UK: FRC guidance on auditor liability limitation agreements

Sections 532 to 538 of the Companies Act (2006) provide the framework governing provisions exempting auditors from liability. Companies are permitted to enter into auditor limitation liability agreements, subject to gaining shareholder approval. Guidance on these agreements, and the framework introduced by the Act, has today been published by the Financial Reporting Council.  The guidance explains:

• What is and is not allowed under the Act.
  
• Several factors to consider when considering the case for an agreement.
  
• What should be included in the agreement and provides example clauses.
  
• The shareholder approval process and provides example wording for including in shareholder resolutions. 

For further information see:

FRC guidance | FRC | Companies Act (2006) - auditor liability provisions | Statement by the Institutional Shareholders' Committee |