Office of Public Sector Information
PART 15 continued CHAPTER 11 continued
(1) An application may be made to the court—
(a) by the Secretary of State, after having complied with section 455, or
(b) by a person authorised by the Secretary of State for the purposes of this section,
for a declaration (in Scotland, a declarator) that the annual accounts of a company do not comply, or a directors' report does not comply, with the requirements of this Act (or, where applicable, of Article 4 of the IAS Regulation) and for an order requiring the directors of the company to prepare revised accounts or a revised report.
(2) Notice of the application, together with a general statement of the matters at issue in the proceedings, shall be given by the applicant to the registrar for registration.
(3) If the court orders the preparation of revised accounts, it may give directions as to—
(a) the auditing of the accounts,
(b) the revision of any directors' remuneration report, directors' report or summary financial statement, and
(c) the taking of steps by the directors to bring the making of the order to the notice of persons likely to rely on the previous accounts,
and such other matters as the court thinks fit.
(4) If the court orders the preparation of a revised directors' report it may give directions as to—
(a) the review of the report by the auditors,
(b) the revision of any summary financial statement,
(c) the taking of steps by the directors to bring the making of the order to the notice of persons likely to rely on the previous report, and
(d) such other matters as the court thinks fit.
(5) If the court finds that the accounts or report did not comply with the requirements of this Act (or, where applicable, of Article 4 of the IAS Regulation) it may order that all or part of—
(a) the costs (in Scotland, expenses) of and incidental to the application, and
(b) any reasonable expenses incurred by the company in connection with or in consequence of the preparation of revised accounts or a revised report,
are to be borne by such of the directors as were party to the approval of the defective accounts or report.
For this purpose every director of the company at the time of the approval of the accounts or report shall be taken to have been a party to the approval unless he shows that he took all reasonable steps to prevent that approval.
(6) Where the court makes an order under subsection (5) it shall have regard to whether the directors party to the approval of the defective accounts or report knew or ought to have known that the accounts or report did not comply with the requirements of this Act (or, where applicable, of Article 4 of the IAS Regulation), and it may exclude one or more directors from the order or order the payment of different amounts by different directors.
(7) On the conclusion of proceedings on an application under this section, the applicant must send to the registrar for registration a copy of the court order or, as the case may be, give notice to the registrar that the application has failed or been withdrawn.
(8) The provisions of this section apply equally to revised annual accounts and revised directors' reports, in which case they have effect as if the references to revised accounts or reports were references to further revised accounts or reports.
(1) The Secretary of State may by order (an “authorisation order”) authorise for the purposes of section 456 any person appearing to him—
(a) to have an interest in, and to have satisfactory procedures directed to securing, compliance by companies with the requirements of this Act (or, where applicable, of Article 4 of the IAS Regulation) relating to accounts and directors' reports,
(b) to have satisfactory procedures for receiving and investigating complaints about companies' annual accounts and directors' reports, and
(c) otherwise to be a fit and proper person to be authorised.
(2) A person may be authorised generally or in respect of particular classes of case, and different persons may be authorised in respect of different classes of case.
(3) The Secretary of State may refuse to authorise a person if he considers that his authorisation is unnecessary having regard to the fact that there are one or more other persons who have been or are likely to be authorised.
(4) If the authorised person is an unincorporated association, proceedings brought in, or in connection with, the exercise of any function by the association as an authorised person may be brought by or against the association in the name of a body corporate whose constitution provides for the establishment of the association.
(5) An authorisation order may contain such requirements or other provisions relating to the exercise of functions by the authorised person as appear to the Secretary of State to be appropriate.
No such order is to be made unless it appears to the Secretary of State that the person would, if authorised, exercise his functions as an authorised person in accordance with the provisions proposed.
(6) Where authorisation is revoked, the revoking order may make such provision as the Secretary of State thinks fit with respect to pending proceedings.
(7) An order under this section is subject to negative resolution procedure.
(1) The Commissioners for Her Majesty’s Revenue and Customs may disclose information to a person authorised under section 457 for the purpose of facilitating—
(a) the taking of steps by that person to discover whether there are grounds for an application to the court under section 456 (application in respect of defective accounts etc), or
(b) a decision by the authorised person whether to make such an application.
(2) This section applies despite any statutory or other restriction on the disclosure of information.
Provided that, in the case of personal data within the meaning of the Data Protection Act 1998 (c. 29), information is not to be disclosed in contravention of that Act.
