|
| |
|
| |
(5) | A person guilty of an offence under this section is liable— |
| |
(a) | on conviction on indictment, to a fine; |
| |
(b) | on summary conviction, to a fine not exceeding the statutory |
| |
| 5 |
| |
| |
| |
397 | Duty to prepare directors’ report |
| |
(1) | The directors of a company must prepare a directors’ report for each financial |
| 10 |
| |
(2) | For a financial year in which— |
| |
(a) | the company is a parent company, and |
| |
(b) | the directors of the company prepare group accounts, |
| |
| the directors’ report must be a consolidated report (a “group directors’ report”) |
| 15 |
relating to the company and its subsidiary undertakings included in the |
| |
| |
(3) | A group directors’ report may, where appropriate, give greater emphasis to |
| |
the matters that are significant to the company and its subsidiary undertakings |
| |
included in the consolidation, taken as a whole. |
| 20 |
(4) | In the case of failure to comply with the requirement to prepare a directors’ |
| |
report, an offence is committed by every person who— |
| |
(a) | was a director of the company immediately before the end of the period |
| |
for filing accounts and reports for the financial year in question, and |
| |
(b) | failed to take all reasonable steps for securing compliance with that |
| 25 |
| |
(5) | A person guilty of an offence under this section is liable— |
| |
(a) | on conviction on indictment, to a fine; |
| |
(b) | on summary conviction, to a fine not exceeding the statutory |
| |
| 30 |
398 | Contents of directors’ report: general |
| |
(1) | The directors’ report for a financial year must state— |
| |
(a) | the names of the persons who, at any time during the financial year, |
| |
were directors of the company, and |
| |
(b) | the principal activities of the company in the course of the year. |
| 35 |
(2) | In relation to a group directors’ report subsection (1)(b) has effect as if the |
| |
reference to the company was to the company and its subsidiary undertakings |
| |
included in the consolidation. |
| |
|
| |
|
| |
|
(3) | Except in the case of a company subject to the small companies regime, the |
| |
report must state the amount (if any) that the directors recommend should be |
| |
| |
(4) | The Secretary of State may make provision by regulations as to other matters |
| |
that must be disclosed in a directors’ report. |
| 5 |
| Without prejudice to the generality of this power, the regulations may make |
| |
any such provision as was formerly made by Schedule 7 to the Companies Act |
| |
| |
399 | Contents of directors’ report: business review |
| |
(1) | Unless the company is subject to the small companies’ regime, the directors’ |
| 10 |
report must contain a business review. |
| |
(2) | The purpose of the business review is to inform members of the company and |
| |
help them assess how the directors have performed their duty under section |
| |
158 (duty to promote the success of the company). |
| |
(3) | The business review must contain— |
| 15 |
(a) | a fair review of the company’s business, and |
| |
(b) | a description of the principal risks and uncertainties facing the |
| |
| |
(4) | The review required is a balanced and comprehensive analysis of— |
| |
(a) | the development and performance of the company’s business during |
| 20 |
| |
(b) | the position of the company’s business at the end of that year, |
| |
| consistent with the size and complexity of the business. |
| |
(5) | In the case of a quoted company the business review must, to the extent |
| |
necessary for an understanding of the development, performance or position |
| 25 |
of the company’s business, include— |
| |
(a) | the main trends and factors likely to affect the future development, |
| |
performance and position of the company’s business; and |
| |
| |
(i) | environmental matters (including the impact of the company’s |
| 30 |
business on the environment), |
| |
(ii) | the company’s employees, and |
| |
(iii) | social and community issues, |
| |
| including information about any policies of the company in relation to |
| |
those matters and the effectiveness of those policies. |
| 35 |
| If the review does not contain information of each kind mentioned in |
| |
paragraph (b)(i), (ii) and (iii), it must state which of those kinds of information |
| |
| |
(6) | The review must, to the extent necessary for an understanding of the |
| |
development, performance or position of the company’s business, include— |
| 40 |
(a) | analysis using financial key performance indicators, and |
| |
(b) | where appropriate, analysis using other key performance indicators, |
| |
including information relating to environmental matters and employee |
| |
| |
|
| |
|
| |
|
| “Key performance indicators” means factors by reference to which the |
| |
development, performance or position of the company’s business can be |
