Companies Act 2014

295. (1) Where the directors of a holding company prepare IFRS group financial statements, they shall comply with all IFRS in that regard and—

• (a) shall make an unreserved statement in the notes to those group financial statements that those financial statements have been prepared in accordance with international financial reporting standards, and

• (b) shall ensure that those financial statements contain the additional information required by this Act, other than that F162[required by Schedules 3, 3A, 4 and 4A].

• (2) For the avoidance of doubt, the requirement for group financial statements prepared in accordance with IFRS to present fairly the assets, liabilities, financial position, financial performance and cash flows is deemed to be equivalent to the true and fair view required by section 294(2).

• F163[(2A) IFRS group financial statements shall state the following:

• (a) the name and legal form of the holding company;

• (b) the place of registration of the holding company and the number under which it is registered;

• (c) the address of its registered office;

• (d) where the holding company is being wound up, the information required by section 595.]

• (3) If a company fails to comply with F164[subsection (1) or (2A)], the company and any officer of it who is in default shall be guilty of a category 2 offence.

• (4) In any proceedings against a person in respect of an offence under subsection (3), it shall be a defence to prove that the defendant had reasonable grounds for believing and did believe that—

• (a) a competent and reliable person was charged with the duty of ensuring that the provisions of the subsection concerned were complied with, and

• (b) the latter person was in a position to discharge that duty.

• (5) In subsection (3) “officer” includes any shadow director and de facto director.

296. Consistency of financial statements

296. (1) Subject to the provisions of this section, the directors of a holding company shall ensure that the entity financial statements of—

• (a) the holding company, and

• (b) each of the subsidiary undertakings of the holding company,

are prepared using the same financial reporting framework, except to the extent that, in their opinion, there are good reasons for not doing so, and those reasons are disclosed in the entity financial statements of the holding company.

• (2) As respects financial statements of subsidiary undertakings, subsection (1) only applies to entity financial statements of subsidiary undertakings that are required to be prepared under this Act.

• (3) Subsection (1) does not apply—

• (a) where the directors do not prepare group financial statements for the holding company, or

• (b) to the financial statements of undertakings which do not trade for the acquisition of gain by the members.

• (4) Where the directors of the holding company prepare IFRS group financial statements and IFRS entity financial statements for the holding company, subsection (1) shall have effect as if paragraph (a) of it were omitted.

CHAPTER 5 Group financial statements: exemptions and exclusions

297. Exemption from consolidation: size of group

297. F165[…]

298. Application of section 297 in certain circumstances and cessation of exemption

298. F166[…]

299. Exemption from consolidation: holding company that is subsidiary undertaking of undertaking registered in EEA

299. (1) Subject to subsection (4), a holding company is exempt from the requirement to prepare group financial statements if that holding company (the “lower holding company”) is itself a subsidiary undertaking and its holding undertaking is established under the laws of an EEA state and one or other of the following cases applies.

• (2) Those cases are—

• (a) the lower holding company is a wholly owned subsidiary of that other holding undertaking,

• F167[(aa) that other holding undertaking holds more than 90 per cent of the shares in the lower holding company and the remaining shareholders in, or members of, the lower holding company have approved the exemption,]

• (b) that other holding undertaking holds F168[more than 50 per cent but not more than 90 per cent] of the shares in the lower holding company and notice requesting the preparation of group financial statements has not been served on the lower holding company by shareholders holding in aggregate—

• (i) more than half of the remaining shares in the lower holding company, or

• (ii) 5 per cent or more of the total shares in the lower holding company.

• (3) The notice referred to in subsection (2)(b) shall be served on the lower holding company not later than 6 months after the end of the financial year before that to which it relates.

• (4) Subsection (1) shall not apply unless the following conditions are satisfied—

• (a) the lower holding company is included in consolidated accounts for a larger group drawn up to the same date, or to an earlier date in the same financial year, by a holding undertaking established under the laws of an EEA state,

• (b) those accounts are drawn up and audited and the group’s consolidated annual report is drawn up in accordance with—

• F169[(i) the provisions of the F170[Accounting Directive, other than the requirements laid down in Article 29a of that Directive], or]

• (ii) international financial reporting standards,

• (c) the lower holding company F169[discloses in the notes to its entity financial statements] that it is exempt from the obligation to prepare and deliver group financial statements,

• (d) the lower holding company states in its entity financial statements the name of the holding undertaking which draws up the consolidated accounts referred to in paragraph (a) and—

• F169[(i) the address of the holding undertaking’s registered office or, where the holding undertaking is incorporated outside the State, the registered office (howsoever described) of the undertaking in the country in which it is incorporated, or]

• (ii) if the holding undertaking is unincorporated, the address of its principal place of business,

and

• (e) the lower holding company delivers to the Registrar, within the period allowed for delivering its entity financial statements, copies of—

• (i) the holding undertaking’s consolidated accounts, and

• (ii) the consolidated annual report,

together with the auditors’ report on them.

• (5) Shares held by directors of the lower holding company for the purpose of complying with any share qualification requirement shall be disregarded in determining for the purposes of subsection (2)(a) whether the company is a wholly owned subsidiary of another.

• (6) F171[For the purposes of paragraphs (aa) and (b) of subsection (2)], shares held by a wholly owned subsidiary of the first-mentioned undertaking in that paragraph, or held on behalf of that undertaking or its wholly owned subsidiary, shall be attributed to that undertaking.

• (7) Without prejudice to the construction provided in subsection (8) for the expression “consolidated annual report”, references in this section to—

• (a) an undertaking established under the laws of an EEA State,

• (b) consolidated accounts prepared by such an undertaking, and

• (c) other relevant matters in that regard,

shall, in a case where the undertaking is a company registered under this Act or an existing company, be read, respectively, as references to—

• (i) the company so registered or the existing company, as the case may be,

• (ii) group financial statements prepared by the company, and

• (iii) the matters provided by, or referred to in, this Part or any other enactment that correspond to those relevant matters.

