The British government is close to proposing measures to give directors and auditors protection against potentially catastrophic legal claims.
Patricia Hewitt, trade and industry secretary, hopes the safeguards will remove a big disincentive to people joining company boards and will improve corporate governance.
But her plans to allow auditors to secure limits on their liability in negligence claims will run into strong opposition from some big investor groups.
UK action on auditor liability could spur reform in other EU member states and will be closely watched in the US where most of the million-dollar legal actions against accounting firms are filed. The issues of director and auditor liability are highly controversial because of the careful balancing act involved in any reform.
