Companies Act (Cap. 386), article 151A

151A. (1)( a)A public-interest entity shall appoint an auditor or an audit firm for an initial engagement of at least one year. The engagement may be renewed. (b) Neither the initial engagem ent of a particular auditor or audit firm by a public-interest entity, nor this in combination with any renewed engagements therewith shall exceed a maximum duration of ten years. (2) After the expiry of the maximum durations of engagements referred to in sub-article (1)( b), or after the expiry of the durations of engagements extended in acco rdance with sub-articles (3) or (5), neither the auditor or the audit firm nor, where applicable, an y members of their networks within the European Union shall undertake the statutory audit of the same public-interest entit y within the following four-year period. (3) By way of derogation from sub-article (1), the maximum durations referred to in sub-article (1)( b) may be extended to the maximum duration of twenty (20) years, where a public tendering process for the statutory audit is conducted in accordance with Article 16(2) to (5) of the Audit Regulation and takes effect upon the expiry of the maximum durations referred to in sub-article (1)( b). (4) The maximum durations referred to in sub-article (1)( b) shall be extended only if, upon a recommendation of the audit committee, the board of directors proposes to the general meeti ng of the company, in accordance with Maltese law, that the engagement be renewed and that proposal is approved. (5) After the expiry of the maximum durations referred to in sub-article (1)( b), or in sub-article (3), as appropriate, the public- interest entity may, on an excep tional basis, request that the Board grant an extension to re-appoint the auditor or the audit firm for a further engagement where the conditions in sub-article (3) are met. Such an additional engageme nt shall not exceed two years. (6) ( a) The key audit partners responsible for carrying out a statutory audit shall cease their participation in the statutory audit of the audited entity not later than seven (7) years from the date of their appointment. They shall not participate again in the statutory audit of the audited entity before three years have elapsed following that cessation. (b) The auditor or the audit firm shall establish an appropriate gradual rotatio n mechanism with regard to the most senior personnel involved in the statutory audit, including at least the persons who are registered as auditors. The gradual ro tation mechanism shall be a p p l i e d i n p h a s e s o n t h e b a s i s o f i n d i v i d u a l s r a t h e r than of the entire engag ement team. It shall be proportionate in view of t he scale and the complexity of the activity of the auditor or the audit firm. (c) T h e a u d i t o r o r t h e a u d i t f i r m s h a l l b e a b l e t o demonstrate to the Board that such mechanism is COMP ANIES [CAP. 386. 101 effectively applied and adapted to the scale and the complexity of the activity of the auditor or the audit firm. (7) ( a) For the purposes of this article, the duration of the audit engagement shall be calculated as from the first financial year covered in the audit engagement letter in which the auditor or the audit firm has been appointed for the first time for the carrying-out of consecutive statutory audits for the same public- interest entity. (b) For the purposes of this article, the audit firm shall include other firms that the audit firm has acquired or that have merged with it. (c) If there is uncertainty as to the date on which the auditor or the audit firm began carrying out consecutive statutory audits for the public-interest entity, for example due to f irm mergers, acquisitions, or changes in ownership structure, the auditor or the audit firm shall immediatel y report such uncertainties to the Board. (8) As from 17 June 2020, a public-interest entity shall not enter into or renew an audit engagement with a given auditor or audit firm if that auditor or audit firm has been providing audit services to that public-interest entity for twenty (20) and mor e consecutive years as at 16 June 2014. (9) As from 17 June 2023, a public-interest entity shall not enter into or renew an audit engagement with a given auditor or audit firm if that statutory auditor or audit firm has been providing audit services to that public-int erest entity for eleven (11) a nd more but less than twenty (20) cons ecutive years as at 16 June 2014. (10) Without prejudice to sub-articles (8) and (9), the audit engagements that were entered into before 16 June 2014 but whic h are still in place as at 17 June 2016 may r emain applicable unt il the end of the maximum duration re ferred to in sub-article (1)( b). Sub- article (3) shall apply. (11) Article 16(3) of the Audit Regulation shall only apply to audit engagements after the expiry of the period referred to in sub- article (1)( b). Filling of casual vacancies.