Early termination of a statutory auditor’s mandate – new procedure

On 14 February 2023, a new mandatory notification procedure for the early termination of a statutory auditor’s mandate was adopted by the Supervisory Council of Auditors.

Under Article 3:66 of the Code of Companies and Association (CCA), a notification including the reasons for the dismissal or resignation of the statutory auditor during their mandate must be sent to the Supervisory Council of Auditors by the audited entity and by the statutory auditor.

Previously, this notification was to be sent by means of a formal letter to the Supervisory Council. As of 14 February 2023, the Supervisory Council imposed a new digital procedure which requires all notifications to be sent via a new tool, the ‘EARLY END declaration’. With the adoption of this tool, both the statutory auditor and the audited entity are now required to fill in the EARLY END declaration via their respective portals on the FiMis App. 

Notification by means of a formal letter is therefore no longer necessary nor allowed. 

We would also like to remind you that terminating the mandate of a statutory auditor during their assignment is not straightforward. Indeed, the CCA provides for a specific procedure to be followed in the event of an early termination, whether the auditor’s mandate is terminated by the audited entity or by the auditor themself. 

In order to resign during their mandate, an auditor needs to have serious personal reasons that require them to do so. These serious personal reasons must be strictly interpreted, and usually involve for example illness, loss of independence, and so on. If there are no such serious personal reasons, the auditor may only resign during an (Extraordinary) General Assembly having given the latter their reasons in writing beforehand,  e.g. to align the audited entity with the group’s auditor. These reasons can then be more widely accepted.

The audited entity may dismiss the auditor for just cause, which, again, is a concept which must be strictly interpreted by referring to objective and verifiable factors, i.e. that an auditor is no longer deserving of the shareholders’ trust. It is important to note that reasons relating to changes in the shareholder structure or the inclusion of the audited entity in a group can in principle not be considered as just cause. Dismissal for just cause must be decided by the General Assembly, following a specific procedure, which includes sending a prior notification to the auditor (Article 3:67 of the CCA). 

In any event, the notification of the early termination of the auditor’s mandate must be sent to the Supervisory Council by both the audited entity and the auditor via their respective portals on the FiMis App. 

Feel free to reach out to PwC Legal business law team or Pierre Queritet, Stijn Vanbaelen or Héloïse Van Houtte for more information.