(3) Information disclosed to an authorised person under this section—
(a) may not be used except in or in connection with—
(i) taking steps to discover whether there are grounds for an application to the court under section 456, or
(ii) deciding whether or not to make such an application,
or in, or in connection with, proceedings on such an application; and
(b) must not be further disclosed except—
(i) to the person to whom the information relates, or
(ii) in, or in connection with, proceedings on any such application to the court.
(4) A person who contravenes subsection (3) commits an offence unless—
(a) he did not know, and had no reason to suspect, that the information had been disclosed under this section, or
(b) he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
(5) A person guilty of an offence under subsection (4) is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
(b) on summary conviction—
(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);
(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).
(1) This section applies where it appears to a person who is authorised under section 457 that there is, or may be, a question whether a company’s annual accounts or directors' report comply with the requirements of this Act (or, where applicable, of Article 4 of the IAS Regulation).
(2) The authorised person may require any of the persons mentioned in subsection (3) to produce any document, or to provide him with any information or explanations, that he may reasonably require for the purpose of—
(a) discovering whether there are grounds for an application to the court under section 456, or
(b) deciding whether to make such an application.
(3) Those persons are—
(a) the company;
(b) any officer, employee, or auditor of the company;
(c) any persons who fell within paragraph (b) at a time to which the document or information required by the authorised person relates.
(4) If a person fails to comply with such a requirement, the authorised person may apply to the court.
(5) If it appears to the court that the person has failed to comply with a requirement under subsection (2), it may order the person to take such steps as it directs for securing that the documents are produced or the information or explanations are provided.
(6) A statement made by a person in response to a requirement under subsection (2) or an order under subsection (5) may not be used in evidence against him in any criminal proceedings.
(7) Nothing in this section compels any person to disclose documents or information in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.
(8) In this section “document” includes information recorded in any form.
(1) This section applies to information (in whatever form) obtained in pursuance of a requirement or order under section 459 (power of authorised person to require documents etc) that relates to the private affairs of an individual or to any particular business.
(2) No such information may, during the lifetime of that individual or so long as that business continues to be carried on, be disclosed without the consent of that individual or the person for the time being carrying on that business.
(3) This does not apply—
(a) to disclosure permitted by section 461 (permitted disclosure of information obtained under compulsory powers), or
(b) to the disclosure of information that is or has been available to the public from another source.
(4) A person who discloses information in contravention of this section commits an offence, unless—
(a) he did not know, and had no reason to suspect, that the information had been disclosed under section 459, or
(b) he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
(5) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
(b) on summary conviction—
(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);
(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).
(1) The prohibition in section 460 of the disclosure of information obtained in pursuance of a requirement or order under section 459 (power of authorised person to require documents etc) that relates to the private affairs of an individual or to any particular business has effect subject to the following exceptions.
(2) It does not apply to the disclosure of information for the purpose of facilitating the carrying out by the authorised person of his functions under section 456.
(3) It does not apply to disclosure to—
(a) the Secretary of State,
(b) the Department of Enterprise, Trade and Investment for Northern Ireland,
(c) the Treasury,
(d) the Bank of England,
(e) the Financial Services Authority, or
(f) the Commissioners for Her Majesty’s Revenue and Customs.
(4) It does not apply to disclosure—
(a) for the purpose of assisting a body designated by an order under section 46 of the Companies Act 1989 (c. 40) (delegation of functions of the Secretary of State) to exercise its functions under Part 2 of that Act;
(b) with a view to the institution of, or otherwise for the purposes of, disciplinary proceedings relating to the performance by an accountant or auditor of his professional duties;
(c) for the purpose of enabling or assisting the Secretary of State or the Treasury to exercise any of their functions under any of the following—
(i) the Companies Acts,
(ii) Part 5 of the Criminal Justice Act 1993 (c. 36) (insider dealing),
(iii) the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)),
(iv) the Company Directors Disqualification Act 1986 (c. 46) or the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4)),
(v) the Financial Services and Markets Act 2000 (c. 8);
(d) for the purpose of enabling or assisting the Department of Enterprise, Trade and Investment for Northern Ireland to exercise any powers conferred on it by the enactments relating to companies, directors' disqualification or insolvency;
(e) for the purpose of enabling or assisting the Bank of England to exercise its functions;
(f) for the purpose of enabling or assisting the Commissioners for Her Majesty’s Revenue and Customs to exercise their functions;
(g) for the purpose of enabling or assisting the Financial Services Authority to exercise its functions under any of the following—
(i) the legislation relating to friendly societies or to industrial and provident societies,
(ii) the Building Societies Act 1986 (c. 53),
(iii) Part 7 of the Companies Act 1989 (c. 40),
(iv) the Financial Services and Markets Act 2000; or
(h) in pursuance of any Community obligation.
