Companies Act 2006

• (5) The copies of the balance sheet , strategic report and directors' report delivered to the registrar under this section must state the name of the person who signed it on behalf of the board.

• (6) The copy of the auditor's report delivered to the registrar under this section must—

• (a) state the name of the auditor and (where the auditor is a firm) the name of the person who signed it as senior statutory auditor, or

• (b) if the conditions in section 506 (circumstances in which names may be omitted) are met, state that a resolution has been passed and notified to the Secretary of State in accordance with that section.

• (6A) If more than one person is appointed as auditor, the reference in subsection (6)(a) to the name of the auditor is to be read as a reference to the names of all the auditors.

• (7) This section does not apply to companies within—

• (a) section 444 (filing obligations of companies subject to the small companies regime), or

• (b) section 444A (filing obligations of companies entitled to small companies exemption in relation to directors' report).

• (7) This section does not apply to companies within—

• (a) section 443A (filing obligations of micro-entities), or

• (b) section 444 (filing obligations of small companies other than micro-entities).

Filing obligations of unquoted companies

446

• (1) The directors of an unquoted company must deliver to the registrar for each financial year of the company a copy of—

• (a) the company's annual accounts, . . .

• (aa) the strategic report,

• (b) the directors' report , ... and

• (ba) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) any separate corporate governance statement.

• (2) The directors must also deliver to the registrar a copy of the auditor's report on those accounts (and the strategic report (where this is covered by the auditor’s report), the directors' report ... and any separate corporate governance statement).

This does not apply if the company is exempt from audit and the directors have taken advantage of that exemption.

• (3) The copies of the balance sheet , strategic report , directors' report ... and any separate corporate governance statement delivered to the registrar under this section must state the name of the person who signed it on behalf of the board.

• (4) The copy of the auditor's report delivered to the registrar under this section must—

• (a) state the name of the auditor and (where the auditor is a firm) the name of the person who signed it as senior statutory auditor, or

• (b) if the conditions in section 506 (circumstances in which names may be omitted) are met, state that a resolution has been passed and notified to the Secretary of State in accordance with that section.

• (4A) If more than one person is appointed as auditor, the reference in subsection (4)(a) to the name of the auditor is to be read as a reference to the names of all the auditors.

• (5) This section does not apply to companies within—

• (a) section 444 (filing obligations of companies subject to the small companies regime), . . .

• (aa) section 444A (filing obligations of companies entitled to small companies exemption in relation to directors' report), or

• (b) section 445 (filing obligations of medium-sized companies).

• (5) This section does not apply to companies within—

• (a) section 443A (filing obligations of micro-entities),

• (b) section 444 (filing obligations of small companies other than micro-entities), or

• (c) section 445 (filing obligations of medium-sized companies).

Filing obligations of quoted companies

447

• (1) The directors of a quoted company must deliver to the registrar for each financial year of the company a copy of—

• (a) the company's annual accounts,

• (b) the directors' remuneration report, . . .

• (ba) the strategic report,

• (c) the directors' report., and

• (d) any separate corporate governance statement.

• (2) They must also deliver a copy of the auditor's report on those accounts (and on the directors' remuneration reportthe strategic report (where this is covered by the auditor’s report), , the directors' report and any separate corporate governance statement).

• (3) The copies of the balance sheet, the directors' remuneration report , the strategic report, the directors' report and any separate corporate governance statement delivered to the registrar under this section must state the name of the person who signed it on behalf of the board.

• (4) The copy of the auditor's report delivered to the registrar under this section must—

• (a) state the name of the auditor and (where the auditor is a firm) the name of the person who signed it as senior statutory auditor, or

• (b) if the conditions in section 506 (circumstances in which names may be omitted) are met, state that a resolution has been passed and notified to the Secretary of State in accordance with that section.

• (5) If more than one person is appointed as auditor, the reference in subsection (4)(a) to the name of the auditor is to be read as a reference to the names of all the auditors.

Unlimited companies exempt from obligation to file accounts

448

• (1) The directors of an unlimited company are not required to deliver accounts and reports to the registrar in respect of a financial year if the following conditions are met.

• (2) The conditions are that at no time during the relevant accounting reference period—

• (a) has the company been, to its knowledge, a subsidiary undertaking of an undertaking which was then limited, or

• (b) have there been, to its knowledge, exercisable by or on behalf of two or more undertakings which were then limited, rights which if exercisable by one of them would have made the company a subsidiary undertaking of it, or

• (c) has the company been a parent company of an undertaking which was then limited.

The references above to an undertaking being limited at a particular time are to an undertaking (under whatever law established) the liability of whose members is at that time limited.