| |
| |
(7) | Where a company qualifies as medium-sized in relation to a financial year (see |
| |
sections 449 to 451), the directors’ report for the year need not comply with the |
| 5 |
requirements of subsection (6) so far as they relate to non-financial |
| |
| |
(8) | The review must, where appropriate, include references to, and additional |
| |
explanations of, amounts included in the company’s annual accounts. |
| |
(9) | In relation to a group directors’ report this section has effect as if the references |
| 10 |
to the company were references to the company and its subsidiary |
| |
undertakings included in the consolidation. |
| |
(10) | Nothing in this section requires the disclosure of information about impending |
| |
developments or matters in the course of negotiation if the disclosure would, |
| |
in the opinion of the directors, be seriously prejudicial to the interests of the |
| 15 |
| |
400 | Contents of directors’ report: statement as to disclosure to auditors |
| |
(1) | This section applies to a company unless— |
| |
(a) | it is exempt for the financial year in question from the requirements of |
| |
Part 16 as to audit of accounts, and |
| 20 |
(b) | the directors take advantage of that exemption. |
| |
(2) | The directors’ report must contain a statement to the effect that, in the case of |
| |
each of the persons who are directors at the time the report is approved— |
| |
(a) | so far as the director is aware, there is no relevant audit information of |
| |
which the company’s auditor is unaware, and |
| 25 |
(b) | he has taken all the steps that he ought to have taken as a director in |
| |
order to make himself aware of any relevant audit information and to |
| |
establish that the company’s auditor is aware of that information. |
| |
(3) | “Relevant audit information” means information needed by the company’s |
| |
auditor in connection with preparing his report. |
| 30 |
(4) | A director is regarded as having taken all the steps that he ought to have taken |
| |
as a director in order to do the things mentioned in subsection (2)(b) if he has— |
| |
(a) | made such enquiries of his fellow directors and of the company’s |
| |
auditors for that purpose, and |
| |
(b) | taken such other steps (if any) for that purpose, |
| 35 |
| as are required by his duty as a director of the company to exercise reasonable |
| |
care, skill and diligence. |
| |
(5) | Where a directors’ report containing the statement required by this section is |
| |
approved but the statement is false, every director of the company who— |
| |
(a) | knew that the statement was false, or was reckless as to whether it was |
| 40 |
| |
(b) | failed to take reasonable steps to prevent the report from being |
| |
| |
| |
(6) | A person guilty of an offence under subsection (5) is liable— |
| 45 |
|
| |
|
| |
|
(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 |
| 5 |
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 |
| |
| |
401 | Approval and signing of directors’ report |
| 10 |
(1) | The directors’ report must be approved by the board of directors and signed |
| |
on behalf of the board by a director or the secretary of the company. |
| |
(2) | If the report is prepared in accordance with the small companies regime, it |
| |
must contain a statement to that effect in a prominent position above the |
| |
| 15 |
(3) | If a directors’ report is approved that does not comply with the requirements |
| |
of this Act, every director of the company who— |
| |
(a) | knew that it did not comply, or was reckless as to whether it complied, |
| |
| |
(b) | failed to take reasonable steps to secure compliance with those |
| 20 |
requirements or, as the case may be, to prevent the report from being |
| |
| |
| |
(4) | A person guilty of an offence under this section is liable— |
| |
(a) | on conviction on indictment, to a fine; |
| 25 |
(b) | on summary conviction, to a fine not exceeding the statutory |
| |
| |
| |
Quoted companies: directors’ remuneration report |
| |
402 | Duty to prepare directors’ remuneration report |
| 30 |
(1) | The directors of a quoted company must prepare a directors’ remuneration |
| |
report for each financial year of the company. |
| |
(2) | In the case of failure to comply with the requirement to prepare a directors’ |
| |
remuneration report, every person who— |
| |
(a) | was a director of the company immediately before the end of the period |
| 35 |
for filing accounts and reports for the financial year in question, and |
| |
(b) | failed to take all reasonable steps for securing compliance with that |
| |
| |
| |
(3) | A person guilty of an offence under this section is liable— |
| 40 |
(a) | on conviction on indictment, to a fine; |
| |
(b) | on summary conviction, to a fine not exceeding the statutory |
| |
| |
|
| |
|