Proposal for a directive
Article 1 – point 19 c (new)
Directive 2006/43/EC
Articles 42 and 43
19c. Articles 42 and 43 are replaced by the following: Article 42 Appointment of the statutory auditors or audited firms 1. Member States shall ensure that for the purposes of the application of Article 37 (1) of this Directive, for the appointment of statutory auditors or audit firms by public-interest entities, the conditions set out in paragraphs 2 to 6 of this Article shall apply. Where Article 37(2) of Directive 2006/43/EC applies, the public-interest entity shall only inform the competent authority designated in accordance with Art 35 of Regulation XX/XX of the use of the alternative systems or modalities referred to in that Article. In this case paragraphs 2 to 7 of this Article shall not apply. 2. The audit committee shall submit a recommendation to the administrative or supervisory board of the audited entity for the appointment of statutory auditors or audit firms. The audit committee shall justify the recommendation made. The audit committee shall state that its recommendation is free from influence by a third party and that no contractual clause as referred to in paragraph 7 has been imposed upon it. 3. The recommendation of the audit committee referred to in paragraph 2 shall be prepared following a selection procedure organised by the audited entity respecting the following criteria: (a) the audited entity shall be free to invite any statutory auditors or audit firms to submit proposals for the provision of the statutory audit service and shall consider at least one of the invited auditors or firms which does not receive more than 15% of the total audit fees from public- interest entities in the Member State concerned in the previous calendar year; (b) the audited entity shall be free to choose the method to contact the invited statutory auditor(s) or audit firm(s) and shall not be required to publish a call for tenders in the Official Journal of the European Union and/or in national gazettes or newspapers; (c) the audited entity shall prepare tender documents for the attention of the invited statutory auditor(s) or audit firm(s). Those tender documents shall allow them to understand the business of the audited entity and the type of statutory audit that is to be carried out. The tender documents shall contain transparent and non- discriminatory selection criteria that shall be used by the audited entity to evaluate the proposals made by statutory auditors or audit firms. (d) the audited entity shall be free to define the selection procedure and may conduct direct negotiations with interested tenderers in the course of the procedure where it shall also address audit quality and remuneration aspects; (e) where, in accordance with national law or Union law, the competent authorities referred to in Article 35 of Regulation XX/XX, require statutory auditors and audit firms to comply with certain quality standards, those standards shall be included in the tender documents; (f) the audited entity shall evaluate the proposals made by the statutory auditors or audit firms in accordance with the selection criteria predefined in the tender documents. The audited entity shall prepare a report on the conclusions of the selection procedure, which shall be validated by the audit committee. (g) the audited entity shall be able to demonstrate to the competent authority referred to in Article 35 Regulation XX/XX that the selection procedure was conducted in a fair manner and that audit quality and remuneration aspects were duly taken into account. The audit committee shall be responsible for the selection procedure referred to in the first subparagraph. For the purposes of point (a) of the first subparagraph, the competent authority referred to in Article 35(1) of Regulation XX/XX shall make public a list of the auditors and audit firms concerned which shall be updated on an annual basis. The competent authority shall use the information provided by statutory auditors and audit firms pursuant to Article 28 to make the relevant calculations. (4) Public-interest entities which meet the criteria set out in points (f) and (t) of Article 2(1) of Directive 2003/71/EC shall not be required to apply the selection procedure referred to in paragraph 3. (5) The proposal of the administrative or supervisory board to the general meeting of shareholders or members of the audited entity for the appointment of statutory auditors or audit firms shall include the recommendation made by the audit committee. If the proposal of the administrative or supervisory board departs from the recommendation of the audit committee, the proposal shall justify the reasons for not following the recommendation of the audit committee. However, the auditor or auditors recommended by the administrative or supervisory board must have participated in the selection procedure described in paragraph 3. (6) In the case of a credit institution or insurance undertaking, the administrative or supervisory board shall submit its draft proposal to the competent authority referred to in Article 35(2) of Regulation XX/XX. The competent authority referred to in Article 35(2) of Regulation XX/XX shall have the right to veto the choice proposed in the recommendation. Any such opposition shall be duly justified. The absence of a reply by the competent authority within the prescribed time-limit following submission of the audit committee's recommendation shall be considered as constituting an implied consent to the recommendation. (7) Any contractual clause entered into between a public-interest entity and a third party restricting the choice by the general meeting of shareholders or members of that entity pursuant to Article 37 of Directive 2006/43/EC to certain categories or lists of statutory auditors or audit firms to carry out the statutory audit of that entity shall be null and void. The public-interest entity shall inform the competent authorities referred to in Article 35 Regulation XX/XX of any attempt by a third party to impose such a contractual clause or to otherwise influence the decision of the general meeting of shareholders on the selection of a statutory auditor or audit firm. 7a. The audit committee or supervisory board/non-executive directors shall issue the audit engagement without delay following the election. (8) Where the audited entity is exempted from the obligation to have an audit committee, the audited entity shall decide which body or organ of the entity shall perform its functions for the purposes of the obligations set out in this Article. (9) Member States may decide that a minimum number of statutory auditors or audit firms shall be appointed by public- interest entities in certain circumstances and establish the conditions governing the relations between the auditors or firms appointed. If a Member State establishes such requirement, it shall inform the Commission thereof.