Companies (Amendment) Act , 1986

1 Interpretation.

1.—(1) In this Act, except where the context otherwise requires—

“the Act of 1983” means the Companies (Amendment) Act, 1983;

“company” does not include an unlimited company;

“private company” does not include an unlimited company;

“public company” means a company other than a private company;

“the Principal Act” means the Companies Act, 1963.

(2) In this Act, except where the context otherwise requires, a reference to a balance sheet or profit and loss account shall include a reference to any notes to or documents annexed to the accounts in question giving information which is required by any provision of the Companies Acts, 1963 to 1986, and required or allowed by any such provision to be given in a note to or a document annexed to a company's accounts.

2 Scope of Act.

2.—(1) This Act does not apply to—

(a) a company not trading for the acquisition of gain by the members,

(b) a company to which subsection (4) (c) of section 128 of the Principal Act applies,

(c) a company in respect of which there is in force an order under subsection (5) of that section.

(2) Sections 3 to 6, 8 to 12, 17 to 19, and 24 of this Act do not apply in relation to—

(a) a company that is the holder of a licence under the Central Bank Act, 1971,

(b) a company that is a trustee savings bank certified under the Trustee Savings Banks Acts, 1863 to 1965,

(c) a company engaged solely in the making of hire-purchase agreements (within the meaning of the Hire-Purchase Act, 1946) and credit-sale agreements (within the meaning of that Act), in respect of goods owned by the company,

(d) a company engaged in the business of accepting deposits or other repayable funds or granting credit for its own account,

(e) Agricultural Credit Corporation, public limited company,

(f) Fóir Teoranta, or

(g) Industrial Credit Corporation Public Limited Company.

(3) Sections 3 to 12, 17 to 19 and 24 of this Act do not apply in relation to a company that is the holder of an authorisation under the European Communities (Non-Life Insurance) Regulations, 1976 (S.I. No. 115 of 1976), or an authorisation under the European Communities (Life Assurance) Regulations, 1984 (S.I. No. 57 of 1984).

3 General provisions in relation to accounts.

3.—(1) Subject to subsection (2) of this section, every balance sheet and profit and loss account of a company laid before an annual general meeting of the company, pursuant to section 148 of the Principal Act, shall comply with the following requirements and section 149 (other than subsection (5) and, in so far as it relates to the said subsection (5), subsection (7)) of that Act shall not apply to any such balance sheet or profit and loss account:

(a) every such balance sheet and profit and loss account shall comply with the provisions of sections 4 and 5 of, and the Schedule to, this Act,

(b) every such balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of its financial year and every such profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year,

(c) where a balance sheet or profit and loss account drawn up in accordance with paragraph (a) of this subsection would not provide sufficient information to comply with paragraph (b) of this subsection, any necessary additional information shall be provided in that balance sheet or profit and loss account or in a note to the accounts,

(d) where, owing to special circumstances, the preparation of accounts of a company in compliance with the said paragraph (a) would prevent those accounts from complying with paragraph (b) (even if additional information were provided under paragraph (c) of this subsection), the directors of the company shall depart from the requirements of the Schedule to this Act in preparing those accounts insofar as is necessary in order to comply with that paragraph,

(e) where the directors of a company depart from the requirements of this section, they shall attach a note to the accounts of the company giving details of the particular departures made, the reasons therefor and the effect of those departures on the accounts,

and, accordingly, in the Companies Acts, 1963 to 1982, and the Companies (Amendment) Act, 1983, in relation to a company to which this Act applies—

(i) references to the said section 149 shall be construed as references to subsection (5) and, in so far as it relates to the said subsection (5), subsection (7) of the said section 149 and to the provisions of this Act corresponding to the other provisions of the said section 149, and

(ii) references to the Sixth Schedule shall be construed as references to the corresponding provisions of this Act.

(2) Subsection (1) of this section shall not apply to the profit and loss account of a company if—

(a) the company has subsidiaries, and

(b) the profit and loss account is framed as a consolidated profit and loss account dealing with all or any of the company's subsidiaries as well as the company, and—

(i) complies with the requirements of this Act relating to consolidated profit and loss accounts, and

(ii) shows how much of the consolidated profit or loss for the financial year concerned is dealt with in the accounts of the company.

(3) Where, in the case of a company, advantage is taken of subsection (2) of this section, that fact shall be disclosed in a note to the group accounts.

