap in the other direction. If the company calls a
meeting for a date 28 days or less after the special notice was given, the notice
is **deemed properly given** even though it was short. A board cannot defeat a
removal by rushing the meeting.

## Resignation: 21 days, and two seven-day filings

Resignation is simpler and faster. Under s.281(1) an auditor resigns by giving
written notice **to the company at its registered office**. Not to the finance
manager, not by email to a director — the registered office is the statutory
address, which is one reason the registered office obligation matters.

Section 281(2) ends the term of office **21 days after the notice is given**, or on
the date specified in the notice. An auditor who wants a longer runway must say so
in the notice.

Then two separate seven-day filings run:

- **s.282(1)** — the company sends a copy of the notice to the Registrar within
  seven days of **receiving** it. The company and every officer commit an offence
  if it does not.
- **s.284** — the auditor sends the statement of circumstances connected with the
  resignation to the Registrar within seven days of the notice, and to the stock
  exchange if the shares or debentures are quoted.

For a **public company**, s.283 adds real teeth where the resignation notice is
accompanied by a statement of circumstances. The auditor may serve a signed
requisition calling on the directors to convene a general meeting to receive the
explanation. The directors must hold that meeting **within 28 days** of receiving
the requisition, and every director who fails to take all reasonable steps to
secure it commits an offence under s.283(11). The auditor may require the
statement to be circulated, and retains the s.285 right to attend and be heard.

## Appointing the replacement

The vacancy does not fill itself.

For a **private company** using a written resolution, s.279 applies where the
effect is to appoint a person in place of an outgoing auditor. The company must
send a copy of the proposed resolution to **both** the proposed appointee and the
outgoing auditor. The outgoing auditor then has **14 days** from receiving it to
make a written statement explaining the circumstances connected with the
resignation, and may require it to be sent to every member. Where that happens,
the circulation period under s.303(3) stretches from 21 days to **28 days**.

Where the appointment is made at a meeting instead, s.280 requires special notice
in four situations — broadly, where no appointment period or AGM has passed since
the outgoing auditor ceased to hold office by resignation or removal, or where one
has passed and no auditor was appointed. On receiving that notice the company must
immediately send a copy to the proposed appointee.

And under s.269(1)(a), the incoming auditor **does not take office until the
previous auditor ceases to hold office**. Overlapping the two, other than as joint
or additional auditors under s.269(2), does not work.

## Professional clearance: the step that is not in the Act

Before any of this matters commercially, the incoming firm has to be willing to
take the job.

R320.4 MY of the MIA By-Laws is mandatory and specific: in the case of a financial
statement audit engagement, **no member in public practice shall accept nomination
without enquiring from the existing auditor** whether there is any professional or
other reason for the proposed change of which he should be aware — and, if there
is, requesting all the details necessary to reach a decision.

Appendix II to the By-Laws sets the mechanics:

1. The existing accountant should reply in writing **normally within 14 working
   days**, saying whether there are professional reasons not to accept, and
   disclosing the information if the client has given permission — or disclosing
   that permission was refused.
2. If no reply arrives after 14 working days, the proposed accountant sends a
   **reminder by registered post or by hand**.
3. If there is still no reply within 14 working days of the reminder, the proposed
   accountant tries other means, including enquiries of third parties or
   background checks on senior management.
4. If the information is not obtained, or permission to disclose was refused, the
   proposed accountant must **consider whether it is appropriate to accept at
   all**.
5. On accepting, the proposed accountant informs the existing accountant in
   writing, by registered post or by hand.

Under 320.5 A1 the proposed accountant will usually need the client's permission,
preferably in writing, to open the discussion. **Refusing that permission is the
loudest thing a client can do.** It does not stop the change; it tells the incoming
firm that something is being withheld, and step 3 of the appendix tells them to go
looking anyway.

Budget two to six weeks for clearance in a real timetable, and longer if fees are
outstanding — an unpaid fee is a common reason a clearance reply is unhelpful.

## Why a mid-audit resignation is a red flag to your banker

An auditor who resigns before signing has usually concluded one of three things:
that the evidence needed is not going to arrive, that the representations offered
are not reliable, or that continuing would breach an ethical requirement. All
three are worse than a qualified opinion, because a qualification at least tells
you what the problem was.

The visible artefacts are the s.282 notice on the SSM file and the s.284 statement
of circumstances lodged by the auditor. Both are on the public record. Whatever the
company later says about a fee disagreement, a credit officer will read the file.

Add the reporting duties that sit on the auditor throughout. Section 266(8)
requires the auditor to report a breach of the Act to the Registrar in writing
where the matter has not been and will not be adequately dealt with by comment in
the report or by raising it with the directors. Section 266(9) goes further for
public companies and companies controlled by them, requiring a written report to
the Registrar where a serious offence involving fraud or dishonesty is suspected.
Failure to comply carries up to **five years imprisonment or a fine up to RM3
million** under s.266(13). An auditor under that kind of pressure resigns rather
than accommodates.

Most facility agreements also carry a notification covenant on a change of
auditors. Check it before the resolution is passed, not after.

## Common mistakes

- **Passing a board resolution to remove the auditor.** Only members can remove,
  and only under s.276 with special notice.
- **Sending the special notice to the auditor but not the Registrar**, contrary to
  s.277(2).
- **Counting the auditor's seven days from the meeting date.** It runs from receipt
  of the special notice, under s.277(3).
- **Serving resignation on a director instead of the registered office**, which is
  not what s.281(1) requires.
- **Missing the 14-day s.278 filing** after the removal resolution is passed.
- **Appointing the incoming firm before the outgoing firm ceases to hold office**,
  contrary to s.269(1)(a).
- **Refusing professional clearance permission**, which tells the incoming firm far
  more than the answer would have.
- **Changing auditor to fix a disagreement about an accounting treatment.** The
  new firm will ask why, and the answer arrives through the clearance letter.

## What's next

If the change is fee-driven, it helps to know what actually determines an audit
fee in Malaysia — and why the schedule still circulating online has not been in
force for years.

## Sources

- Companies Act 2016 (Act 777), reprint as at 1 August 2022 — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)
- By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants, updated 5 November 2024 — https://mia.org.my/wp-content/uploads/2024/11/By-Laws-updated-Nov-2024-%E2%80%93-Effective-15-December-2024.pdf (MIA)
- Practice Directive No. 1/2017 (Revised 1 October 2024) — Late Lodgement Penalties — https://www.ssm.com.my/Pages/Legal_Framework/Document/Practice%20Directive%201_2017%20(Revised)%201%20Oct%202024.pdf (SSM)

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