Companies Act 2014 section 1536

Prohibited relationships - financial or beneficial interest

Section 1536 sets out the restrictions on financial interests, transactions, and gifts that apply to statutory auditors, audit firms, their partners, employees, and closely associated persons in relation to the entities they audit.

• Auditors and connected persons must not hold a material financial or beneficial interest in, or deal in financial instruments of, any entity they audit — except for indirect holdings through diversified collective investment schemes such as pension funds or life assurance policies
• No person involved in a statutory audit may participate in or influence the outcome of that audit if they own financial instruments of the audited entity or a related entity, or have had a recent employment, business, or other relationship that could give rise to a conflict of interest
• Auditors and connected persons must not solicit or accept gifts or favours — whether monetary or non-monetary — from the audited entity or any related entity, unless the value would be regarded as trivial by a reasonable and informed third party
• The restrictions apply broadly to the statutory auditor, the audit firm, the key audit partner, employees, any individual directly involved in audit activities, and persons closely associated with them as defined by EU directives