When a sharholder of a ltd request an independent audit.what are the legal obligation of the company.?

Question

When a sharholder of a ltd request an independent audit.what are the legal obligation of the company.?

Answer 1

I'm 90% sure this is how it works.

I think you'll find that it's the board of directors that run the company for all the shareholders, so they are under no obligation to incur the cost of an audit (or anything else) if they don't think it's necessary or in the interest of ALL shareholders.

Practically if the shareholder in question owns the majority (more than 50%) of the shares  they will (eventually) just sack the board and put in their own directors who will just do what they are told, so the company might as well just do what that shareholder wants now. That's not a legal obligation, but it makes sense unless you want a hostile owner, which is never good for business.

I'm puzzled why a shareholder would want an inpendant audit anyway.... aren't the annual accounts independantly audited ?

If they have good reason to suspect fraud or other foul play they should inform the police.

If they don't they should shut up and let the company get on with it's business or sell their shares.