Company Law Reform Bill [HL]

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL]

Company Law Reform Bill [HL]
Part 15 — Accounts and reports
Chapter 7 — Publication of accounts and reports
186

403
Contents of directors’ remuneration report
(1)
The Secretary of State may make provision by regulations as to—
(a)
the information that must be contained in a directors’ remuneration
report,
(b)
how information is to be set out in the report, and
5
(c)
what is to be the auditable part of the report.
(2)
Without prejudice to the generality of this power, the regulations may make
any such provision as was made, immediately before the commencement of
this Part, by Schedule 7A to the Companies Act 1985 (c. 6).
(3)
It is the duty of—
10
(a)
any director of a company, and
(b)
any person who is or has at any time in the preceding five years been a
director of the company,

to give notice to the company of such matters relating to himself as may be
necessary for the purposes of regulations under this section.
15
(4)
A person who makes default in complying with subsection (3) commits an
offence and is liable on summary conviction to a fine not exceeding level 3 on
the standard scale.
404
Approval and signing of directors’ remuneration report
(1)
The directors’ remuneration report must be approved by the board of directors
20
and signed on behalf of the board by a director or the secretary of the company.
(2)
If a directors’ remuneration 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,
and
25
(b)
failed to take reasonable steps to secure compliance with those
requirements or, as the case may be, to prevent the report from being
approved,

commits an offence.
(3)
A person guilty of an offence under this section is liable—
30
(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
maximum.
Chapter 7
Publication of accounts and reports
35
Duty to circulate copies of accounts and reports
405
Duty to circulate copies of annual accounts and reports
(1)
Every company must send a copy of its annual accounts and reports for each
financial year to—
(a)
every member of the company,
40
(b)
every holder of the company’s debentures, and

Company Law Reform Bill [HL]
Part 15 — Accounts and reports
Chapter 7 — Publication of accounts and reports
187

(c)
every person who is entitled to receive notice of general meetings.
(2)
Copies need not be sent to a person for whom the company does not have a
current address.
(3)
A company has a “current address” for a person if—
(a)
an address has been notified to the company by the person as one at
5
which documents may be sent to him, and
(b)
the company has no reason to believe that documents sent to him at
that address will not reach him.
(4)
In the case of a company not having a share capital, copies need not be sent to
anyone who is not entitled to receive notices of general meetings of the
10
company.
(5)
Where copies are sent out over a period of days, references in the Companies
Acts to the day on which copies are sent out shall be read as references to the
last day of that period.
(6)
This section has effect subject to section 408 (option to provide summary
15
financial statement).
406
Time allowed for sending out copies of accounts and reports
(1)
The time allowed for sending out copies of the company’s annual accounts and
reports is as follows.
(2)
A private company must comply with section 405 not later than—
20
(a)
the end of the period for filing accounts and reports, or
(b)
if earlier, the date on which it actually delivers its accounts and reports
to the registrar.
(3)
A public company must comply with section 405 not later than 21 days before
the relevant accounts meeting.
25
(4)
If in the case of a public company copies are sent out later than is required by
subsection (3), they shall, despite that, be deemed to have been duly sent if it is
so agreed by all the members entitled to attend and vote at the relevant
accounts meeting.
(5)
Whether the time allowed is that for a private company or a public company is
30
determined by reference to the company’s status immediately before the end
of the accounting reference period by reference to which the financial year for
the accounts in question was determined.
(6)
In this section the “relevant accounts meeting” means the accounts meeting of
the company at which the accounts and reports in question are to be laid.
35
407
Default in sending out copies of accounts and reports: offences
(1)
If default is made in complying with section 405 or 406, an offence is committed
by—
(a)
the company, and
(b)
every officer of the company who is in default.
40
(2)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to a fine;

Company Law Reform Bill [HL]
Part 15 — Accounts and reports
Chapter 7 — Publication of accounts and reports
188

(b)
on summary conviction, to a fine not exceeding the statutory
maximum.
Option to provide summary financial statement
408
Option to provide summary financial statement
(1)
A company may—
5
(a)
in such cases as may be specified by regulations made by the Secretary
of State, and
(b)
provided any conditions so specified are complied with,

provide a summary financial statement instead of copies of the accounts and
reports required to be sent out by section 405.
10
(2)
Copies of those reports and accounts must, however, be sent to any person
entitled to be sent them in accordance with that section and who wishes to
receive them.
(3)
The Secretary of State may make provision by regulations as to the manner in
which it is to be ascertained, whether before or after a person becomes entitled
15
to be sent a copy of those accounts and reports, whether he wishes to receive
them.
(4)
A summary financial statement must comply with the requirements of—
section 409 (form and contents of summary financial statement: unquoted
companies), or
20
section 410 (form and contents of summary financial statement: quoted
companies).
(5)
Regulations under this section are subject to negative resolution procedure.
409
Form and contents of summary financial statement: unquoted companies
(1)
A summary financial statement by a company that is not a quoted company
25
must—
(a)
be derived from the company’s annual accounts, and
(b)
be prepared in accordance with this section and regulations made
under it.
(2)
The summary financial statement must be in such form, and contain such
30
information, as the Secretary of State may specify by regulations.