• (3) The exemption conferred by this section does not apply if—

• (a) the company is a banking or insurance company or the parent company of a banking or insurance group, or

• (b) each of the members of the company is—

• (i) a limited company,

• (ii) another unlimited company each of whose members is a limited company, . . .

• (iii) a Scottish partnership which is not a limited partnership, each of whose members is a limited company , or

• (iv) a Scottish partnership which is a limited partnership, each of whose general partners is a limited company.

The references in paragraph (b) to a limited company, another unlimited company , a Scottish partnership which is not a limited partnership or a Scottish partnership which is a limited partnership include a comparable undertaking incorporated in or formed under the law of a country or territory outside the United Kingdom.

• (4) Where a company is exempt by virtue of this section from the obligation to deliver accounts—

• (a) section 434(3) (requirements in connection with publication of statutory accounts: meaning of “statutory accounts”) has effect with the substitution for the words “as required to be delivered to the registrar under section 441” of the words “as prepared in accordance with this Part and approved by the board of directors”; and

• (b) section 435(1)(b) (requirements in connection with publication of non-statutory accounts: statement whether statutory accounts delivered) has effect with the substitution for the words from “whether statutory accounts” to “have been delivered to the registrar” of the words “that the company is exempt from the requirement to deliver statutory accounts”.

• (5) In this section—

• “ general partner ” means— in relation to a Scottish partnership which is a limited partnership, a person who is a general partner within the meaning of the Limited Partnerships Act 1907 ; and in relation to an undertaking incorporated in or formed under the law of any country or territory outside the United Kingdom and which is comparable to a Scottish partnership which is a limited partnership, a person comparable to such a general partner;

• “ limited partnership ” means a partnership registered under the Limited Partnerships Act 1907; and the “ relevant accounting reference period ”, in relation to a financial year, means the accounting reference period by reference to which that financial year was determined.

Dormant subsidiaries exempt from obligation to file accounts

448A

• (1) The directors of a company are not required to deliver a copy of the company's individual accounts to the registrar in respect of a financial year if—

• (a) the company is a subsidiary undertaking,

• (b) it has been dormant throughout the whole of that year, and

• (c) its parent undertaking is established under the law of any part of the United Kingdom.

• (2) Exemption is conditional upon compliance with all of the following conditions—

• (a) all members of the company must agree to the exemption in respect of the financial year in question,

• (b) the parent undertaking must give a guarantee under section 448C in respect of that year,

• (c) the company must be included in the consolidated accounts drawn up for that year or to an earlier date in that year by the parent undertaking in accordance with—

• (i) if the undertaking is a company, the requirements of this Part of this Act, or, if the undertaking is not a company, the legal requirements which apply to the drawing up of consolidated accounts for that undertaking, or

• (ii) UK-adopted international accounting standards,

• (d) the parent undertaking must disclose in the notes to the consolidated accounts that the directors of the company are exempt from the requirement to deliver a copy of the company's individual accounts to the registrar by virtue of this section, and

• (e) the directors of the company must deliver to the registrar within the period for filing the company's accounts and reports for that year—

• (i) a written notice of the agreement referred to in subsection (2)(a),

• (ii) the statement referred to in section 448C(1),

• (iii) a copy of the consolidated accounts referred to in subsection (2)(c),

• (iv) a copy of the auditor's report on those accounts, and

• (v) a copy of the consolidated annual report drawn up by the parent undertaking.

Companies excluded from the dormant subsidiaries exemption

448B

• (b) a company that—

• (i) is an authorised insurance company, a banking company, an e-Money issuer, a MiFID investment firm or a UCITS management company, or

• (ii) carries on insurance market activity, or

• (c) a special register body as defined in section 117(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (c 52) or an employers' association as defined in section 122 of that Act or Article 4 of the Industrial Relations (Northern Ireland) Order 1992 ( S.I. 1992/807) ( NI 5).

Dormant subsidiaries filing exemption: parent undertaking declaration of guarantee

448C

• (1) A guarantee is given by a parent undertaking under this section when the directors of the subsidiary company deliver to the registrar a statement by the parent undertaking that it guarantees the subsidiary company under this section.

• (2) The statement under subsection (1) must be authenticated by the parent undertaking and must specify—

• (a) the name of the parent undertaking,

• (b) the registered number (if any) of the parent undertaking,

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) the name and registered number of the subsidiary company in respect of which the guarantee is being given,

• (e) the date of the statement, and

• (f) the financial year to which the guarantee relates.

