Companies Act 1989

Part I — Company Accounts

Introduction

Introduction.

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Provisions applying to companies generally

Accounting records.

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A company’s financial year and accounting reference periods.

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Individual company accounts.

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Group accounts.

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Additional disclosure required in notes to accounts.

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Approval and signing of accounts.

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Directors’ report.

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Auditors’ report.

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Publication of accounts and reports.

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Laying and delivering of accounts and reports.

11

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Remedies for failure to comply with accounting requirements.

12

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Exemptions and special provisions

Small and medium-sized companies and groups.

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Dormant companies.

14

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Public listed companies: provision of summary financial statement.

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Private companies: election to dispense with laying of accounts and reports before general meeting.

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Unlimited companies: exemption from requirement to deliver accounts and reports.

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Banking and insurance companies and groups: special provisions.

18

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Supplementary provisions

Accounting standards.

19

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Power to alter accounting requirements.

20

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Parent and subsidiary undertakings.

21

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Other interpretation provisions.

22

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Consequential amendments

Consequential amendments.

23

The enactments specified in Schedule 10 have effect with the amendments specified there, which are consequential on the amendments made by the preceding provisions of this Part.

Part II — Eligibility for Appointment as Company Auditor

Introduction

Introduction.

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Eligibility for appointment

Eligibility for appointment.

25

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Effect of appointment of partnership.

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Ineligibility on ground of lack of independence.

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Effect of ineligibility.

28

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Power of Secretary of State to require second audit.

29

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Recognition of supervisory bodies and professional qualifications

Supervisory bodies.

30

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Meaning of “appropriate qualification”.

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Qualifying bodies and recognised professional qualifications.

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Approval of overseas qualifications.

33

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Eligibility of individuals retaining only 1967 Act authorisation.

34

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Duties of recognised bodies

The register of auditors.

35

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Information about firms to be available to public.

36

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Matters to be notified to the Secretary of State.

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Power to call for information.

38

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Compliance orders.

39

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Directions to comply with international obligations.

40

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Offences

False and misleading statements.

41

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Offences by bodies corporate, partnerships and unincorporated associations.

42

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Time limits for prosecution of offences.

43

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Jurisdiction and procedure in respect of offences.

44

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Supplementary provisions

Fees.

45

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Delegation of functions of Secretary of State.

46

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Circumstances in which Secretary of State may delegate functions to existing body

46A

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Restrictive practices.

47

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Exemption from liability for damages.

48

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Service of notices.

49

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Power to make consequential amendments.

50

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Power to make provision in consequence of changes affecting accountancy bodies.

51

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Meaning of “associate”.

52

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Minor definitions.

53

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Index of defined expressions.

54

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Part III — Investigations and Powers to Obtain Information

Amendments of the Companies Act 1985

Investigations by inspectors not leading to published report.

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In section 432 of the Companies Act 1985 (appointment of inspectors by Secretary of State), after subsection (2) (investigation of circumstances suggesting misconduct) insert—

(2A) Inspectors may be appointed under subsection (2) on terms that any report they may make is not for publication; and in such a case, the provisions of section 437(3) (availability and publication of inspectors’ reports) do not apply.

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Production of documents and evidence to inspectors.

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• (1) Section 434 of the Companies Act 1985 (production of documents and evidence to inspectors) is amended as follows.

• (2) In subsection (1) (duty of officers to assist inspectors), for “books and documents” substitute “documents”.

• (3) For subsection (2)(power to require production of documents, attendance or other assistance) substitute—

(2) If the inspectors consider that an officer or agent of the company or other body corporate, or any other person, is or may be in possession of information relating to a matter which they believe to be relevant to the investigation, they may require him— (a) to produce to them any documents in his custody or power relating to that matter, (b) to attend before them, and (c) otherwise to give them all assistance in connection with the investigation which he is reasonably able to give; and it is that person’s duty to comply with the requirement.

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• (4) For subsection (3) (power to examine on oath) substitute—

(3) An inspector may for the purposes of the investigation examine any person on oath, and may administer an oath accordingly.

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• (5) After subsection (5) insert—

(6) In this section “documents” includes information recorded in any form; and, in relation to information recorded otherwise than in legible form, the power to require its production includes power to require the production of a copy of the information in legible form.

