The Limited Liability Housing Companies Act includes clauses about the housing company’s obligation to select an auditor or an operations inspector.
Auditor
According to the Limited Housing Companies Act, a housing company must have an auditor, if:
- The company’s buildings or building include 30 or more apartments under the control of shareholders.
- The Auditing Act or some other legislation requires an auditor to be chosen.
- It is demanded by shareholders with at least 1/10 of all shares or 1/3 of the shares represented in the meeting, in either the ordinary shareholders’ meeting or other shareholders’ meeting where the issue is to be discussed as per the meeting invite.
The auditor reviews the company’s financial statement and accounts and inspects the management of the housing company. The auditor therefore checks whether the financial statement has been prepared in accordance with the Accounting Act and the Limited Liability Housing Companies Act, and whether it accurately represents the company’s operations and financial standing at the end of the financial period.
Operations inspector
In general, operations inspection is considered more limited in scope than an actual audit since there are no requirements in terms of qualifications or specific expertise. In reality, however, it is recommended that the operations inspector is at least somewhat familiar with accounting and, for example, the Limited Liability Housing Companies Act. Typically, the operations inspector is a shareholder in the company not serving on the board.
A housing company is required to have an operations inspector, if the company does not have an auditor and the articles of association does not state otherwise. Furthemore, a housing company is required to select an operations inspector, if the company does not have an auditor and it is demanded by shareholders with at least 1/10 of all shares or 1/3 of the shares represented in the meeting, in either the ordinary shareholders’ meeting or other shareholders’ meeting where the issue is to be discussed as per the meeting invite. The shareholders’ meeting selects the operations inspector.
The housing company management must provide the operations inspector opportunity to carry out the operations inspection in the scope deemed necessary by the inspector. In practice, the property manager and the board members are required to provide the operations inspector any assistance or related information they might ask. Following the inspection, the operations inspector will provide a dated and signed operations inspection report regarding the financial period under inspection. The report must include a statement on whether the financial statement substantially includes the company’s income, expenses, assets, equity, debt, and pledged securities and whether the annual report substantially contains the information required by Chapter 10 § 5–7 of the Limited Liability Housing Companies Act. The operations inspector is also required to state in the report of any activity by a board member or the property manager that might render the housing company liable for damages.
Regarding auditor selection in articles of association that precede current legislation
If articles of association has not been updated since the updated Limited Liability Housing Companies Act of 2010 came into effect, the articles can continue to have sections stating that, for example, the company must select two auditors and one backup auditor. In such a case, however, provided that the company has under 30 apartments, the company can under the current rules select, for example, two operations inspectors and one deputy operations inspector. This is due to the fact that the Limited Liability Housing Companies Act did not include any stipulations on operations inspectors before the new Limited Liability Housing Companies Act came into effect on July 1st, 2010.
For more information on interpreting older articles of association, please see this Kiinteistölehti article.