• (3) A guarantee given under this section has the effect that—

• (a) the parent undertaking guarantees all outstanding liabilities to which the subsidiary company is subject at the end of the financial year to which the guarantee relates, until they are satisfied in full, and

• (b) the guarantee is enforceable against the parent undertaking by any person to whom the subsidiary company is liable in respect of those liabilities.

Requirements where abbreviated accounts delivered

Special auditor's report where abbreviated accounts delivered

449

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Approval and signing of abbreviated accounts

450

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to file accounts and reports

Default in filing accounts and reports: offences

451

• (1) If the requirements of section 441 (duty to file accounts and reports) are not complied with in relation to a company's accounts and reports for a financial year before the end of the period for filing those accounts and reports, every person who immediately before the end of that period was a director of the company commits an offence.

• (2) It is a defence for a person charged with such an offence to prove that he took all reasonable steps for securing that those requirements would be complied with before the end of that period.

• (3) It is not a defence to prove that the documents in question were not in fact prepared as required by this Part.

• (4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 5 on the standard scaleone-tenth of the greater of £5,000 or level 4 on the standard scale.

Default in filing accounts and reports: court order

452

• (1) If—

• (a) the requirements of section 441 (duty to file accounts and reports) are not complied with in relation to a company's accounts and reports for a financial year before the end of the period for filing those accounts and reports, and

• (b) the directors of the company fail to make good the default within 14 days after the service of a notice on them requiring compliance,

the court may, on the application of any member or creditor of the company or of the registrar, make an order directing the directors (or any of them) to make good the default within such time as may be specified in the order.

• (2) The court's order may provide that all costs (in Scotland, expenses) of and incidental to the application are to be borne by the directors.

Civil penalty for failure to file accounts and reports

453

• (1) Where the requirements of section 441 are not complied with in relation to a company's accounts and reports for a financial year before the end of the period for filing those accounts and reports, the company is liable to a civil penalty.

This is in addition to any liability of the directors under section 451.

• (2) The amount of the penalty shall be determined in accordance with regulations made by the Secretary of State by reference to—

• (a) the length of the period between the end of the period for filing the accounts and reports in question and the day on which the requirements are complied with, and

• (b) whether the company is a private or public company.

• (3) The penalty may be recovered by the registrar and is to be paid into the Consolidated Fund.

• (4) It is not a defence in proceedings under this section to prove that the documents in question were not in fact prepared as required by this Part.

• (5) Regulations under this section having the effect of increasing the penalty payable in any case are subject to affirmative resolution procedure.

Otherwise, the regulations are subject to negative resolution procedure.

Chapter 11 — Revision of defective accounts and reports

Voluntary revision

Voluntary revision of accounts etc

454

• (1) If it appears to the directors of a company that—

• (a) the company's annual accounts,

• (b) the directors' remuneration report or the directors' report, or

• (c) a strategic report of the company,

did not comply with the requirements of this Act ..., they may prepare revised accounts or a revised report or statement.

• (2) Where copies of the previous accounts or report have been sent out to members, delivered to the registrar or (in the case of a public company) laid before the company in general meeting, the revisions must be confined to—

• (a) the correction of those respects in which the previous accounts or report did not comply with the requirements of this Act ..., and

• (b) the making of any necessary consequential alterations.

• (3) The Secretary of State may make provision by regulations as to the application of the provisions of this Act in relation to—

• (a) revised annual accounts,

• (b) a revised directors' remuneration report or directors' report, or

• (c) a revised strategic report of the company.

• (4) The regulations may, in particular—

• (a) make different provision according to whether the previous accounts or report are replaced or are supplemented by a document indicating the corrections to be made;

• (b) make provision with respect to the functions of the company's auditor in relation to the revised accounts or report;

• (c) require the directors to take such steps as may be specified in the regulations where the previous accounts or report have been—

• (i) sent out to members and others under section 423,

• (ii) laid before the company in general meeting, or

• (iii) delivered to the registrar,

or where a strategic report and supplementary material containing information derived from the previous accounts or report have been sent to members under section 426;

• (d) apply the provisions of this Act (including those creating criminal offences) subject to such additions, exceptions and modifications as are specified in the regulations.

• (5) Regulations under this section are subject to negative resolution procedure.

Secretary of State's notice

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

455

• (1) This section applies where—

• (a) copies of a company's annual accounts , strategic report or directors’ report have been sent out under section 423, or

• (b) a copy of a company's annual accounts , strategic report or directors’ report has been delivered to the registrar or (in the case of a public company) laid before the company in general meeting,

and it appears to the Secretary of State that there is, or may be, a question whether the accounts or report comply with the requirements of this Act ....

• (2) The Secretary of State may give notice to the directors of the company indicating the respects in which it appears that such a question arises or may arise.