• F172[(8) In this section, "consolidated annual report" means the report prepared by management of the group in accordance with the Accounting Directive and is equivalent to the expression "directors’ report" as used in this Part.]

300. Exemption from consolidation: holding company that is subsidiary undertaking of undertaking registered outside EEA

300. (1) Subject to subsection (4), a holding company is exempt from the requirement to prepare group financial statements if the holding company (the “lower holding company”) is itself a subsidiary undertaking and its holding undertaking is not established under the laws of an EEA state and one or other of the following cases applies.

• (2) Those cases are—

• (a) the lower holding company is a wholly owned subsidiary of that other holding undertaking,

• F173[(aa) that other holding undertaking holds more than 90 per cent of the shares in the lower holding company and the remaining shareholders in, or members of, the lower holding company have approved the exemption,]

• (b) that other holding undertaking holds F174[more than 50 per cent but not more than 90 per cent] of the shares in the lower holding company and notice requesting the preparation of group financial statements has not been served on the lower holding company by shareholders holding in aggregate—

• (i) more than half of the remaining shares in the lower holding company, or

• (ii) 5 per cent or more of the total shares in the lower holding company.

• (3) The notice referred to in subsection (2)(b) shall be served not later than 6 months after the end of the financial year before that to which it relates.

• (4) Subsection (1) shall not apply unless the following conditions are satisfied:

• (a) the lower holding company and all of its subsidiary undertakings are included in consolidated accounts for a larger group drawn up to the same date, or to an earlier date in the same financial year, by a holding undertaking;

• F175[(b) those accounts and, where appropriate, the group’s consolidated annual report are drawn up—

• (i) in accordance with the F176[Accounting Directive, other than the requirements laid down in Article 29a of that Directive],

• (ii) in a manner equivalent to consolidated accounts and consolidated reports so drawn up,

• (iii) in accordance with international financial reporting standards, or

• (iv) in accordance with accounting standards of third countries determined as equivalent to international financial reporting standards pursuant to Commission Regulation (EC) No. 1569/2007 of 21 December 2007³ establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council;]

• (c) the consolidated accounts are audited by one or more persons authorised to audit accounts under the laws under which the holding undertaking which draws them up is established;

• (d) the lower holding company F177[discloses in the notes to its entity financial statements] that it is exempt from the obligation to prepare and deliver group financial statements;

• (e) the lower holding company states in its entity financial statements the name of the holding undertaking which draws up the consolidated accounts referred to in paragraph (a) and—

• F177[(i) the address of the holding undertaking’s registered office and, where the holding undertaking is incorporated outside the State, the registered office (howsoever described) of the undertaking in the country in which it is incorporated, or]

• (ii) if the holding undertaking is unincorporated, the address of its principal place of business;

and

• (f) the lower holding company delivers to the Registrar, within the period allowed for delivering its entity financial statements, copies of—

• (i) the other holding undertaking’s consolidated accounts, and

• (ii) where appropriate, the consolidated annual report,

together with the auditors’ report on them.

• (5) Shares held by directors of the lower holding company for the purpose of complying with any share qualification requirement shall be disregarded in determining for the purposes of subsection (2)(a) whether the company is a wholly owned subsidiary of another.

• (6) F178[For the purposes of paragraphs (aa) and (b) of subsection (2)], shares held by a wholly owned subsidiary of the first-mentioned undertaking in that paragraph, or held on behalf of that undertaking or its wholly owned subsidiary, shall be attributed to that undertaking.

• F179[(7) In this section, "consolidated annual report" means—

• (a) the report prepared by management of the group in accordance with the Accounting Directive, or

• (b) the report prepared by management of the group in a manner equivalent to consolidated reports referred to in subsection (4)(b) (ii),

and, in either case, is equivalent to the expression "directors’ report" as used in this Part.]

301. Exemption from consolidation: holding company with all of its subsidiary undertakings excluded from consolidation

301. A holding company is exempt from the requirement to prepare group financial statements if, by virtue of section 303(2) or (3), all of its subsidiary undertakings could be excluded from the consolidation in Companies Act group financial statements.

302. Exemption from consolidation where IFRS so permits

302. A holding company that prepares IFRS financial statements is exempt from the requirement to prepare group financial statements in the circumstances provided, and subject to compliance with the conditions in that behalf specified, in IFRS.

303. Subsidiary undertakings included in the group financial statements

303. (1) In the case of Companies Act group financial statements, all of the subsidiary undertakings of the holding company shall be consolidated in the group financial statements, but this is subject to the exceptions authorised by the subsequent provisions of this section.

• (2) A subsidiary undertaking may be excluded from consolidation in Companies Act group financial statements if its inclusion is not material for the purposes of giving a true and fair view; but 2 or more undertakings may be excluded only if they are not material, for those purposes, taken together.

• (3) In addition, a subsidiary undertaking may be excluded from consolidation in Companies Act group financial statements where—

• (a) severe long-term restrictions substantially hinder the exercise of the rights of the holding company over the assets or management of that subsidiary undertaking, or

• (b) F180[in extremely rare cases, the information necessary] for the preparation of group financial statements in accordance with this Part cannot be obtained without disproportionate expense or undue delay, or

• (c) the interest of the holding company is held exclusively with a view to subsequent resale.

• (4) The reference in subsection (3)(a) to the rights of the holding company and the reference in subsection (3)(c) to the interest of the holding company are, respectively, to rights and interest held by or attributed to the holding company for the purposes of section 7 (definition of subsidiary) in the absence of which it would not be the holding company.

304. Treatment of entity profit and loss account where group financial statements prepared

304. (1) Subject to subsection (3), subsection (2) applies with respect to the entity profit and loss account of a holding company where—

• (a) F181[the company is required to prepare or elects to prepare (and, accordingly, does prepare)] group financial statements in accordance with this Act, and

• (b) F181[the company’s entity balance sheet shows] the company’s profit or loss for the financial year determined in accordance with this Act.

