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Companies (Audit, Investigations and Community Enterprise) Act 2004

Section 18 – Exemption from liability

95.Section 18 exempts a body receiving a grant under section 16, its subsidiary bodies and their members, officers and staff from liability in damages for things done or not done for the purposes of, or in connection with, the activities listed in section 16 (which is in effect a list of the FRC’s regulatory functions).  It supersedes two previous exemptions: that enjoyed by a body authorised to apply to the courts in respect of defective accounts (the FRRP) under s245C(6) of the Companies Act 1985; and that available to a body to which the Secretary of State delegates her functions under Part 2 of the Companies Act 1989 (expected to be the Professional Oversight Board for Accountancy of the FRC) under s48(3) of that Act.  These two exemptions are therefore repealed.

96.Subsection (1) provides that an exemption from liability in damages applies when a grant has been paid to a body under section 16, and that it applies to acts or omissions occurring during the period of 12 months following the payment.

97.Subsection (3) provides for a body funded under section 16, its subsidiaries and their members, officers and staff to be exempt from liability in damages for things that they do or omit to do during the 12 month period since the grant was paid, for the purposes of, or in connection with, any of the activities listed in section 16(2). The exemption would not apply to any non-regulatory activities conducted by the regulator (for example, providing vocational training on a commercial basis or compiling a database of Non-Executive Directors).

98.Subsection (4) sets out the circumstances when the exemption will not apply – that is to say, where the act or omission was in bad faith or where it was unlawful under section 6(1) of the Human Rights Act 1998.

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