(4) Subsection (1) (b) of this section overrides the requirements of sections 4 and 5 of, and the Schedule to, this Act and all other requirements of the Companies Acts, 1963 to 1986, as to the matters to be included in the accounts of a company or in notes to those accounts; and, accordingly, where a balance sheet or profit and loss account of a company drawn up in accordance with those requirements would not provide sufficient information to comply with the said subsection (1) (b), any necessary additional information shall be provided in that balance sheet or profit and loss account or in a note to the accounts.

4 Format of accounts.

4.—(1) Subject to the provisions of this section, every balance sheet of a company shall show the items listed in either of the balance sheet formats set out in the Schedule to this Act and every profit and loss account of a company shall show the items listed in any one of the profit and loss accounts formats so set out in either case in the order and under the headings and sub-headings given in the format adopted.

(2) Subsection (1) of this section shall not be construed as requiring the heading or sub-heading for any item in the balance sheet, or profit and loss account, of a company to be distinguished by any letter or number assigned to that item in the formats set out in the Schedule to this Act.

(3) Where the balance sheet, or profit and loss account, of a company has been prepared by reference to one of the formats set out in the Schedule to this Act, the directors of the company shall adopt the same format in preparing the accounts for subsequent financial years unless, in their opinion, there are special reasons for a change.

(4) Where any change is made in accordance with subsection (3) of this section in the format adopted in preparing a balance sheet, or profit and loss account, of a company, the reasons for the change, together with full particulars of the change, shall be given in a note to the accounts in which the new format is first adopted.

(5) Any item required in accordance with the Schedule to this Act to be shown in the balance sheet, or profit and loss account, of a company, may be shown in greater detail than that required by the format adopted.

(6) Any items to which an Arabic number is assigned in any of the formats set out in the Schedule to this Act may be combined in the accounts of a company—

(a) in any case where the individual amounts of such items are not material to assessing the state of affairs or profit or loss of the company for the financial year concerned, or

(b) in any case where the combination of such items facilitates that assessment.

(7) Where items are combined in a company's accounts pursuant to subsection (6) (b) of this section, the individual amounts of any items so combined shall be disclosed in a note to the accounts.

(8) In respect of every item shown in the balance sheet, or profit and loss account, of a company, the corresponding amount for the financial year immediately preceding that to which the balance sheet or profit and loss account refers shall also be shown and, if that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount shall be adjusted, and particulars of the adjustment and the reasons therefor shall be given in a note to the accounts.

(9) Subject to subsection (10) of this section, a heading or subheading corresponding to an item listed in the format adopted in preparing the balance sheet, or profit and loss account, of a company, shall not be included in the balance sheet or profit and loss account, as the case may be, if there is no amount to be shown for that item in respect of the financial year to which the balance sheet or profit and loss account relates.

(10) Subsection (9) of this section shall not apply in any case where an amount can be shown for the item in question in respect of the financial year immediately preceding that to which the balance sheet or profit and loss account relates, and that amount shall be shown under the heading or sub-heading required by the format adopted as aforesaid.

(11) Amounts in respect of items representing assets or income may not be set off in the accounts of a company against amounts in respect of items representing liabilities or expenditure, as the case may be, or vice versa.

(12) The balance sheet, or profit and loss account, of a company may include an item representing or covering the amount of any asset or liability or income or expenditure not otherwise covered by any of the items listed in the format adopted but the following shall not be treated as assets in the balance sheet of a company—

(a) preliminary expenses,

(b) expenses of, and commission on, any issue of shares or debentures, and

(c) costs of research.

(13) In preparing the balance sheet, or profit and loss account, of a company, the directors of the company shall adapt the arrangement and headings and sub-headings otherwise required by subsection (1) of this section in respect of items to which an Arabic number is assigned in the format adopted, in any case where the special nature of the company's business requires such adaptation.

(14) Every profit and loss account of a company shall show the amount of the profit or loss of the company on ordinary activities before taxation.

(15) The profit and loss account of a company for a financial year shall show—

(a) separately, the aggregate amount of the dividends paid and the aggregate amount of the dividends proposed to be paid,

(b) any transfer between the profit and loss account and reserves,

(c) any increase or reduction in the balance on the profit and loss account since the immediately preceding financial year.

(d) the profit or loss brought forward at the beginning of the year, and

(e) the profit or loss carried forward at the end of the year.