• (2) F181The entity profit and loss account together with, in the case of a company which elects to apply the small companies regime, the information specified in paragraphs 52 and 53 of Schedule 3A, and in the case of all other companies the information specified in paragraphs 59 to 63 of *[Schedule 3] (information supplementing the profit and loss account) or equivalent information required by IFRS shall be approved in accordance with section 324 (approval by board of directors) but may be omitted from the company’s entity financial statements for the purposes of section 338* (circulation of financial statements), and shall also be exempt from the requirements of—

• (a) section 339 (right of members to demand copies of financial statements),

• (b) section 341 (financial statements to be laid before members), and

• (c) section 347 (documents to be annexed to annual return).

• (3) Subsection (2) does not apply unless the fact that it has been availed of is disclosed in the entity financial statements published with the group financial statements.

CHAPTER 6 Disclosure of directors’ remuneration and transactions

305. Disclosure of directors’ remuneration

305. (1) F182[Subject to subsection (14), the notes to the statutory financial statements] of a company shall disclose both for the current and the preceding financial year the following amounts in relation to directors of the company (and that expression includes the one or more persons who, at any time during the financial year concerned, were directors of it)—

• (a) the aggregate amount of emoluments paid to or receivable by directors in respect of qualifying services,

• (b) the aggregate amount of the gains by the directors on the exercise of share options during the financial year,

• (c) the aggregate amount of the money or value of other assets, including shares but excluding share options, paid to or receivable by the directors under long term incentive schemes in respect of qualifying services,

• (d) the aggregate amount of any contributions paid, treated as paid, or payable during the financial year to a retirement benefit scheme in respect of qualifying services of directors, identifying separately the amounts relating to—

• (i) defined contribution schemes, and

• (ii) defined benefit schemes,

and in each case showing the number of directors, if any, to whom retirement benefits are accruing under such schemes in respect of qualifying services,

• (e) the aggregate amount of any compensation paid or payable to directors in respect of loss of office or other termination payments in the financial year.

• (2) F183[Subject to subsection (14), the notes to the statutory financial statements] of a company shall disclose both for the current and the preceding financial year the following amounts in relation to the one or more persons who are past directors of it or past directors of its holding undertaking—

• (a) the aggregate amount paid or payable for such directors’ retirement benefits,

• (b) the aggregate amount of any compensation paid or payable to such directors in respect of loss of office or other termination benefits.

• (3) In this section “qualifying services”, in relation to any person, means his or her services as a director of the company and his or her services, while director of the company, as director of any of its subsidiary undertakings or otherwise in connection with the management of the affairs of the company or any of its subsidiary undertakings.

• (4) For the purpose of subsection (1)(a), “emoluments”, in relation to a director, includes salaries, fees and percentages, bonuses, any sums paid by way of expenses allowance in so far as those sums are chargeable to income tax, and, subject to subsection (5), the estimated money value of any other benefits received by him or her otherwise than in cash.

• (5) However, for the purpose of subsection (1)(a), “emoluments”, in relation to a director, does not include—

• (a) the value of any share options granted to him or her or gains made by him or her on the exercise of share options,

• (b) any contributions paid, treated as paid or payable in respect of him or her to a retirement benefit scheme or any benefits to which he or she is entitled from such a scheme,

• (c) any money or other assets paid to or receivable by him or her under any long term incentive scheme.

• (6) In subsections (1)(b) and (c) and (5)(a)—

“shares” means quoted shares (that is to say shares quoted on any securities or other market referred to in section 1072) or shares that are redeemable in cash or puttable in cash;

F184["share options" means options over quoted shares or shares that are redeemable in cash or puttable in cash.]

• (7) In subsection (1)(c), “long term incentive scheme” means any agreement or arrangement under which money or other assets may become receivable by a director and which includes one or more qualifying conditions with respect to services or performance which cannot be fulfilled within a single financial year; and for this purpose the following shall be disregarded:

• (a) bonuses the amount of which falls to be determined by reference to service or performance within a single year;

• (b) compensation for loss of office and other termination payments; and

• (c) retirement benefits.

• (8) The amount to be shown for the purpose of subsection (2)(a) shall not include any retirement benefits paid or receivable under a retirement benefit scheme if the scheme is such that the contributions under it are substantially adequate for the maintenance of the scheme.

• (9) However the amount to be so shown shall include any retirement benefits paid or receivable in respect of any qualifying services of a past-director of the company, whether to or by him or her, on his or her nomination or by virtue of dependence on or other connection with him or her, to or by any other person.

• (10) The amount to be shown for the purpose of subsection (2)(a) shall distinguish between retirement benefits in respect of services as director, whether of the company or its subsidiary undertakings, and other retirement benefits.

• (11) For the purposes of this section—

“contribution”, in relation to a retirement benefit scheme, means any payment (including an insurance premium) made for the purposes of the scheme by or in respect of persons rendering services in respect of which retirement benefits will or may become payable under the scheme, except that it does not include any payment in respect of 2 or more persons if the amount paid in respect of each of them is not ascertainable;

“retirement benefits” includes any pension, superannuation allowance, superannuation gratuity or similar payment;

“retirement benefit scheme” means a scheme for the provision of retirement benefits in respect of services as director or otherwise which is maintained in whole or in part by means of contributions.

• (12) The amounts to be shown for the purpose of subsections (1)(e) and (2)(b)—

• (a) shall include any sums paid to or receivable by a director or past director—

• (i) by way of compensation for loss of office or other termination payment as director of the company,

• (ii) while director of the company, or on or in connection with his or her ceasing to be a director of the company, by way of—

• (I) compensation for loss of any other office in connection with the management of the company’s affairs or other termination payment in respect of such office, or

• (II) compensation for loss of office or other termination payment as director or otherwise in connection with the management of the affairs of any of its subsidiary undertakings,

and

• (b) shall distinguish between compensation or termination payments in respect of the office of director, whether of the company or of its subsidiary undertakings, and compensation or termination payments in respect of other offices,

and, for the purposes of this section, references to termination payments include references to sums paid or payable as consideration for or in connection with a person’s retirement from office.

