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Company Law Reform Bill [HL] (221-227)


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

221

 

465     

Other persons authorised to apply to the court

(1)   

The Secretary of State may by order (an “authorisation order”) authorise for the

purposes of section 464 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

5

(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

10

(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

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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

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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

25

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.

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466     

Disclosure of information by tax authorities

(1)   

The Commissioners for Her Majesty’s Revenue and Customs may disclose

information to a person authorised under section 465 for the purpose of

facilitating—

(a)   

the taking of steps by that person to discover whether there are grounds

35

for an application to the court under section 464 (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

40

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—

45

(a)   

may not be used except in or in connection with—

 
 

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

222

 

(i)   

taking steps to discover whether there are grounds for an

application to the court under section 464, 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—

5

(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

10

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

15

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);

20

(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).

Power of authorised person to require documents etc

467     

Power of authorised person to require documents, information and

25

explanations

(1)   

This section applies where it appears to a person who is authorised under

section 465 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).

30

(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 464, or

35

(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

40

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

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

223

 

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.

5

(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.

10

468     

Restrictions on disclosure of information obtained under compulsory powers

(1)   

This section applies to information (in whatever form) obtained in pursuance

of a requirement or order under section 467 (power of authorised person to

require documents etc) that relates to the private affairs of an individual or to

any particular business.

15

(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 469 (permitted disclosure of

20

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—

25

(a)   

he did not know, and had no reason to suspect, that the information

had been disclosed under section 467, 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—

30

(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

35

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).

469     

Permitted disclosure of information obtained under compulsory powers

40

(1)   

The prohibition in section 468 of the disclosure of information obtained in

pursuance of a requirement or order under section 467 (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.

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

224

 

(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 464.

(3)   

It does not apply to disclosure to—

(a)   

the Secretary of State,

(b)   

the Department of Enterprise, Trade and Investment for Northern

5

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.

10

(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,

15

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,

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(ii)   

the insider dealing legislation,

(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

25

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’

30

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;

35

(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),

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(iii)   

Part 7 of the Companies Act 1989,

(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

45

appear to the authorised person to be similar to his functions under section 464

for the purpose of enabling or assisting that body to exercise those functions.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 12 — Supplementary provisions

225

 

(6)   

In determining whether to disclose information to a body in accordance with

subsection (6), 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;

5

(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

10

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).

470     

Power to amend categories of permitted disclosure

15

(1)   

The Secretary of State may by order amend section 469(4), (5) and (6).

(2)   

An order under this section must not—

(a)   

amend subsection (4) 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);

20

(b)   

amend subsection (5) 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 (6) of that section (overseas regulatory authorities)

25

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.

Chapter 12

30

Supplementary provisions

Liability for false or misleading statements in reports

471     

Liability for false or misleading statements in reports

(1)   

The reports to which this section applies are—

(a)   

the directors’ report,

35

(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—

40

(a)   

any untrue or misleading statement in a report to which this section

applies, or

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 12 — Supplementary provisions

226

 

(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

5

(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

10

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.

15

Accounting and reporting standards

472     

Accounting standards

(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

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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.

25

Companies qualifying as medium-sized

473     

Companies qualifying as medium-sized: general

(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

30

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;

35

(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—

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 16 — Accounts and reports
Chapter 12 — Supplementary provisions

227

 
 

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

(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

10

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 474 (companies qualifying as medium-sized:

15

parent companies).

474     

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

20

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;

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(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

30

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)

 

35

 

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 388 for each member of the group.

 
 

 
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