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June 23, 2011

Companies Act’s review – Auditors concerns

The Ministry of Finance (MOF)’s proposed changes to the Companies Act includes deciding against a requirement for auditors to disclose to shareholders the reasons for their resignation due to concern over defamation, amongst others. Partner Lin Song from RHT Law’s China Practice shared that while it is possible that lawsuits against audit companies signing off on Chinese companies’ financial statements could happen in Singapore, it is difficult for investors to have a strong case if auditors followed internationally recognised standards but could not spot accounting irregularities due to management’s sophisticated fraud or collusion with banks