• (13) The amounts to be shown for the purpose of subsections (1) and (2)—

• (a) shall include all relevant sums paid by or receivable from—

• (i) the company,

• (ii) the company’s subsidiary undertakings,

• (iii) any holding undertaking of the company, and

• (iv) any other person,

except sums to be accounted for to the company or any of its subsidiary undertakings or, by virtue of section 253, to past or present members of the company or any of its subsidiary undertakings or any class of those members, and

• (b) shall distinguish, in the case of the amount to be shown for the purpose of subsection (1)(e) or (2)(b), between the sums respectively paid by or receivable from the company, the company’s subsidiary undertakings, any holding undertaking of the company and any other persons.

• F185[(14) A company that qualifies for the micro companies regime shall be exempt from the requirements of this section.]

305A. F186[Payments to third parties for services of directors

305A. (1) Subject to subsection (3), the notes to the statutory financial statements of a company shall disclose, both for the current and the preceding financial year, the aggregate amount of any consideration paid to, or receivable by, third parties for making available the services of any person—

• (a) as a director of the company,

• (b) as director of any of its subsidiary undertakings, or

• (c) otherwise in connection with the management of the company’s affairs or any of its subsidiary undertakings.

• (2) The amount to be shown for the purposes of subsection (1) shall—

• (a) include all relevant sums paid by or receivable from—

• (i) the company,

• (ii) the company’s subsidiary undertakings,

• (iii) any holding undertaking of the company, and

• (iv) any other person,

and

• (b) distinguish between the sums respectively paid by, or receivable from, the company, the company’s subsidiary undertakings, any holding undertaking of the company and any other persons.

• (3) A company that qualifies for the micro companies regime shall be exempt from the requirements of this section.

• (4) For the purposes of subsection (1)—

• (a) (i) the reference to "consideration" includes benefits otherwise than in cash and the reference to "the aggregate amount" is to the estimated monetary value of the benefits, and

• (ii) the nature of any such consideration referred to in subparagraph (i) shall be disclosed,

and

• (b) the reference to "third parties" means a person other than—

• (i) the director or a person connected with that director,

• (ii) a body corporate controlled by that director, or

• (iii) the company or any of its subsidiary undertakings.]

306. Supplemental provisions in relation to section 305

F187[306. (1) The amounts to be shown for the purpose of section 305 in relation to a director shall include all amounts paid or payable to a person connected with a director within the meaning of section 220.

• (2) The amounts to be shown for the purpose of section 305 for any financial year shall be the sums receivable in respect of that year, whenever paid, or, in the case of sums not receivable in respect of a period, the sums paid during that year, so, however, that where—

• (a) any sums are not shown in the statutory financial statements for the relevant financial year on the ground that the person receiving them is liable to account for them as mentioned in subsection (13)(a) of section 305, but the liability is thereafter wholly or partly released or is not enforced within a period of 2 years, or

• (b) any sums paid by the way of expenses allowance are chargeable to income tax after the end of the relevant financial year,

those sums shall, to the extent to which the liability is released or not enforced or they are chargeable as so mentioned, as the case may be, be shown in the first statutory financial statements in which it is practicable to show them and shall be distinguished from the amounts to be shown in those statements apart from this provision.

• (3) Where it is necessary to do so for the purpose of making any distinction required by sections 305, 305A or this section in any amount to be shown for the purpose of any one of those sections, the directors may apportion any payments between the matters in respect of which they have been paid or which are receivable or have been paid or are payable to third parties in such manner as they think appropriate.

• (4) If, in the case of any statutory financial statements, the requirements of section 305, 305A or this section are not complied with, it shall be the duty of the statutory auditors of the company by whom the statutory financial statements are examined to include in the report on those statements, so far as they are reasonably able to do so, a statement giving the required particulars.

• (5) In sections 305 and 305A, any reference to a company’s subsidiary undertaking—

• (a) in relation to a person who is or was, while a director of the company, a director also, by virtue of the company’s nomination, direct or indirect, of any other body corporate, shall, subject to paragraph (b), include that body corporate, whether or not it is or was in fact the company’s subsidiary undertaking, and

• (b) shall—

• (i) for the purpose of subsections (3) to (6) and (8) to (10) of section 305, be taken as referring to a subsidiary undertaking at the time the services were rendered, and, for the purpose of subsection (12) of that section, be taken as referring to a subsidiary undertaking immediately before the loss of office as director of the company, and

• (ii) for the purpose of subsection (1) of section 305A, be taken as referring to a subsidiary undertaking at the time the services were rendered.

• (6) In sections 305 and 305A and this section, "director" includes any shadow director and de facto director.]

307. Obligation to disclose information about directors’ benefits: loans, quasi-loans, credit transactions and guarantees

307. (1) Subject to sections 308 and 309, the entity financial statements of a company shall disclose, both for the current and the preceding financial year, in the notes to the statements the particulars specified in subsection (3), (4), (5), (6) or (7), as appropriate, of—

• (a) loans, quasi-loans and credit transactions entered into by the company with or for its directors, directors of its holding undertaking or persons connected with such directors,

• (b) any agreement by the company to enter into any loans, quasi-loans and credit transactions with or for its directors, directors of its holding undertaking or persons connected with such directors,

• (c) guarantees entered into and security provided by the company on behalf of its directors, directors of its holding undertaking or persons connected with such directors in connection with a loan, quasi-loan or credit transaction entered into with or for those directors or other persons,

• (d) any agreement by the company to enter into guarantees or provide any security on behalf of its directors, directors of its holding undertaking or persons connected with such directors in connection with a loan, quasi-loan or credit transaction entered into with or for those directors or other persons, and

• (e) any of the following arrangements made by the company or which it takes part in, namely—

• (i) an assignment to it, or an assumption by it, of any rights, obligations or liabilities under a transaction which, if it had been entered into by the company, would have fallen into any of the preceding paragraphs,

• (ii) an arrangement under which—

• (I) another person enters into a transaction which, if it had been entered into by the company, would have fallen into any of the preceding paragraphs or subparagraph (i), and

• (II) that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from the company or its holding undertaking or a subsidiary undertaking of the company or its holding undertaking.