• (3) The notice must specify a period of not less than one month for the directors to give an explanation of the accounts or report or prepare revised accounts or a revised report.

• (4) If at the end of the specified period, or such longer period as the Secretary of State may allow, it appears to the Secretary of State that the directors have not—

• (a) given a satisfactory explanation of the accounts or report, or

• (b) revised the accounts or report so as to comply with the requirements of this Act ...,

the Secretary of State may apply to the court.

• (5) The provisions of this section apply equally to revised annual accounts , revised strategic reports and revised directors’ reports, in which case they have effect as if the references to revised accounts or reports were references to further revised accounts or reports.

Application to court

Application to court in respect of defective accounts or reports

456

• (1) An application may be made to the court—

• (a) by the Secretary of State, after having complied with section 455, or

• (b) by a person authorised by the Secretary of State for the purposes of this section,

for a declaration (in Scotland, a declarator) that the annual accounts of a company do not comply,or a strategic report or a directors' report does not comply, with the requirements of this Act ... and for an order requiring the directors of the company to prepare revised accounts or a revised report.

• (2) Notice of the application, together with a general statement of the matters at issue in the proceedings, shall be given by the applicant to the registrar for registration.

• (3) If the court orders the preparation of revised accounts, it may give directions as to—

• (a) the auditing of the accounts,

• (b) the revision of any directors' remuneration report, strategic report and supplementary material or, directors' report ..., and

• (c) the taking of steps by the directors to bring the making of the order to the notice of persons likely to rely on the previous accounts,

and such other matters as the court thinks fit.

• (4) If the court orders the preparation of a revised strategic report or directors' report it may give directions as to—

• (a) the review of the report by the auditors,

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) the taking of steps by the directors to bring the making of the order to the notice of persons likely to rely on the previous report, and

• (d) such other matters as the court thinks fit.

• (5) If the court finds that the accounts or report did not comply with the requirements of this Act ...it may order that all or part of—

• (a) the costs (in Scotland, expenses) of and incidental to the application, and

• (b) any reasonable expenses incurred by the company in connection with or in consequence of the preparation of revised accounts or a revised report,

are to be borne by such of the directors as were party to the approval of the defective accounts or report.

For this purpose every director of the company at the time of the approval of the accounts or report shall be taken to have been a party to the approval unless he shows that he took all reasonable steps to prevent that approval.

• (6) Where the court makes an order under subsection (5) it shall have regard to whether the directors party to the approval of the defective accounts or report knew or ought to have known that the accounts or report did not comply with the requirements of this Act ..., and it may exclude one or more directors from the order or order the payment of different amounts by different directors.

• (7) On the conclusion of proceedings on an application under this section, the applicant must send to the registrar for registration a copy of the court order or, as the case may be, give notice to the registrar that the application has failed or been withdrawn.

• (8) The provisions of this section apply equally to revised annual accounts , revised strategic reports and revised directors’ reports, in which case they have effect as if the references to revised accounts or reports were references to further revised accounts or reports.

Other persons authorised to apply to the court

457

• (1) The Secretary of State may by order (an “authorisation order”) authorise for the purposes of section 456 any person appearing to him—

• (a) to have an interest in, and to have satisfactory procedures directed to securing, compliance by companies with the requirements of this Act ... relating to accounts , strategic reports and directors’ reports,

• (b) to have satisfactory procedures for receiving and investigating complaints about companies' annual accounts , strategic reports and directors’ reports, and

• (c) otherwise to be a fit and proper person to be authorised.

• (2) A person may be authorised generally or in respect of particular classes of case, and different persons may be authorised in respect of different classes of case.

• (3) The Secretary of State may refuse to authorise a person if he considers that his authorisation is unnecessary having regard to the fact that there are one or more other persons who have been or are likely to be authorised.

• (4) If the authorised person is an unincorporated association, proceedings brought in, or in connection with, the exercise of any function by the association as an authorised person may be brought by or against the association in the name of a body corporate whose constitution provides for the establishment of the association.

• (5) An authorisation order may contain such requirements or other provisions relating to the exercise of functions by the authorised person as appear to the Secretary of State to be appropriate.

No such order is to be made unless it appears to the Secretary of State that the person would, if authorised, exercise his functions as an authorised person in accordance with the provisions proposed.

• (6) Where authorisation is revoked, the revoking order may make such provision as the Secretary of State thinks fit with respect to pending proceedings.

• (7) An order under this section is subject to negative resolution procedure.

Disclosure of information by tax authorities

458

• (1) The Commissioners for Her Majesty's Revenue and Customs may disclose information to a person authorised under section 457 for the purpose of facilitating—

• (a) the taking of steps by that person to discover whether there are grounds for an application to the court under section 456 (application in respect of defective accounts etc), or

• (b) a decision by the authorised person whether to make such an application.