(5) It does not apply to disclosure to a body exercising functions of a public nature under legislation in any country or territory outside the United Kingdom that appear to the authorised person to be similar to his functions under section 456 for the purpose of enabling or assisting that body to exercise those functions.
(6) In determining whether to disclose information to a body in accordance with subsection (5), the authorised person must have regard to the following considerations—
(a) whether the use which the body is likely to make of the information is sufficiently important to justify making the disclosure;
(b) whether the body has adequate arrangements to prevent the information from being used or further disclosed other than—
(i) for the purposes of carrying out the functions mentioned in that subsection, or
(ii) for other purposes substantially similar to those for which information disclosed to the authorised person could be used or further disclosed.
(7) Nothing in this section authorises the making of a disclosure in contravention of the Data Protection Act 1998 (c. 29).
(1) The Secretary of State may by order amend section 461(3), (4) and (5).
(2) An order under this section must not—
(a) amend subsection (3) of that section (UK public authorities) by specifying a person unless the person exercises functions of a public nature (whether or not he exercises any other function);
(b) amend subsection (4) of that section (purposes for which disclosure permitted) by adding or modifying a description of disclosure unless the purpose for which the disclosure is permitted is likely to facilitate the exercise of a function of a public nature;
(c) amend subsection (5) of that section (overseas regulatory authorities) so as to have the effect of permitting disclosures to be made to a body other than one that exercises functions of a public nature in a country or territory outside the United Kingdom.
(3) An order under this section is subject to negative resolution procedure.
(1) The reports to which this section applies are—
(a) the directors' report,
(b) the directors' remuneration report, and
(c) a summary financial statement so far as it is derived from either of those reports.
(2) A director of a company is liable to compensate the company for any loss suffered by it as a result of—
(a) any untrue or misleading statement in a report to which this section applies, or
(b) the omission from a report to which this section applies of anything required to be included in it.
(3) He is so liable only if—
(a) he knew the statement to be untrue or misleading or was reckless as to whether it was untrue or misleading, or
(b) he knew the omission to be dishonest concealment of a material fact.
(4) No person shall be subject to any liability to a person other than the company resulting from reliance, by that person or another, on information in a report to which this section applies.
(5) The reference in subsection (4) to a person being subject to a liability includes a reference to another person being entitled as against him to be granted any civil remedy or to rescind or repudiate an agreement.
(6) This section does not affect—
(a) liability for a civil penalty, or
(b) liability for a criminal offence.
(1) In this Part “accounting standards” means statements of standard accounting practice issued by such body or bodies as may be prescribed by regulations.
(2) References in this Part to accounting standards applicable to a company’s annual accounts are to such standards as are, in accordance with their terms, relevant to the company’s circumstances and to the accounts.
(3) Regulations under this section may contain such transitional and other supplementary and incidental provisions as appear to the Secretary of State to be appropriate.
(1) A company qualifies as medium-sized in relation to its first financial year if the qualifying conditions are met in that year.
(2) A company qualifies as medium-sized in relation to a subsequent financial year—
(a) if the qualifying conditions are met in that year and the preceding financial year;
(b) if the qualifying conditions are met in that year and the company qualified as medium-sized in relation to the preceding financial year;
(c) if the qualifying conditions were met in the preceding financial year and the company qualified as medium-sized in relation to that year.
(3) The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements—
| 1. Turnover | Not more than £22.8 million |
| 2. Balance sheet total | Not more than £11.4 million |
| 3. Number of employees | Not more than 250 |
(4) For a period that is a company’s financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted.
(5) The balance sheet total means the aggregate of the amounts shown as assets in the company’s balance sheet.
(6) The number of employees means the average number of persons employed by the company in the year, determined as follows—
(a) find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),
(b) add together the monthly totals, and
(c) divide by the number of months in the financial year.
(7) This section is subject to section 466 (companies qualifying as medium-sized: parent companies).
(1) A parent company qualifies as a medium-sized company in relation to a financial year only if the group headed by it qualifies as a medium-sized group.