• (2) Subject to sections 308 and 309, the group financial statements of a holding company shall disclose, both for the current and the preceding financial year, in the notes to the statements the particulars specified in subsection (3), (4), (5), (6) or (7), as appropriate, of—

• (a) loans, quasi-loans and credit transactions entered into by the company or any of its subsidiary undertakings with or for its directors, directors of its holding undertaking or persons connected with such directors,

• (b) any agreement by the company or any of its subsidiary undertakings to enter into any loans, quasi-loans and credit transactions with or for its directors, directors of its holding undertaking or persons connected with such directors,

• (c) guarantees entered into and security provided by the company or any of its subsidiary undertakings on behalf of its directors, directors of its holding undertaking or persons connected with such directors in connection with a loan, quasi-loan or credit transaction entered into with or for those directors or other persons,

• (d) any agreement by the company or any of its subsidiary undertakings to enter into guarantees or provide any security on behalf of its directors, directors of its holding undertaking or persons connected with such directors in connection with a loan, quasi-loan or credit transaction entered into with or for those directors or other persons, and

• (e) any of the following arrangements made by the company or any of its subsidiary undertakings or which it or any of them takes part in, namely:

• (i) an assignment to the company or the subsidiary undertaking, or an assumption by the company or the subsidiary undertaking, of any rights, obligations or liabilities under a transaction which, if it had been entered into by the company or undertaking, would have fallen into any of the preceding paragraphs;

• (ii) an arrangement under which—

• (I) another person enters into a transaction which, if it had been entered into by the company or the subsidiary undertaking (each of which is referred to in clause (II) as a “relevant entity”), would have fallen into any of the preceding paragraphs or subparagraph (i), and

• (II) that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from—

• (A) if the relevant entity is the company — the company or its holding undertaking or a subsidiary undertaking of the company or its holding undertaking,

• (B) if the relevant entity is the subsidiary undertaking — the subsidiary undertaking or its holding undertaking or a subsidiary undertaking of the first-mentioned subsidiary undertaking or its holding undertaking.

• (3) The particulars mentioned in subsections (1) and (2) in respect of arrangements comprising loans, quasi-loans or credit transactions referred to in paragraph (a) of either subsection are, separately for each director or other person—

• (a) the name of the person for whom the arrangements were made and where that person is or was connected with a director of the company or undertaking, the name of the director,

• (b) the value of the arrangements at the beginning and end of the financial year,

• (c) advances made under the arrangements during the financial year,

• (d) amounts repaid under the arrangements during the financial year,

• (e) the amounts of any allowance made during the financial year in respect of any failure or anticipated failure by the borrower to repay the whole or part of the outstanding amount,

• (f) F188[amounts outstanding under the arrangements waived] during the financial year,

• (g) an indication of the interest rate, and

• (h) the arrangements’ other main conditions.

• (4) The particulars mentioned in subsections (1) and (2) in respect of an agreement to enter into loans, quasi-loans or credit transactions referred to in paragraph (b) of either subsection are, separately for each director or other person—

• (a) the name of the person for whom the agreement was made and where that person is or was connected with a director of the company or undertaking, the name of the director,

• (b) the value of the arrangements agreed to,

• (c) an indication of the interest rate, and

• (d) the agreement’s other main conditions.

• (5) The particulars mentioned in subsections (1) and (2) in respect of arrangements comprising guarantees entered into or security provided in connection with a loan, quasi-loan or credit transaction referred to in paragraph (c) of either subsection are, separately for each director or other person—

• (a) the name of the person for whom the arrangements were made and where that person is or was connected with a director of the company or the undertaking, the name of the director,

• (b) the amount of the maximum liability that may be incurred by the company (or any of its subsidiary undertakings),

• (c) any amount paid and any liability incurred by the company (or any of its subsidiary undertakings) for the purpose of fulfilling the guarantee or on foot of the provision of security (including any loss incurred by reason of enforcement of the guarantee or loss of the security), and

• (d) the arrangements’ main terms.

• (6) The particulars mentioned in subsections (1) and (2) in respect of agreements to enter into guarantees or provide security in connection with a loan, quasi-loan or credit transaction referred to in paragraph (d) of either subsection are, separately for each director or other person—

• (a) the name of the person for whom the agreement was made and where that person is or was connected with a director of the company or the undertaking, the name of the director,

• (b) the amount of the maximum liability that may be incurred by the company (or any of its subsidiary undertakings), and

• (c) the agreement’s main terms.

• (7) The particulars mentioned in subsections (1) and (2) in respect of an arrangement referred to in paragraph (e) of either subsection are—

• (a) in the case of an arrangement referred to in subparagraph (i) or (ii) of that paragraph (e), whichever of the particulars specified in any of subsections (3) to (6) would have to be disclosed if the arrangement had fallen into a preceding paragraph of subsection (1) or, as the case may be, subsection (2) or (in the case of an arrangement referred to in subparagraph (ii) of that paragraph (e)) subparagraph (i) of that paragraph (e), and

• (b) in addition -in the case of an arrangement referred to in subparagraph (ii) of that paragraph (e) -the amount of the benefit referred to in that subparagraph obtained or to be obtained by the other person referred to therein.