• (2) This section applies despite any statutory or other restriction on the disclosure of information.

Provided that, in the case of personal data within the meaning of Parts 5 to 7 of the Data Protection Act 2018 (see section 3(2) and (14) of that Act), information is not to be disclosed in contravention of the data protection legislation.

• (3) Information disclosed to an authorised person under this section—

• (a) may not be used except in or in connection with—

• (i) taking steps to discover whether there are grounds for an application to the court under section 456, or

• (ii) deciding whether or not to make such an application,

or in, or in connection with, proceedings on such an application; and

• (b) must not be further disclosed except—

• (i) to the person to whom the information relates, or

• (ii) in, or in connection with, proceedings on any such application to the court.

• (4) A person who contravenes subsection (3) commits an offence unless—

• (a) he did not know, and had no reason to suspect, that the information had been disclosed under this section, or

• (b) he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

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

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);

• (b) on summary conviction—

• (i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);

• (ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).

• (6) Where an offence under this section is committed by a body corporate, every officer of the body who is in default also commits the offence. For this purpose—

• (a) any person who purports to act as director, manager or secretary of the body is treated as an officer of the body, and

• (b) if the body is a company, any shadow director is treated as an officer of the company.

Power of authorised person to require documents etc

Power of authorised person to require documents, information and explanations

459

• (1) This section applies where it appears to a person who is authorised under section 457 that there is, or may be, a question whether a company's annual accounts , strategic report or directors’ report complies comply with the requirements of this Act ....

• (2) The authorised person may require any of the persons mentioned in subsection (3) to produce any document, or to provide him with any information or explanations, that he may reasonably require for the purpose of—

• (a) discovering whether there are grounds for an application to the court under section 456, or

• (b) deciding whether to make such an application.

• (3) Those persons are—

• (a) the company;

• (b) any officer, employee, or auditor of the company;

• (c) any persons who fell within paragraph (b) at a time to which the document or information required by the authorised person relates.

• (4) If a person fails to comply with such a requirement, the authorised person may apply to the court.

• (5) If it appears to the court that the person has failed to comply with a requirement under subsection (2), it may order the person to take such steps as it directs for securing that the documents are produced or the information or explanations are provided.

• (6) A statement made by a person in response to a requirement under subsection (2) or an order under subsection (5) may not be used in evidence against him in any criminal proceedings.

• (7) Nothing in this section compels any person to disclose documents or information in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.

• (8) In this section “document” includes information recorded in any form.

Restrictions on disclosure of information obtained under compulsory powers

460

• (1) This section applies to information (in whatever form) obtained in pursuance of a requirement or order under section 459 (power of authorised person to require documents etc) that relates to the private affairs of an individual or to any particular business.

• (2) No such information may, during the lifetime of that individual or so long as that business continues to be carried on, be disclosed without the consent of that individual or the person for the time being carrying on that business.

• (3) This does not apply—

• (a) to disclosure permitted by section 461 (permitted disclosure of information obtained under compulsory powers), or

• (b) to the disclosure of information that is or has been available to the public from another source.

• (4) A person who discloses information in contravention of this section commits an offence, unless—

• (a) he did not know, and had no reason to suspect, that the information had been disclosed under section 459, or

• (b) he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

• (5) A person guilty of an offence under this section is liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);

• (b) on summary conviction—

• (i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);

• (ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).

• (6) Where an offence under this section is committed by a body corporate, every officer of the body who is in default also commits the offence. For this purpose—

• (a) any person who purports to act as director, manager or secretary of the body is treated as an officer of the body, and

• (b) if the body is a company, any shadow director is treated as an officer of the company.

Permitted disclosure of information obtained under compulsory powers

461

• (1) The prohibition in section 460 of the disclosure of information obtained in pursuance of a requirement or order under section 459 (power of authorised person to require documents etc) that relates to the private affairs of an individual or to any particular business has effect subject to the following exceptions.

• (2) It does not apply to the disclosure of information for the purpose of facilitating the carrying out by the authorised person of his functions under section 456.

• (3) It does not apply to disclosure to—

• (a) the Secretary of State,

• (b) the Department of Enterprise, Trade and Investment for Northern Ireland,

• (c) the Treasury,

• (d) the Bank of England,

• (e) the Financial Conduct Authority,

• (ea) the Prudential Regulation Authority, or

• (f) the Commissioners for Her Majesty's Revenue and Customs.

