§80a–31 Accountants and Auditors

Summary

Registered management companies and face-amount certificate companies may not file financial statements signed by an outside public accountant unless the accountant was picked at a meeting held within 30 days before or after the start of the fiscal year or before that year’s annual stockholder meeting. The choice must be by an in-person vote of a majority of the board members who are not “interested persons.” The appointment must be sent to the next annual stockholder meeting for ratification or rejection. If the accountant dies or quits between meetings, the non-interested directors can fill the vacancy at a special meeting. Shareholders, by a vote of a majority of the outstanding voting securities at a meeting called for that purpose, can end the accountant’s job immediately and without penalty. The accountant’s report must be addressed to both the board and the security holders. If the appointment is rejected or ended, the vacancy can be filled by a majority vote of the outstanding voting securities at that meeting or a later meeting called for that purpose. Common-law trusts covered under section 80a–16(c) follow their own removal and replacement rules. A company also cannot file a financial statement prepared with help from its controller or chief accounting officer unless that person was chosen by the shareholders at the last annual meeting or by the board. The Commission may require accountants to keep work papers and records about these companies and let the Commission inspect them.