• (8) There shall also be stated, both for the current and the preceding financial year in the notes to the financial statements (whether entity or group financial statements)—

• (a) the total of the amounts stated for the purposes of paragraphs (b) to (f) of subsection (3) (that is to say a separate total for the amounts stated for each of those paragraphs),

• (b) the total of the amounts stated for the purposes of paragraphs (b) and (c) of subsection (5) (that is to say a separate total for the amounts stated for each of those paragraphs), and

• (c) the amounts stated for the purposes of subsection (3)(b) expressed as a percentage of the net assets of the company at the beginning and end of the financial year.

• (9) The disclosure required by subsection (8) is extended by section 308(5) to (8), in the manner specified in those provisions, to persons who are officers (but not directors) of the company, holding undertaking or subsidiary undertaking concerned.

• (10) Where at any time during the financial year the aggregate of the amounts outstanding under all arrangements of the type referred to in subsections (3)(f) and (5)(b) amount to more than 10 per cent of the net assets of the company, the aggregate amount shall be stated and the percentage of net assets that the total represents.

308. Supplemental provisions in relation to section 307 (including certain exemptions from its terms)

308. (1) References in section 307 and this section to a director of the company or the undertaking are references to the person who was a director of the company or the undertaking at any time in the financial year to which the financial statements relate (or, as the case may be, the preceding financial year) and “director” in those sections includes any shadow director and de facto director.

• (2) The requirements of section 307 apply in relation to every loan, quasi-loan, credit transaction or guarantee or agreement referred to in that section subsisting at any time in the financial year to which the financial statements relate (or, as the case may be, the preceding financial year)—

• (a) whenever it was entered into,

• (b) whether or not the person concerned was a director of the company or the undertaking in question at the time it was entered into,

• (c) in the case of an arrangement entered into involving a subsidiary undertaking of that company, whether or not that undertaking was a subsidiary undertaking at the time it was entered into, and

• (d) whether or not the transaction or agreement was prohibited by section 239.

• (3) The requirements of section 307(1) to (8) do not apply in relation to an individual director and persons connected with him or her if the aggregate value of all agreements, transactions and arrangements referred to in section 307(1) and (2) did not, at any time during the financial year, exceed €7,500 for that director and those persons.

• (4) Where a holding company avails itself of an exemption under this Part from the requirement to prepare group financial statements in relation to any financial year, section 307(2) shall have effect in relation to the company and that financial year as if “entity financial statements” were substituted for “group financial statements”.

• (5) In addition to, and not in derogation from any of its requirements in relation to directors, subsection (8) of section 307 applies, subject to subsection (3) and section 310, to persons who are officers (but not directors) of the company, holding company or subsidiary undertaking concerned and, accordingly operates, with respect to such officers, to require to be disclosed, both for the current and the preceding financial year, in the notes to the financial statements (whether entity or group financial statements) the matters mentioned in that subsection, but separately from the disclosures under it in respect of directors.

• (6) For the purposes of that application, the following provisions of section 307 and this section have effect subject to the following modifications:

• (a) the references in section 307(1) and (2) to directors are to be read as references to officers (not being directors) of the company, holding undertaking or subsidiary undertaking concerned;

• (b) subsection (3)(b) to (f) and subsection (5)(b) and (c) of section 307 are to be read as if they applied to officers (not being directors) of the company, holding undertaking or subsidiary undertaking concerned;

• (c) the following references to director in this section, namely, the first and second references to director in subsection (1) and each such reference in subsections (2) and (3), are to be read as references to an officer who is not a director.

• (7) The operation of subsection (8) of section 307, as applied by virtue of subsections (5) and (6), also requires the number of officers mentioned in subsection (5), arrangements in respect of whom are the subject of the matters disclosed pursuant to that subsection (8), as so applied, to be stated in the notes to the financial statements concerned.

• (8) For the purposes of section 307 and this section—

• (a) “quasi-loan”, “credit transaction”, “guarantee” and “value of the arrangement” have the meanings given to them by section 219,

• (b) section 220 shall apply in determining whether a person is connected with a director or not,

• (c) section 219(7) shall apply in determining whether or not a transaction or arrangement is made for a person.

309. Other arrangements and transactions in which the directors, etc., have material interest

309. (1) F189[Subject to subsection (1A) and section 310], the entity financial statements of a company shall disclose, both for the current and the preceding financial year, in the notes to the statements the particulars specified in subsection (3) of any other arrangement or transaction not dealt with by section 305, 307 or 308 entered into by the company in which a person, who at any time during the financial year was a director, a director of its holding undertaking or a person connected with such a director, had, directly or indirectly, a material interest.

• F190[(1A) A company that qualifies for the micro companies regime shall be exempt from the requirements of subsection (1).]

• (2) Subject to section 310, the group financial statements of a holding company shall disclose, both for the current and the preceding financial year, in the notes to the statements the particulars specified in subsection (3) of any other arrangement or transaction not dealt with by section 305, 307 or 308 entered into by the company or any of its subsidiary undertakings in which a person, who at any time during the financial year was a director, a director of its holding undertaking or a person connected with such a director, had, directly or indirectly, a material interest.

• (3) The particulars mentioned in subsections (1) and (2) are—

• (a) particulars of the principal terms of the arrangement or transaction,

• (b) the name of the director or other person with the material interest, and

• (c) the nature of the interest.

• (4) For the purposes of subsections (1) and (2)—

• (a) an arrangement or transaction between a company and a director of the company or of its holding undertaking or a person connected with such a director shall (if it would not otherwise be so treated) be treated as an arrangement or transaction in which that director is interested, and

• (b) an interest in such an arrangement or transaction is not material if in the opinion of the majority of the directors (other than that director) of the company which is preparing the financial statements in question it is not material (but without prejudice to the question whether or not such an interest is material in any case where those directors have not considered the matter).

• (5) Subsections (1) and (2) do not apply in relation to the following arrangements or transactions—

• (a) an arrangement or transaction between one company and another in which a director of the first company or of its subsidiary undertaking or holding undertaking is interested only by virtue of his or her being a director of the other,

• (b) a contract of service between a company and one of its directors or a director of its holding undertaking or between a director of a company and any of that company’s subsidiary undertakings, and

• (c) an arrangement or transaction which was not entered into during the financial year concerned and which did not subsist at any time during that year.

