Abstract
Abstract Since 1929, successive Companies Acts have empowered the courts to relieve a company auditor, wholly or partly, from liability for negligence having regard to all the circumstances of the case and if the auditor has acted ‘honestly and reasonably’. This power is now contained within section 727 of the Companies Act 1985. By reference to decided cases in the UK and in those Commonwealth countries where similar legislation exists this article reviews the manner in which the courts have interpreted this section and explores the reasons why they have rarely, if ever, chosen to use their powers under this section in favour of auditors.
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