On 21 January 2009, the GC100 published an issues note on auditor liability limitation agreements under sections 534 to 538 of the Companies Act 2006 (2006 Act). Since 6 April 2008, companies have been able to enter into liability limitation agreements with their auditors to limit an auditor's liability to the company for negligence, default or breach of duty or trust in relation to the audit of the accounts, provided they seek prior shareholder approval (see further Practice note, Liability limitation agreements: Companies Act 2006). It is thought that very few public companies have yet sought shareholder approval to enter into such an agreement.

The GC100 note sets out issues for directors to consider before entering into a liability limitation agreement in the context of guidance already issued by the FRC (see Legal update, Auditor liability: FRC publishes guidance on auditor liability limitation agreements) and the Institutional Shareholders' Committee (see Legal update, Auditor liability: ISC statement on auditor liability limitation agreements). The note emphasises in particular:

The note emphasises that a company that has entered into a liability limitation agreement is likely to be in a weaker position when negotiating any claim against its auditor.