• (6) Subsections (1) and (2) do not apply to any arrangement or transaction with a company or any of its subsidiary undertakings in which a director of the company or of its holding undertaking, or a person connected with such a director, had, directly or indirectly, a material interest if—

• (a) the value of each arrangement or transaction in which that director or other person had, directly or indirectly, a material interest and which was made after the commencement of the financial year with the company or any of its subsidiary undertakings, and

• (b) the value of each such arrangement or transaction which was made before the commencement of the financial year less the amount (if any) by which the liabilities of the person for whom the arrangement or transaction was made have been reduced,

did not at any time during the financial year exceed in the aggregate €5,000 or, if more, did not exceed €15,000 or one per cent of the value of the net assets of the company preparing the entity or group financial statements, whichever is the less.

• (7) Where a holding company avails itself of an exemption under this Part from the requirement to prepare group financial statements in relation to any financial year, subsection (2) shall have effect in relation to the company and that financial year as if “entity financial statements” were substituted for “group financial statements”.

• (8) For the purposes of this section—

• (a) section 220 shall apply in determining whether a person is connected with a director or not,

• (b) “arrangement” includes an agreement, and

• (c) “director” includes any shadow director and de facto director.

310. Credit Institutions: exceptions to disclosure by holding company under sections 307 to 309 in the case of connected persons and certain officers

310. (1) As respects any financial statements prepared by any company which is the holding company of a credit institution the requirements of section 307 do not apply in relation to any of the following to which the credit institution is a party, namely:

• (a) a loan, quasi-loan or other transaction referred to in section 307(1)(a) or (2)(a) entered into with or for a person connected with a director of that holding company or institution;

• (b) an agreement referred to in section 307(1)(b) or (2)(b) to enter into a loan, quasi-loan or other transaction referred to in that provision with or for a person connected with a director of that holding company or institution;

• (c) a guarantee entered into or security provided as mentioned in section 307(1)(c) or (2)(c) on behalf of a person connected with any of the directors referred to in that provision (being any of the directors of the holding company or institution) in connection with a loan, quasi-loan or credit transaction entered into with or for such a person so connected;

• (d) an agreement as mentioned in section 307(1)(d) or (2)(d) to enter into a guarantee or provide security on behalf of a person connected with any of the directors mentioned in that provision (being any of the directors of the holding company or institution) in connection with a loan, quasi-loan or credit transaction entered into with or for such a person so connected; or

• (e) an arrangement referred to in subparagraph (i) or (ii) of section 307(1)(e) or (2)(e) where the transaction referred to in that subparagraph (that is to say, a transaction that, if it had been made by the institution, would have fallen into a preceding paragraph of section 307(1) or (2), as the case may be, or (in the case of that subparagraph (ii)) that subparagraph (i)) was entered into with or for a person connected with a director of that holding company or institution.

• (2) As respects any financial statements prepared by any company that is the holding company of a credit institution, the extension of section 307(8) by section 308(5) does not apply in relation to any transaction, arrangement or agreement made by that credit institution for or with—

• (a) any of its officers, or

• (b) any of the officers of the holding company.

• (3) As respects any financial statements prepared by any company that is the holding company of a credit institution, the requirements of subsection (1) or (2) of section 309 do not apply in relation to any arrangement or transaction referred to in that subsection (1) or (2) to which the credit institution is a party if the only person referred to in that subsection (1) or (2), as the case may be, who has, directly or indirectly, a material interest in the arrangement or transaction is a person connected with any of the directors referred to in that subsection (1) or (2), as the case may be.

• (4) In a case that would fall within subsection (3) but for the fact that both—

• (a) a person (the “connected person”) connected with any of the directors referred to in subsection (1) or (2), as the case may be, of section 309, and

• (b) a director or directors referred to in that subsection (1) or (2), as the case may be,

have, directly or indirectly, a material interest in the arrangement or transaction concerned to which the credit institution referred to in subsection (3) is a party, then the particulars of the material interest to be disclosed under section 309 need not include the name of the connected person nor (if his or her interest is different from that of the foregoing director or directors) the nature of the connected person’s interest.

• (5) A word or expression used in this section and also used in sections 307 to 309 has the same meaning in this section as it has in those sections.

311. Credit Institutions: disclosures by holding company of aggregate amounts in respect of connected persons

311. (1) In this section—

“relevant period” means the financial year to which the financial statements concerned relate;

“relevant persons” means persons who, at any time during the financial year to which the financial statements concerned relate, were connected with a director of the company or the institution referred to in subsection (2);

“relevant transaction, arrangement or agreement” shall be read in accordance with subsection (3);

“transactions, arrangements or agreements” means any of the following classes of transactions, arrangements or agreements:

• (a) loans, quasi-loans or credit transactions entered into with or for relevant persons;

• (b) agreements to enter into any loans, quasi-loans or credit transactions with or for relevant persons;

• (c) guarantees entered into or security provided on behalf of relevant persons in connection with a loan, quasi-loan or credit transaction entered into with or for such persons;

• (d) agreements to enter into guarantees or provide any security on behalf of relevant persons in connection with a loan, quasi-loan or credit transaction entered into with or for such persons;

• (e) arrangements referred to in subparagraph (i) or (ii) of either section 307(1)(e) or (2)(e) where the transactions referred to in that subparagraph (that is to say, transactions that, if they had been made by the institution, would have fallen into a preceding paragraph of section 307(1) or (2), as the case may be, or (in the case of that subparagraph (ii)) that subparagraph (i)) were entered into with or for relevant persons.

• (2) The group financial statements of a company which is the holding company of a credit institution shall contain a statement, by way of notes to those statements, of the matters specified in subsection (3) in relation to transactions, arrangements or agreements made by the credit institution.