5 Accounting principles.

5.—Subject to section 6 of this Act, the amounts to be included in the accounts of a company in respect of the items shown shall be determined in accordance with the following principles:

(a) the company shall be presumed to be carrying on business as a going concern,

(b) accounting policies shall be applied consistently from one financial year to the next,

(c) the amount of any item in the accounts shall be determined on a prudent basis and in particular—

(i) only profits realised at the balance sheet date shall be included in the profit and loss account, and

(ii) all liabilities and losses which have arisen or are likely to arise in respect of the financial year to which the accounts relate, or a previous financial year, shall be taken into account, including those liabilities and losses which only become apparent between the balance sheet date and the date on which the accounts are signed in pursuance of section 156 of the Principal Act,

(d) all income and charges relating to the financial year to which the accounts relate shall be taken into account without regard to the date of receipt or payment, and

(e) in determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately.

6 Departure from the accounting principles.

6.—If it appears to the directors of a company that there are special reasons for departing from any of the principles specified in section 5 of this Act, they may so depart, but particulars of the departure, the reasons for it and its effect on the balance sheet and profit and loss account of the company shall be stated in a note to the accounts, for the financial year concerned, of the company.

7 Documents to be annexed to annual return.

7.—(1) Subject to the provisions of this Act, there shall be annexed to the annual return—

(a) (i) in the case of a company other than a company to which subsection (2) or (3) section 2 of this Act applies, a copy of the balance sheet, and profit and loss account, of the company drawn up in accordance with sections 3, 4 and 5 of, and the Schedule to, this Act,

(ii) in the case of a company to which section 2 (2) of this Act applies, a copy of the balance sheet, and profit and loss account, of the company drawn up in accordance with the Principal Act,

and a copy of the report of the auditors on, and the report of the directors accompanying, each such balance sheet and profit and loss account, and each such copy shall be certified both by a director, and the secretary, of the company to be a true copy of such balance sheet, profit and loss account, or report, as the case may be, laid before the annual general meeting of the company held during the period to which the return relates, and

(b) where a document, being a balance sheet, profit and loss account, report, or statement, annexed to the annual return, is in a language other than the English language or the Irish language, there shall be annexed to each such document a translation in the English language or the Irish language certified in the prescribed manner to be a correct translation.

(2) If a document required by this section to be annexed to the annual return referred to in subsection (1) of this section does not comply with the provisions of the law in force at the date of the relevant audit with respect to the form and the contents of the document, there shall be made by the company concerned such amendments in the copy as are necessary in order to bring it into compliance with those provisions, and the fact that the copy has been so amended shall be stated therein.

(3) Section 128 of the Principal Act shall not apply to a company to which this section applies.

8 Small companies and medium-sized companies.

8.—(1) Subject to section 9 of this Act—

(a) a private company shall qualify to be treated as a small company for the purposes of this Act in respect of any financial year of the company if, in respect of that year and the financial year of the company immediately preceding that year, the company satisfies at least two of the conditions specified in subsection (2) of this section, and

(b) a private company shall qualify to be treated as a medium-sized company for the purposes of this Act in respect of any financial year of the company if, in respect of that year and the financial year of the company immediately preceding that year, the company satisfies at least two of the conditions specified in subsection (3) of this section.

(2) The qualifying conditions for a company to be treated as a small company in respect of any financial year are as follows:

(a) its balance sheet total for that year shall not exceed £1,250,000,

(b) the amount of its turnover for that year shall not exceed £2,500,000, and

(c) the average number of persons employed by the company in that year shall not exceed 50.

(3) The qualifying conditions for a company to be treated as a medium-sized company in respect of any financial year are as follows:

(a) its balance sheet total for that year shall not exceed £5,000,000,

(b) the amount of its turnover for that year shall not exceed £10,000,000, and

(c) the average number of persons employed by the company in that year shall not exceed 250.

(4) In this section “balance sheet total”, in relation to any financial year of a company, means—

(a) where Format 1 of the balance sheet formats set out in the Schedule to this Act is adopted by the company, the aggregate of the amounts shown in the company's balance sheet for that year under headings corresponding to items A and B in that Format, and

(b) where Format 2 of those formats is adopted by the company, the aggregate of the amounts so shown under “Assets”.

(5) In this section “amount of turnover”, in relation to any financial year of a company, means the amounts of the turnover shown in the profit and loss account of the company under headings corresponding to the relevant items in any of the Formats of profit and loss accounts set out in the Schedule to this Act.

(6) In the application of this section to any period which is a financial year of a company, but is not in fact a year, the amounts specified in subsections (2) (b) and (3) (b) of this section shall be proportionately adjusted.

(7) A private company which is incorporated on or after the commencement of this section shall qualify to be treated as a small company or, as the case may be, as a medium-sized company, in respect of its first financial year if it satisfies at least two of the relevant qualifying conditions specified in subsection (2) or (3), as may be appropriate, of this section in respect of that financial year.