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Company Law Reform Bill [HL] (199-205)


Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 6 — Quoted companies: directors’ remuneration report

199

 

(a)   

on conviction on indictment, to a fine;

(b)   

on summary conviction, to a fine not exceeding the statutory

maximum.

Chapter 6

Quoted companies: directors’ remuneration report

5

426     

Duty to prepare directors’ remuneration report

(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—

10

(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

requirement,

   

commits an offence.

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(3)   

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

maximum.

427     

Contents of directors’ remuneration report

20

(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

(c)   

what is to be the auditable part of the report.

25

(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—

(a)   

any director of a company, and

30

(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.

(4)   

A person who makes default in complying with subsection (3) commits an

35

offence and is liable on summary conviction to a fine not exceeding level 3 on

the standard scale.

428     

Approval and signing of directors’ remuneration report

(1)   

The directors’ remuneration 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.

40

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 7 — Publication of accounts and reports

200

 

(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

(b)   

failed to take reasonable steps to secure compliance with those

5

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—

(a)   

on conviction on indictment, to a fine;

10

(b)   

on summary conviction, to a fine not exceeding the statutory

maximum.

Chapter 7

Publication of accounts and reports

Duty to circulate copies of accounts and reports

15

429     

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,

(b)   

every holder of the company’s debentures, and

20

(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

25

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

30

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 432 (option to provide summary

35

financial statement).

430     

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 429 not later than—

40

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 7 — Publication of accounts and reports

201

 

(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 429 not later than 21 days before

the relevant accounts meeting.

5

(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

10

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.

15

431     

Default in sending out copies of accounts and reports: offences

(1)   

If default is made in complying with section 429 or 430, an offence is committed

by—

(a)   

the company, and

(b)   

every officer of the company who is in default.

20

(2)   

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

maximum.

Option to provide summary financial statement

25

432     

Option to provide summary financial statement

(1)   

A company may—

(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,

30

   

provide a summary financial statement instead of copies of the accounts and

reports required to be sent out by section 429.

(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.

35

(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

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—

40

section 433 (form and contents of summary financial statement: unquoted

companies), or

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 7 — Publication of accounts and reports

202

 

section 434 (form and contents of summary financial statement: quoted

companies).

(5)   

Regulations under this section are subject to negative resolution procedure.

433     

Form and contents of summary financial statement: unquoted companies

(1)   

A summary financial statement by a company that is not a quoted company

5

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

10

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

15

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

20

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 and the directors’ report;

(d)   

contain a statement by the company’s auditor of his opinion as to

25

whether the summary financial statement—

(i)   

is consistent with the company’s annual accounts and, where

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

30

made under it;

(e)   

state whether the auditor’s report on the annual accounts 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;

35

(f)   

state whether, in that report, the auditor’s statement under section 510

(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;

40

(g)   

state whether that auditor’s report contained a statement under—

(i)   

section 512(2)(a) or (b) (accounting records or returns

inadequate or accounts not agreeing with records and returns),

or

(ii)   

section 512(3) (failure to obtain necessary information and

45

explanations),

   

and if so, set out the statement in full.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 7 — Publication of accounts and reports

203

 

(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.

434     

Form and contents of summary financial statement: quoted companies

5

(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.

10

(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

15

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

20

company’s annual accounts and the directors’ remuneration report;

(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

25

company’s annual accounts, the directors’ remuneration report or 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 the

30

directors’ remuneration report and, where 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;

35

(e)   

state whether the auditor’s report on the annual accounts and the

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—

40

(i)   

section 512(2) (accounting records or returns inadequate or

accounts or directors’ remuneration report not agreeing with

records and returns), or

(ii)   

section 512(3) (failure to obtain necessary information and

explanations),

45

   

and if so, set out the statement in full;

(g)   

state whether, in that report, the auditor’s statement under section 510

(whether directors’ report consistent with accounts) was qualified or

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 7 — Publication of accounts and reports

204

 

unqualified and, if it was qualified, set out the qualified statement in

full together with any further material needed to understand the

qualification.

(5)   

Regulations under this section may provide that any specified material may,

instead of being included in the summary financial statement, be sent

5

separately at the same time as the statement.

(6)   

Regulations under this section are subject to negative resolution procedure.

435     

Summary financial statements: offences

(1)   

If default is made in complying with any provision of section 432, 433 or 434,

or of regulations under any of those sections, an offence is committed by—

10

(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

conviction to a fine not exceeding level 3 on the standard scale.

Quoted companies: requirements as to website publication

15

436     

Quoted companies: annual accounts and reports to be made available on

website

(1)   

A quoted company must ensure that its annual accounts and reports—

(a)   

are made available on a website, and

(b)   

remain so available until the annual accounts and reports for the

20

company’s next financial year are made available in accordance with

this section.

(2)   

The provisions of section 438 (requirements as to website availability) apply.

(3)   

In the event of default in complying with this section (or with the requirements

of section 438 as it applies for the purposes of this section), an offence is

25

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.

437     

Quoted companies: preliminary statement of results to be made available on

website

30

(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

equity share capital is admitted to trading.

(2)   

The company must ensure that the statement—

35

(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 436.

(3)   

The provisions of section 438 (requirements as to website availability) apply.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 7 — Publication of accounts and reports

205

 

(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

(b)   

a profit and loss account for the financial year,

5

   

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 438 as it applies for the purposes of this section), an offence is

committed by every officer of the company who is in default.

(6)   

A person guilty of an offence under subsection (3) is liable on summary

10

conviction to a fine not exceeding level 3 on the standard scale.

438     

Requirements as to website availability

(1)   

The following provisions apply for the purposes of—

section 436 (quoted companies: annual accounts and reports to be made

available on website), and

15

section 437 (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

(b)   

identifies the company in question.

20

(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

25

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.

30

(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

35

reasonable to have expected the company to prevent or avoid.

Right of member or debenture holder to demand copies of accounts and reports

439     

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

40

be provided, on demand and without charge, with a copy of—

(a)   

the company’s last annual accounts,

(b)   

the last directors’ report, and

 
 

 
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