• (4) It does not apply to disclosure—

• (a) for the purpose of assisting the Financial Reporting Council Limited to exercise it functions under Part 42 of this Act;

• (aa) for the purpose of assisting the competent authority to exercise its functions under the Statutory Auditors and Third Country Auditors Regulations 2016 and under the Audit Regulation;

• (b) with a view to the institution of, or otherwise for the purposes of, disciplinary proceedings relating to the performance by an accountant or auditor of his professional duties;

• (c) for the purpose of enabling or assisting the Secretary of State or the Treasury to exercise any of their functions under any of the following—

• (i) the Companies Acts,

• (ii) Part 5 of the Criminal Justice Act 1993 (c. 36) (insider dealing),

• (iii) the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)),

• (iv) the Company Directors Disqualification Act 1986 (c. 46) or the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4)),

• (v) the Financial Services and Markets Act 2000 (c. 8);

• (d) for the purpose of enabling or assisting the Department of Enterprise, Trade and Investment for Northern Ireland to exercise any powers conferred on it by the enactments relating to companies, directors' disqualification or insolvency;

• (e) for the purpose of enabling or assisting the Bank of England to exercise its functions;

• (f) for the purpose of enabling or assisting the Commissioners for Her Majesty's Revenue and Customs to exercise their functions;

• (g) for the purpose of enabling or assisting the Financial Conduct Authority or the Prudential Regulation Authority to exercise its functions under any of the following—

• (i) the legislation relating to friendly societies ...,

• (ia) the Credit Unions Act 1979,

• (ii) the Building Societies Act 1986 (c. 53),

• (iii) Part 7 of the Companies Act 1989 (c. 40),

• (iv) the Financial Services and Markets Act 2000;

• (v) the Co-operative and Community Benefit Societies Act 2014; or

• (h) in pursuance of any assimilated obligation.

• (5) It does not apply to disclosure to a body exercising functions of a public nature under legislation in any country or territory outside the United Kingdom that appear to the authorised person to be similar to his functions under section 456 for the purpose of enabling or assisting that body to exercise those functions.

• (6) In determining whether to disclose information to a body in accordance with subsection (5), the authorised person must have regard to the following considerations—

• (a) whether the use which the body is likely to make of the information is sufficiently important to justify making the disclosure;

• (b) whether the body has adequate arrangements to prevent the information from being used or further disclosed other than—

• (i) for the purposes of carrying out the functions mentioned in that subsection, or

• (ii) for other purposes substantially similar to those for which information disclosed to the authorised person could be used or further disclosed.

• (7) Nothing in this section authorises the making of a disclosure in contravention of the data protection legislation.

Power to amend categories of permitted disclosure

462

• (1) The Secretary of State may by order amend section 461(3), (4) and (5).

• (2) An order under this section must not—

• (a) amend subsection (3) of that section (UK public authorities) by specifying a person unless the person exercises functions of a public nature (whether or not he exercises any other function);

• (b) amend subsection (4) of that section (purposes for which disclosure permitted) by adding or modifying a description of disclosure unless the purpose for which the disclosure is permitted is likely to facilitate the exercise of a function of a public nature;

• (c) amend subsection (5) of that section (overseas regulatory authorities) so as to have the effect of permitting disclosures to be made to a body other than one that exercises functions of a public nature in a country or territory outside the United Kingdom.

• (3) An order under this section is subject to negative resolution procedure.

Chapter 12 — Supplementary provisions

Liability for false or misleading statements in reports and statements

Liability for false or misleading statements in reports and statements

463

• (1) The reports and statements to which this section applies are—

• (za) the strategic report,

• (a) the directors' report,

• (b) the directors' remuneration report, and

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) any separate corporate governance statement.

• (2) A director of a company is liable to compensate the company for any loss suffered by it as a result of—

• (a) any untrue or misleading statement in a report or statement to which this section applies, or

• (b) the omission from a report or statement to which this section applies of anything required to be included in it.

• (3) He is so liable only if—

• (a) he knew the statement to be untrue or misleading or was reckless as to whether it was untrue or misleading, or

• (b) he knew the omission to be dishonest concealment of a material fact.

• (4) No person shall be subject to any liability to a person other than the company resulting from reliance, by that person or another, on information in a report or statement to which this section applies.

• (5) The reference in subsection (4) to a person being subject to a liability includes a reference to another person being entitled as against him to be granted any civil remedy or to rescind or repudiate an agreement.

• (6) This section does not affect—

• (a) liability for a civil penalty, or

• (b) liability for a criminal offence.

Accounting and reporting standards

Accounting standards

464

• (1) In this Part “accounting standards” means statements of standard accounting practice issued by such body or bodies as may be prescribed by regulations.