• (3) The matters mentioned in subsection (2) are:

• (a) the aggregate amounts outstanding at the end of the relevant period under transactions, arrangements or agreements made by the institution and coming within any particular paragraph of subsection (1) (which transactions, arrangements or agreements, coming within any particular such paragraph, are referred to subsequently in this section as “relevant transactions, arrangements or agreements”);

• (b) the aggregate maximum amounts outstanding during the relevant period under relevant transactions, arrangements or agreements made by the institution;

• (c) the number of relevant persons for or with whom relevant transactions, arrangements and agreements that subsisted at the end of the relevant period were made by the institution; and

• (d) the maximum number of relevant persons for or with whom relevant transactions, arrangements and agreements that subsisted at any time during the relevant period were made by the institution.

• (4) A transaction, arrangement or agreement to which subsection (2) applies need not be included in the statement referred to in that subsection if—

• (a) it is entered into by the institution concerned in the ordinary course of its business, and

• (b) its value is not greater, and its terms no more favourable,

in respect of the person for or with whom it is made, than that or those which—

• (i) the institution ordinarily offers, or

• (ii) it is reasonable to expect the institution to have offered,

to or in respect of a person of the same financial standing but unconnected with the institution.

• (5) In reckoning the aggregate maximum amounts or the maximum number of persons referred to in subsection (3)(b) or (d), as appropriate, there shall not be counted, as the case may be—

• (a) relevant transactions, arrangements and agreements made by the institution concerned for or with a person if the aggregate maximum amount outstanding during the relevant period under relevant transactions, arrangements and agreements made for or with him or her by it does not exceed €7,500, or

• (b) a person for or with whom such transactions, arrangements and agreements have been so made and for whom the aggregate maximum amount outstanding as mentioned in paragraph (a) does not exceed the amount there mentioned.

• (6) For the purposes of this section, “amount outstanding” means the amount of the outstanding liabilities of the person for or with whom the transaction, arrangement or agreement in question was made, or, in the case of a guarantee of security, the amount guaranteed or secured.

• (7) Where a holding company avails itself of an exemption under this Part from the requirement to prepare group financial statements in relation to any financial year, subsection (2) shall have effect in relation to the company and that financial year as if “entity financial statements” were substituted for “group financial statements”.

• (8) A word or expression used in this section and also used in sections 307 to 309 has the same meaning in this section as it has in those sections.

312. Credit Institutions: requirement for register, etc., in the case of holding company as respects certain information

312. (1) Subject to section 313, a company which is the holding company of a credit institution shall maintain a register containing a copy of every transaction, arrangement or agreement made by that institution of which particulars—

• (a) are required by section 307(1) or (2) or section 309(1) or (2) to be disclosed, or

• (b) would, but for section 310, be required by any such provision to be disclosed,

in the company’s entity or group financial statements for the current financial year and for each of the preceding 10 financial years or, if such a transaction, arrangement or agreement is not in writing, a written memorandum setting out its terms.

• (2) Subsection (1) shall not require a company to keep in its register a copy of any transaction, arrangement or agreement made by the credit institution for or with a connected person if—

• (a) it is entered into in the ordinary course of the institution’s business, and

• (b) its value is not greater, and its terms no more favourable, in respect of the person for or with whom it is made, than that or those which—

• (i) the institution ordinarily offers, or

• (ii) it is reasonable to expect the institution to have offered,

to or in respect of a person of the same financial standing but unconnected with the institution.

• (3) Subject to section 313, a company which is the holding company of a credit institution shall, before the annual general meeting of the holding company, make available, at its registered office for inspection by its members, the statement specified in subsection (5).

• (4) That statement shall be made so available for a period of not less than 15 days ending with the date of the meeting.

• (5) The statement mentioned in subsection (3) (referred to in subsections (6) to (8) as the “statement”) is one containing the particulars of transactions, arrangements and agreements made by the credit institution which the holding company would, but for section 310, be required by section 307(1) or (2) or section 309(1) or (2) to disclose in its entity or group financial statements for the last complete financial year preceding the meeting referred to in that subsection.

• (6) The statement shall also be made available for inspection by the members at that annual general meeting.

• (7) This section shall not require the inclusion in the statement of particulars of any transaction, arrangement or agreement made by the credit institution if—

• (a) it is entered into in the ordinary course of the institution’s business, and

• (b) its value is not greater, and its terms no more favourable, in respect of the person for or with whom it is made, than that or those which—

• (i) the institution ordinarily offers, or

• (ii) it is reasonable to expect the institution to have offered,

to or in respect of a person of the same financial standing but unconnected with the institution.

• (8) This section shall not require the inclusion in the statement of particulars of any transaction, arrangement or agreement if, by reason of—

• (a) the company’s not taking advantage of section 310, or

• (b) the company’s being required by a rule, instrument, direction or requirement referred to in section 313 to disclose such information in the following manner, the company has included in its entity or group financial statements for the last complete financial year mentioned in subsection (5) the particulars referred to in section 307(1) or (2) or section 309(1) or (2), as the case may be, of the transaction, arrangement or agreement which, but for either of those reasons, it would not have disclosed in those financial statements by virtue of section 310.

• (9) A company shall, if required by the F191[Authority, produce to the Authority for inspection the register kept by it in accordance with subsection (1) and shall give the Authority such facilities for inspecting and taking copies of the contents of the register as the Authority] may require.

• (10) It shall be the duty of the statutory auditors of the company to examine any such statement specified in subsection (5) before it is made available to the members of the company in accordance with subsections (3) and (4) and to make a report to the members on that statement; and the report shall be annexed to the statement before it is made so available.

• (11) A report under subsection (10) shall state whether in the opinion of the statutory auditors the statement contains the particulars required by subsection (5) and, where their opinion is that it does not, they shall include in the report, so far as they are reasonably able to do so, a statement giving the required particulars.