Skip to main content

Clifford Chance

Clifford Chance

Briefings

Upcoming EU restrictions on contractual auditor controls: implications for loan documentation

22 April 2014

Lenders seek to monitor their borrower's performance over the lifetime of a lending transaction. Fundamental to this is an analysis of a borrower's audited annual accounts. These are helpful only if properly audited and lenders frequently seek to control the auditor's identity by using so called auditor clauses, particularly on riskier credits. These give lenders comfort as to the quality of the auditors and typically require the borrower to use either specified audit firms or one otherwise approved by the lenders. Upcoming EU legislation will mean that such clauses in their current form will be banned and become unenforceable. This briefing examines the ban and considers the likely consequences for loan facility documentation.

Download PDF