Auditors and liability limitation agreements


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Corporate expert
Practice notes

Auditors and liability limitation agreements


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Corporate expert

Practice notes
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There are statutory provisions relating to the liability of an auditor of a company and the limits that may be placed upon it. Prior to 6 April 2008, a company could not exempt or indemnify its auditors from liability for any negligence, default, breach of duty or breach of trust in relation to the company occurring in the course of the audit of accounts. However, such exemption or indemnification is now permitted, provided it takes the form of an indemnity for the costs of successfully defending proceedings or a liability limitation agreement.

In addition, there may be other rules relating to a company’s obligations in relation to audit and auditors that apply to a listed company, an AIM company or a company with securities that are listed on the AQSE Main Market, AQSE Growth Market or AQSE Trading (formerly NEX Exchange Main Board, NEX Exchange Growth Market and NEX Exchange Secondary Market), but these are outside the scope of this Practice Note.

Some or all of the statutory provisions relating to auditors and liability limitation agreements

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United Kingdom
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Liability limitation agreement definition
What does Liability limitation agreement mean?

An agreement purporting to limit the amount of liability owed to a company by its auditor in respect of any negligence, default, breach of duty or breach of trust occurring in the course of the audit of accounts of which the auditor may be guilty in relation to the company.

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