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Company Law Reform Bill [HL] (215-220)


Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 10 — Filing of accounts and reports

215

 

456     

Unlimited companies exempt from obligation to file accounts

(1)   

The directors of an unlimited company are not required to deliver accounts

and reports to the registrar in respect of a financial year if the following

conditions are met.

(2)   

The conditions are that at no time during the relevant accounting reference

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period—

(a)   

has the company been, to its knowledge, a subsidiary undertaking of an

undertaking which was then limited, or

(b)   

have there been, to its knowledge, exercisable by or on behalf of two or

more undertakings which were then limited, rights which if exercisable

10

by one of them would have made the company a subsidiary

undertaking of it, or

(c)   

has the company been a parent company of an undertaking which was

then limited.

   

The references above to an undertaking being limited at a particular time are

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to an undertaking (under whatever law established) the liability of whose

members is at that time limited.

(3)   

The exemption conferred by this section does not apply if—

(a)   

the company is a banking or insurance company or the parent company

of a banking or insurance group, or

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(b)   

the company is a qualifying company within the meaning of the

Partnerships and Unlimited Companies (Accounts) Regulations 1993

(S.I. 1993/1820).

(4)   

Where a company is exempt by virtue of this section from the obligation to

deliver accounts—

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(a)   

section 442(3) (requirements in connection with publication of statutory

accounts: meaning of “statutory accounts”) has effect with the

substitution for the words “as required to be delivered to the registrar

under section 449” of the words “as prepared in accordance with this

Part and approved by the board of directors”; and

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(b)   

section 443(1)(b) (requirements in connection with publication of non-

statutory accounts: statement whether statutory accounts delivered)

has effect with the substitution for the words from “whether statutory

accounts” to “have been delivered to the registrar” of the words “that

the company is exempt from the requirement to deliver statutory

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accounts”.

(5)   

In this section the “relevant accounting reference period”, in relation to a

financial year, means the accounting reference period by reference to which

that financial year was determined.

Requirements where abbreviated accounts delivered

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457     

Special auditor’s report where abbreviated accounts delivered

(1)   

This section applies where—

(a)   

the directors of a company deliver abbreviated accounts to the

registrar, and

(b)   

the company is not exempt from audit (or the directors have not taken

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advantage of any such exemption).

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 10 — Filing of accounts and reports

216

 

(2)   

The directors must also deliver to the registrar a copy of a special report of the

company’s auditor stating that in his opinion—

(a)   

the company is entitled to deliver abbreviated accounts in accordance

with the section in question, and

(b)   

the abbreviated accounts to be delivered are properly prepared in

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accordance with regulations under that section.

(3)   

The auditor’s report on the company’s annual accounts need not be delivered,

but—

(a)   

if that report was qualified, the special report must set out that report

in full together with any further material necessary to understand the

10

qualification, and

(b)   

if that report contained a statement under—

(i)   

section 512(2)(a) or (b) (accounts, records or returns inadequate

or accounts not agreeing with records and returns), or

(ii)   

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

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explanations),

   

the special report must set out that statement in full.

(4)   

The provisions of—

sections 517, 518, 519 and 520 (signature of auditor’s report), and

sections 521 to 523 (offences in connection with auditor’s report),

20

   

apply to a special report under this section as they apply to an auditor’s report

on the company’s annual accounts prepared under Part 17.

(5)   

If abbreviated accounts are delivered to the registrar, the references in section

442 or 443 (requirements in connection with publication of accounts) to the

auditor’s report on the company’s annual accounts shall be read as references

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to the special auditor’s report required by this section.

458     

Approval and signing of abbreviated accounts

(1)   

Abbreviated accounts must be approved by the board of directors and signed

on behalf of the board by a director of the company.

(2)   

The signature must be on the balance sheet.

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(3)   

The balance sheet must contain in a prominent position above the signature a

statement to the effect that it is prepared in accordance with the special

provisions of this Act relating (as the case may be) to companies subject to the

small companies regime or to medium-sized companies.

(4)   

If abbreviated accounts are approved that do not comply with the

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requirements of regulations under the relevant section, every director of the

company who—

(a)   

knew that they did not comply, or was reckless as to whether they

complied, and

(b)   

failed to take reasonable steps to prevent them from being approved,

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commits an offence.

(5)   

A person guilty of an offence under subsection (4) is liable—

(a)   

on conviction on indictment, to a fine;

(b)   

on summary conviction, to a fine not exceeding the statutory

maximum.

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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 10 — Filing of accounts and reports

217

 

Failure to file accounts and reports

459     

Default in filing accounts and reports: offences

(1)   

If the requirements of section 449 (duty to file accounts and reports) are not

complied with in relation to a company’s accounts and reports for a financial

year before the end of the period for filing those accounts and reports, every

5

person who immediately before the end of that period was a director of the

company commits an offence.

(2)   

It is a defence for a person charged with such an offence to prove that he took

all reasonable steps for securing that those requirements would be complied

with before the end of that period.

10

(3)   

It is not a defence to prove that the documents in question were not in fact

prepared as required by this Part.

(4)   

A person guilty of an offence under this section is liable on summary

conviction to a fine not exceeding level 5 on the standard scale and, for

continued contravention, a daily default fine not exceeding one-tenth of level

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5 on the standard scale.