The regulations may require the statement to include information derived
from the directors’ report.
(3)
Nothing in this section or regulations made under it prevents a company from
including in a summary financial statement additional information derived
35
from the company’s annual accounts or the directors’ report.
(4)
The summary financial statement must—
(a)
state that it is only a summary of information derived from the
company’s annual accounts;
(b)
state whether it contains additional information derived from the
40
directors’ report and, if so, that it does not contain the full text of that
report;

Company Law Reform Bill [HL]
Part 15 — Accounts and reports
Chapter 7 — Publication of accounts and reports
189

(c)
state how a person entitled to them can obtain a full copy of the
company’s annual accounts and the directors’ report;
(d)
contain a statement by the company’s auditor of his opinion as to
whether the summary financial statement—
(i)
is consistent with the company’s annual accounts and, where
5
information derived from the directors’ report is included in the
statement, with that report, and
(ii)
complies with the requirements of this section and regulations
made under it;
(e)
state whether the auditor’s report on the annual accounts was
10
unqualified or qualified and, if it was qualified, set out the report in full
together with any further material needed to understand the
qualification;
(f)
state whether, in that report, the auditor’s statement under section 486
(whether directors’ report consistent with accounts) was qualified or
15
unqualified and, if it was qualified, set out the qualified statement in
full together with any further material needed to understand the
qualification;
(g)
state whether that auditor’s report contained a statement under—
(i)
section 488(2)(a) or (b) (accounting records or returns
20
inadequate or accounts not agreeing with records and returns),
or
(ii)
section 488(3) (failure to obtain necessary information and
explanations),

and if so, set out the statement in full.
25
(5)
Regulations under this section may provide that any specified material may,
instead of being included in the summary financial statement, be sent
separately at the same time as the statement.
(6)
Regulations under this section are subject to negative resolution procedure.
410
Form and contents of summary financial statement: quoted companies
30
(1)
A summary financial statement by a quoted company must—
(a)
be derived from the company’s annual accounts and the directors’
remuneration report, and
(b)
be prepared in accordance with this section and regulations made
under it.
35
(2)
The summary financial statement must be in such form, and contain such
information, as the Secretary of State may specify by regulations.

The regulations may require the statement to include information derived
from the directors’ report.
(3)
Nothing in this section or regulations made under it prevents a company from
40
including in a summary financial statement additional information derived
from the company’s annual accounts, the directors’ remuneration report or the
directors’ report.
(4)
The summary financial statement must—
(a)
state that it is only a summary of information derived from the
45
company’s annual accounts and the directors’ remuneration report;

Company Law Reform Bill [HL]
Part 15 — Accounts and reports
Chapter 7 — Publication of accounts and reports
190

(b)
state whether it contains additional information derived from the
directors’ report and, if so, that it does not contain the full text of that
report;
(c)
state how a person entitled to them can obtain a full copy of the
company’s annual accounts, the directors’ remuneration report or the
5
directors’ report;
(d)
contain a statement by the company’s auditor of his opinion as to
whether the summary financial statement—
(i)
is consistent with the company’s annual accounts and the
directors’ remuneration report and, where information
10
derived from the directors’ report is included in the statement,
with that report, and
(ii)
complies with the requirements of this section and regulations
made under it;
(e)
state whether the auditor’s report on the annual accounts and the
15
auditable part of the directors’ remuneration report was unqualified or
qualified and, if it was qualified, set out the report in full together with
any further material needed to understand the qualification;
(f)
state whether that auditor’s report contained a statement under—
(i)
section 488(2) (accounting records or returns inadequate or
20
accounts or directors’ remuneration report not agreeing with
records and returns), or
(ii)
section 488(3) (failure to obtain necessary information and
explanations),