• (2) References in this Part to accounting standards applicable to a company's annual accounts are to such standards as are, in accordance with their terms, relevant to the company's circumstances and to the accounts.

• (3) Regulations under this section may contain such transitional and other supplementary and incidental provisions as appear to the Secretary of State to be appropriate.

Companies qualifying as medium-sized

Companies qualifying as medium-sized: general

465

• (1) A company qualifies as medium-sized in relation to its first financial year if the qualifying conditions are met in that year.

• (2) A company qualifies as medium-sized in relation to a subsequent financial year—

• (a) if the qualifying conditions are met in that year and the preceding financial year;

• (b) if the qualifying conditions are met in that year and the company qualified as medium-sized in relation to the preceding financial year;

• (c) if the qualifying conditions were met in the preceding financial year and the company qualified as medium-sized in relation to that year.

• (3) The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements—

1. Turnover	Not more than £54 million
2. Balance sheet total	Not more than £27 million
3. Number of employees	Not more than 250

• (4) For a period that is a company's financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted.

• (5) The balance sheet total means the aggregate of the amounts shown as assets in the company's balance sheet.

• (6) The number of employees means the average number of persons employed by the company in the year, determined as follows—

• (a) find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),

• (b) add together the monthly totals, and

• (c) divide by the number of months in the financial year.

• (7) This section is subject to section 466 (companies qualifying as medium-sized: parent companies).

Companies qualifying as medium-sized: parent companies

466

• (1) A parent company qualifies as a medium-sized company in relation to a financial year only if the group headed by it qualifies as a medium-sized group.

• (2) A group qualifies as medium-sized in relation to the parent company's first financial year if the qualifying conditions are met in that year.

• (3) A group qualifies as medium-sized in relation to a subsequent financial year of the parent company—

• (a) if the qualifying conditions are met in that year and the preceding financial year;

• (b) if the qualifying conditions are met in that year and the group qualified as medium-sized in relation to the preceding financial year;

• (c) if the qualifying conditions were met in the preceding financial year and the group qualified as medium-sized in relation to that year.

• (4) The qualifying conditions are met by a group in a year in which it satisfies two or more of the following requirements—

1. Aggregate turnover	Not more than £54 million net (or £64 million gross)
2. Aggregate balance sheet total	Not more than £27 million net (or £32 million gross)
3. Aggregate number of employees	Not more than 250

• (5) The aggregate figures are ascertained by aggregating the relevant figures determined in accordance with section 465 for each member of the group.

• (6) In relation to the aggregate figures for turnover and balance sheet total—

• “net” means after any set-offs and other adjustments made to eliminate group transactions—in the case of Companies Act accounts, in accordance with regulations under section 404,in the case of IAS accounts, in accordance with UK-adopted international accounting standards; and

• “gross” means without those set-offs and other adjustments.

A company may satisfy any relevant requirement on the basis of either the net or the gross figure.

• (7) The figures for each subsidiary undertaking shall be those included in its individual accounts for the relevant financial year, that is—

• (a) if its financial year ends with that of the parent company, that financial year, and

• (b) if not, its financial year ending last before the end of the financial year of the parent company.

If those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures shall be taken.

Companies excluded from being treated as medium-sized

467

• (1) A company is not entitled to take advantage of any of the provisions of this Part relating to companies qualifying as medium-sized if it was at any time within the financial year in question—

• (a) a public company,

• (b) a company that—

• (i) has permission under Part 4A of the Financial Services and Markets Act 2000 (c. 8) to carry on a regulated activity, or

• (ii) carries on insurance market activity, or

• (iii) is a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 (interpretation of Part 1), or

• (ba) an e-money issuer, or

• (c) a member of an ineligible group.

• (2) A group is ineligible if any of its members is—

• (a) a traded company,

• (b) a body corporate (other than a company) whose shares are admitted to trading on a UK regulated market,

• (c) a person (other than a small company) who has permission under Part 4A of the Financial Services and Markets Act 2000 to carry on a regulated activity,

• (ca) an e-money issuer,

• (d) a small company that is an authorised insurance company, a banking company, . . . a MiFID investment firm or a UCITS management company, or

• (e) a person who carries on insurance market activity or

• (f) a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 (interpretation of Part 1).

• (3) A company is a small company for the purposes of subsection (2) if it qualified as small in relation to its last financial year ending on or before the end of the financial year in question.

• (4) This section does not prevent a company from taking advantage of section 417(7) (business review: non-financial information) by reason only of its having been a member of an ineligible group at any time within the financial year in question.