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• (6) In section 436 of the Companies Act 1985 (obstruction of inspectors treated as contempt of court), for subsections (1) and (2) substitute—

(1) If any person— (a) fails to comply with section 434(1)(a) or (c), (b) refuses to comply with a requirement under section 434(1)(b) or (2), or (c) refuses to answer any question put to him by the inspectors for the purposes of the investigation, the inspectors may certify that fact in writing to the court.

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Duty of inspectors to report.

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In section 437 of the Companies Act 1985 (inspectors’ reports), after subsection (1A) insert—

(1B) If it appears to the Secretary of State that matters have come to light in the course of the inspectors’ investigation which suggest that a criminal offence has been committed, and those matters have been referred to the appropriate prosecuting authority, he may direct the inspectors to take no further steps in the investigation or to take only such further steps as are specified in the direction. (1C) Where an investigation is the subject of a direction under subsection (1B), the inspectors shall make a final report to the Secretary of State only where— (a) they were appointed under section 432(1) (appointment in pursuance of an order of the court), or (b) the Secretary of State directs them to do so.

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Power to bring civil proceedings on the company’s behalf.

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Expenses of investigating a company’s affairs.

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• (1) Section 439 of the Companies Act 1985 (expenses of investigating a company’s affairs) is amended as follows.

• (2) For subsection (1) substitute—

(1) The expenses of an investigation under any of the powers conferred by this Part shall be defrayed in the first instance by the Secretary of State, but he may recover those expenses from the persons liable in accordance with this section. There shall be treated as expenses of the investigation, in particular, such reasonable sums as the Secretary of State may determine in respect of general staff costs and overheads.

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• (3) In subsection (4) for “the inspectors’ report” substitute “ an inspectors’ report ”.

• (4) For subsection (5) substitute—

(5) Where inspectors were appointed— (a) under section 431, or (b) on an application under section 442(3), the applicant or applicants for the investigation is or are liable to such extent (if any) as the Secretary of State may direct.

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Power of Secretary of State to present winding-up petition.

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• (1) Section 440 of the Companies Act 1985 (power of Secretary of State to present winding-up petition) is repealed; but the following amendments have the effect of re-enacting that provision, with modifications.

• (2) In section 124(4) of the Insolvency Act 1986 (application by Secretary of State for company to be wound up by the court), for paragraph (b) substitute—

(b) in a case falling within section 124A below.

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• (3) After that section insert—

(124A) (1) Where it appears to the Secretary of State from— (a) any report made or information obtained under Part XIV of the Companies Act 1985 (company investigations, &c.), (b) any report made under section 94 or 177 of the Financial Services Act 1986 or any information obtained under section 105 of that Act, (c) any information obtained under section 2 of the Criminal Justice Act 1987 or section 52 of the Criminal Justice (Scotland) Act 1987 (fraud investigations), or (d) any information obtained under section 83 of the Companies Act 1989 (powers exercisable for purpose of assisting overseas regulatory authorities), that it is expedient in the public interest that a company should be wound up, he may present a petition for it to be wound up if the court thinks it just and equitable for it to be so. (2) This section does not apply if the company is already being wound up by the court.

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Inspectors’ reports as evidence.

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In section 441 of the Companies Act 1985 (inspectors’ reports to be evidence), in subsection (1) for “sections 431 or 432” substitute “ this Part ”.

Investigation of company ownership.

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In section 442 of the Companies Act 1985 (power to investigate company ownership), for subsection (3) (investigation on application by members of company) substitute—

(3) If an application for investigation under this section with respect to particular shares or debentures of a company is made to the Secretary of State by members of the company, and the number of applicants or the amount of shares held by them is not less than that required for an application for the appointment of inspectors under section 431(2)(a) or (b), then, subject to the following provisions, the Secretary of State shall appoint inspectors to conduct the investigation applied for. (3A) The Secretary of State shall not appoint inspectors if he is satisfied that the application is vexatious; and where inspectors are appointed their terms of appointment shall exclude any matter in so far as the Secretary of State is satisfied that it is unreasonable for it to be investigated. (3B) The Secretary of State may, before appointing inspectors, require the applicant or applicants to give security, to an amount not exceeding £5,000, or such other sum as he may by order specify, for payment of the costs of the investigation. An order under this subsection shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. (3C) If on an application under subsection (3) it appears to the Secretary of State that the powers conferred by section 444 are sufficient for the purposes of investigating the matters which inspectors would be appointed to investigate, he may instead conduct the investigation under that section.

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Secretary of State’s power to require production of documents.

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Entry and search of premises.

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• (1) For section 448 of the Companies Act 1985 (entry and search of premises) substitute—