460     

Default in filing accounts and reports: court order

(1)   

If—

(a)   

the requirements of section 449 (duty to file accounts and reports) are

not complied with in relation to a company’s accounts and reports for

20

a financial year before the end of the period for filing those accounts

and reports, and

(b)   

the directors of the company fail to make good the default within 14

days after the service of a notice on them requiring compliance,

   

the court may, on the application of any member or creditor of the company or

25

of the registrar, make an order directing the directors (or any of them) to make

good the default within such time as may be specified in the order.

(2)   

The court’s order may provide that all costs (in Scotland, expenses) of and

incidental to the application are to be borne by the directors.

461     

Civil penalty for failure to file accounts and reports

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(1)   

Where the requirements of section 449 are not complied with in relation to a

company’s accounts and reports for a financial year before the end of the

period for filing those accounts and reports, the company is liable to a civil

penalty.

This is in addition to any liability of the directors under section 459.

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(2)   

The amount of the penalty shall be determined in accordance with regulations

made by the Secretary of State by reference to—

(a)   

the length of the period between the end of the period for filing the

accounts and reports in question and the day on which the

requirements are complied with, and

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(b)   

whether the company is a private or public company.

(3)   

The penalty may be recovered by the registrar and is to be paid into the

Consolidated Fund.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 11 — Revision of defective accounts and reports

218

 

(4)   

It is not a defence in proceedings under this section to prove that the

documents in question were not in fact prepared as required by this Part.

(5)   

Regulations under this section having the effect of increasing the penalty

payable in any case are subject to affirmative resolution procedure.

   

Otherwise, the regulations are subject to negative resolution procedure.

5

Chapter 11

Revision of defective accounts and reports

Voluntary revision

462     

Voluntary revision of accounts etc

(1)   

If it appears to the directors of a company that—

10

(a)   

the company’s annual accounts,

(b)   

the directors’ remuneration report or the directors’ report, or

(c)   

a summary financial statement of the company,

   

did not comply with the requirements of this Act (or, where applicable, of

Article 4 of the IAS Regulation), they may prepare revised accounts or a revised

15

report or statement.

(2)   

Where copies of the previous accounts or report have been sent out to

members, delivered to the registrar or (in the case of a public company) laid

before the company in general meeting, the revisions must be confined to—

(a)   

the correction of those respects in which the previous accounts or

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report did not comply with the requirements of this Act (or, where

applicable, of Article 4 of the IAS Regulation), and

(b)   

the making of any necessary consequential alterations.

(3)   

The Secretary of State may make provision by regulations as to the application

of the provisions of this Act in relation to—

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(a)   

revised annual accounts,

(b)   

a revised directors’ remuneration report or directors’ report, or

(c)   

a revised summary financial statement.

(4)   

The regulations may, in particular—

(a)   

make different provision according to whether the previous accounts,

30

report or statement are replaced or are supplemented by a document

indicating the corrections to be made;

(b)   

make provision with respect to the functions of the company’s auditor

or independent examiner in relation to the revised accounts, report or

statement;

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(c)   

require the directors to take such steps as may be specified in the

regulations where the previous accounts or report have been—

(i)   

sent out to members and others under section 429,

(ii)   

laid before the company in general meeting, or

(iii)   

delivered to the registrar,

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or where a summary financial statement containing information

derived from the previous accounts or report has been sent to members

under section 432;

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 11 — Revision of defective accounts and reports

219

 

(d)   

apply the provisions of this Act (including those creating criminal

offences) subject to such additions, exceptions and modifications as are

specified in the regulations.

(5)   

Regulations under this section are subject to negative resolution procedure.

Secretary of State’s notice

5

463     

Secretary of State’s notice in respect of accounts or reports

(1)   

This section applies where—

(a)   

copies of a company’s annual accounts or directors’ report have been

sent out under section 429, or

(b)   

a copy of a company’s annual accounts or directors’ report has been

10

delivered to the registrar or (in the case of a public company) laid before

the company in general meeting,

   

and it appears to the Secretary of State that there is, or may be, a question

whether the accounts or report comply with the requirements of this Act (or,

where applicable, of Article 4 of the IAS Regulation).

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(2)   

The Secretary of State may give notice to the directors of the company

indicating the respects in which it appears that such a question arises or may

arise.

(3)   

The notice must specify a period of not less than one month for the directors to

give an explanation of the accounts or report or prepare revised accounts or a

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revised report.

(4)   

If at the end of the specified period, or such longer period as the Secretary of

State may allow, it appears to the Secretary of State that the directors have

not—

(a)   

given a satisfactory explanation of the accounts or report, or

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(b)   

revised the accounts or report so as to comply with the requirements of

this Act (or, where applicable, of Article 4 of the IAS Regulation),

   

the Secretary of State may apply to the court.

(5)   

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

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revised accounts or reports were references to further revised accounts or

reports.

Application to court

464     

Application to court in respect of defective accounts or reports

(1)   

An application may be made to the court—

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(a)   

by the Secretary of State, after having complied with section 463, 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

40

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.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 11 — Revision of defective accounts and reports

220

 

(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—

5

(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,

10

   

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,

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(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

20

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

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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

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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

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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

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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.

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