Part 16Audit
Chapter 6Auditors' liability
Liability limitation agreements
536Authorisation of agreement by members of the company
(1)
A liability limitation agreement is authorised by the members of the company if it has been authorised under this section and that authorisation has not been withdrawn.
(2)
A liability limitation agreement between a private company and its auditor may be authorised—
(a)
by the company passing a resolution, before it enters into the agreement, waiving the need for approval,
(b)
by the company passing a resolution, before it enters into the agreement, approving the agreement’s principal terms, or
(c)
by the company passing a resolution, after it enters into the agreement, approving the agreement.
(3)
A liability limitation agreement between a public company and its auditor may be authorised—
(a)
by the company passing a resolution in general meeting, before it enters into the agreement, approving the agreement’s principal terms, or
(b)
by the company passing a resolution in general meeting, after it enters into the agreement, approving the agreement.
(4)
The “principal terms” of an agreement are terms specifying, or relevant to the determination of—
(a)
the kind (or kinds) of acts or omissions covered,
(b)
the financial year to which the agreement relates, or
(c)
the limit to which the auditor’s liability is subject.
(5)
Authorisation under this section may be withdrawn by the company passing an ordinary resolution to that effect—
(a)
at any time before the company enters into the agreement, or
(b)
if the company has already entered into the agreement, before the beginning of the financial year to which the agreement relates.
Paragraph (b) has effect notwithstanding anything in the agreement.