and if so, set out the statement in full;
25
(g)
state whether, in that report, the auditor’s statement under section 486
(whether directors’ report consistent with accounts) was qualified or
unqualified and, if it was qualified, set out the qualified statement in
full together with any further material needed to understand the
qualification.
30
(5)
Regulations under this section may provide that any specified material may,
instead of being included in the summary financial statement, be sent
separately at the same time as the statement.
(6)
Regulations under this section are subject to negative resolution procedure.
411
Summary financial statements: offences
35
(1)
If default is made in complying with any provision of section 408, 409 or 410,
or of regulations under any of those sections, an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
(2)
A person guilty of an offence under this section is liable on summary
40
conviction to a fine not exceeding level 3 on the standard scale.
Quoted companies: requirements as to website publication
412
Quoted companies: annual accounts and reports to be made available on
website
(1)
A quoted company must ensure that its annual accounts and reports—
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Company Law Reform Bill [HL]
Part 15 — Accounts and reports
Chapter 7 — Publication of accounts and reports
191

(a)
are made available on a website, and
(b)
remain so available until the annual accounts and reports for the
company’s next financial year are made available in accordance with
this section.
(2)
The provisions of section 414 (requirements as to website availability) apply.
5
(3)
In the event of default in complying with this section (or with the requirements
of section 414 as it applies for the purposes of this section), an offence is
committed by every officer of the company who is in default.
(4)
A person guilty of an offence under subsection (3) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.
10
413
Quoted companies: preliminary statement of results to be made available on
website
(1)
This section applies where a quoted company prepares a preliminary
statement of its annual results in accordance with the requirements of listing
rules or comparable requirements of the market on which the company’s
15
equity share capital is admitted to trading.
(2)
The company must ensure that the statement—
(a)
is made available on a website, and
(b)
remains so available until the annual accounts and reports for the
financial year are made available in accordance with section 412.
20
(3)
The provisions of section 414 (requirements as to website availability) apply.
(4)
A preliminary statement of the company’s annual results means information
published before publication of the company’s annual accounts and reports
that is or purports to be—
(a)
a balance sheet as at the end of the financial year, or
25
(b)
a profit and loss account for the financial year,

whether on an individual or a consolidated basis.
(5)
In the event of default in complying with this section (or with the requirements
of section 414 as it applies for the purposes of this section), an offence is
committed by every officer of the company who is in default.
30
(6)
A person guilty of an offence under subsection (3) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.
414
Requirements as to website availability
(1)
The following provisions apply for the purposes of—
section 412 (quoted companies: annual accounts and reports to be made
35
available on website), and
section 413 (quoted companies: preliminary results to be made available
on website).
(2)
The information must be made available on a website that—
(a)
is maintained by or on behalf of the company, and
40
(b)
identifies the company in question.

Company Law Reform Bill [HL]
Part 15 — Accounts and reports
Chapter 7 — Publication of accounts and reports
192

(3)
Access to the information on the website, and the ability to obtain a hard copy
of the information from the website, must not be—
(a)
conditional on the payment of a fee, or
(b)
otherwise restricted, except so far as necessary to comply with any
enactment or regulatory requirement (in the United Kingdom or
5
elsewhere).
(4)
The information—
(a)
must be made available as soon as reasonably practicable, and
(b)
must be kept available throughout the period specified in the section in
question.
10
(5)
A failure to make information available on a website throughout the period
referred to in subsection (4)(b) is disregarded if—
(a)
the information is made available on the website for part of that period,
and
(b)
the failure is wholly attributable to circumstances that it would not be
15
reasonable to have expected the company to prevent or avoid.
Right of member or debenture holder to demand copies of accounts and reports
415
Right of member or debenture holder to copies of accounts and reports:
unquoted companies
(1)
A member of, or holder of debentures of, an unquoted company is entitled to
20
be provided, on demand and without charge, with a copy of—
(a)
the company’s last annual accounts,
(b)
the last directors’ report, and
(c)
the auditor’s report on those accounts (including the statement on that
report).
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(2)
The entitlement under this section is to a single copy of those documents, but
that is in addition to any copy to which a person may be entitled under section
405.
(3)
If a demand made under this section is not complied with within seven days of
receipt by the company, an offence is committed by—
30
(a)
the company, and
(b)
every officer of the company who is in default.
(4)
A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale and, for
continued contravention, a daily default fine not exceeding one-tenth of level
35
3 on the standard scale.
416
Right of member or debenture holder to copies of accounts and reports:
quoted companies
(1)
A member of, or holder of debentures of, a quoted company is entitled to be
provided, on demand and without charge, with a copy of—
40
(a)
the company’s last annual accounts,
(b)
the last directors’ remuneration report,
(c)
the last directors’ report, and