(2) A group qualifies as medium-sized in relation to the parent company’s first financial year if the qualifying conditions are met in that year.
(3) A group qualifies as medium-sized in relation to a subsequent financial year of the parent company—
(a) if the qualifying conditions are met in that year and the preceding financial year;
(b) if the qualifying conditions are met in that year and the group qualified as medium-sized in relation to the preceding financial year;
(c) if the qualifying conditions were met in the preceding financial year and the group qualified as medium-sized in relation to that year.
(4) The qualifying conditions are met by a group in a year in which it satisfies two or more of the following requirements—
| 1. Aggregate turnover | Not more than £22.8 million net (or £27.36 million gross) |
| 2. Aggregate balance sheet total | Not more than £11.4 million net (or £13.68 million gross) |
| 3. Aggregate number of employees | Not more than 250 |
(5) The aggregate figures are ascertained by aggregating the relevant figures determined in accordance with section 465 for each member of the group.
(6) In relation to the aggregate figures for turnover and balance sheet total—
“net” means after any set-offs and other adjustments made to eliminate group transactions—
in the case of Companies Act accounts, in accordance with regulations under section 404,
in the case of IAS accounts, in accordance with international accounting standards; and
“gross” means without those set-offs and other adjustments.
A company may satisfy any relevant requirement on the basis of either the net or the gross figure.
(7) The figures for each subsidiary undertaking shall be those included in its individual accounts for the relevant financial year, that is—
(a) if its financial year ends with that of the parent company, that financial year, and
(b) if not, its financial year ending last before the end of the financial year of the parent company.
If those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures shall be taken.
(1) A company is not entitled to take advantage of any of the provisions of this Part relating to companies qualifying as medium-sized if it was at any time within the financial year in question—
(a) a public company,
(b) a company that—
(i) has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to carry on a regulated activity, or
(ii) carries on insurance market activity, or
(c) a member of an ineligible group.
(2) A group is ineligible if any of its members is—
(a) a public company,
(b) a body corporate (other than a company) whose shares are admitted to trading on a regulated market,
(c) a person (other than a small company) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity,
(d) a small company that is an authorised insurance company, a banking company, an e-money issuer, an ISD investment firm or a UCITS management company, or
(e) a person who carries on insurance market activity.
(3) A company is a small company for the purposes of subsection (2) if it qualified as small in relation to its last financial year ending on or before the end of the financial year in question.
(1) The Secretary of State may make provision by regulations about—
(a) the accounts and reports that companies are required to prepare;
(b) the categories of companies required to prepare accounts and reports of any description;
(c) the form and content of the accounts and reports that companies are required to prepare;
(d) the obligations of companies and others as regards—
(i) the approval of accounts and reports,
(ii) the sending of accounts and reports to members and others,
(iii) the laying of accounts and reports before the company in general meeting,
(iv) the delivery of copies of accounts and reports to the registrar, and
(v) the publication of accounts and reports.
(2) The regulations may amend this Part by adding, altering or repealing provisions.
(3) But they must not amend (other than consequentially)—
(a) section 393 (accounts to give true and fair view), or
(b) the provisions of Chapter 11 (revision of defective accounts and reports).
(4) The regulations may create criminal offences in cases corresponding to those in which an offence is created by an existing provision of this Part.
The maximum penalty for any such offence may not be greater than is provided in relation to an offence under the existing provision.
(5) The regulations may provide for civil penalties in circumstances corresponding to those within section 453(1) (civil penalty for failure to file accounts and reports).
The provisions of section 453(2) to (5) apply in relation to any such penalty.
(1) The amounts set out in the annual accounts of a company may also be shown in the same accounts translated into euros.
(2) When complying with section 441 (duty to file accounts and reports), the directors of a company may deliver to the registrar an additional copy of the company’s annual accounts in which the amounts have been translated into euros.
(3) In both cases—
(a) the amounts must have been translated at the exchange rate prevailing on the date to which the balance sheet is made up, and
(b) that rate must be disclosed in the notes to the accounts.
(4) For the purposes of sections 434 and 435 (requirements in connection with published accounts) any additional copy of the company’s annual accounts delivered to the registrar under subsection (2) above shall be treated as statutory accounts of the company.
In the case of such a copy, references in those sections to the auditor’s report on the company’s annual accounts shall be read as references to the auditor’s report on the annual accounts of which it is a copy.
Companies Act 2006