General power to make further provision about accounts and reports

General power to make further provision about accounts and reports

468

• (1) The Secretary of State may make provision by regulations about—

• (a) the accounts and reports that companies are required to prepare;

• (b) the categories of companies required to prepare accounts and reports of any description;

• (c) the form and content of the accounts and reports that companies are required to prepare;

• (d) the obligations of companies and others as regards—

• (i) the approval of accounts and reports,

• (ii) the sending of accounts and reports to members and others,

• (iii) the laying of accounts and reports before the company in general meeting,

• (iv) the delivery of copies of accounts and reports to the registrar, and

• (v) the publication of accounts and reports.

• (2) The regulations may amend this Part by adding, altering or repealing provisions.

• (3) But they must not amend (other than consequentially)—

• (a) section 393 (accounts to give true and fair view), or

• (b) the provisions of Chapter 11 (revision of defective accounts and reports).

• (4) The regulations may create criminal offences in cases corresponding to those in which an offence is created by an existing provision of this Part.

The maximum penalty for any such offence may not be greater than is provided in relation to an offence under the existing provision.

• (5) The regulations may provide for civil penalties in circumstances corresponding to those within section 453(1) (civil penalty for failure to file accounts and reports).

The provisions of section 453(2) to (5) apply in relation to any such penalty.

Use or disclosure of profit and loss accounts for certain companies

468A

• (1) The Secretary of State may by regulations make provision requiring the registrar, on application or otherwise—

• (a) not to make available for public inspection profit and loss accounts, or parts of them, delivered to the registrar under—

• section 443A (micro-entities), or

• section 444 (other small companies);

• (b) to refrain from disclosing such accounts, or parts of them, except in specified circumstances.

• (2) Regulations under subsection (1) which provide for the making of an application may make provision as to—

• (a) who may make an application;

• (b) the grounds on which an application may be made;

• (c) the information to be included in and documents to accompany an application;

• (d) the notice to be given of an application and of its outcome;

• (e) how an application is to be determined;

• (f) the duration of, and procedures for revoking, any restrictions on the making of information available for public inspection or its disclosure.

• (3) Provision under subsection (2)(e) or (f) may in particular provide for a question to be referred to a person other than the registrar for the purposes of determining the application or revoking the restrictions.

• (4) The circumstances that may be specified under subsection (1)(b) by way of an exception to a restriction on disclosure include circumstances where the court has made an order, in accordance with the regulations, authorising disclosure.

• (5) Regulations under subsection (1)(b) may not require the registrar to refrain from disclosing information under section 1110F (general powers of disclosure by the registrar).

• (6) Regulations under this section may in particular confer a discretion on the registrar.

• (7) Regulations under this section are subject to affirmative resolution procedure.

Other supplementary provisions

Preparation and filing of accounts in euros

469

• (1) The amounts set out in the annual accounts of a company may also be shown in the same accounts translated into euros.

• (2) When complying with section 441 (duty to file accounts and reports), the directors of a company may deliver to the registrar an additional copy of the company's annual accounts in which the amounts have been translated into euros.

• (3) In both cases—

• (a) the amounts must have been translated at the exchange rate prevailing on the date to which the balance sheet is made up, and

• (b) that rate must be disclosed in the notes to the accounts.

• (3A) Subsection (3)(b) does not apply to the Companies Act individual accounts of a company for a financial year in which the company qualifies as a micro-entity (see sections 384A and 384B).

• (4) For the purposes of sections 434 and 435 (requirements in connection with published accounts) any additional copy of the company's annual accounts delivered to the registrar under subsection (2) above shall be treated as statutory accounts of the company.

In the case of such a copy, references in those sections to the auditor's report on the company's annual accounts shall be read as references to the auditor's report on the annual accounts of which it is a copy.

Power to apply provisions to banking partnerships

470

• (1) The Secretary of State may by regulations apply to banking partnerships, subject to such exceptions, adaptations and modifications as he considers appropriate, the provisions of this Part (and of regulations made under this Part) applying to banking companies.

• (2) A “banking partnership” means a partnership which has permission under Part 4A of the Financial Services and Markets Act 2000 (c. 8).

But a partnership is not a banking partnership if it has permission to accept deposits only for the purpose of carrying on another regulated activity in accordance with that permission.

• (3) Expressions used in this section that are also used in the provisions regulating activities under the Financial Services and Markets Act 2000 have the same meaning here as they do in those provisions.

See section 22 of that Act, orders made under that section and Schedule 2 to that Act.

• (4) Regulations under this section are subject to affirmative resolution procedure.

Meaning of “annual accounts” and related expressions

471

• (1) In this Part a company's “annual accounts”, in relation to a financial year, means—

• (a) any individual accounts prepared by the company for that year (see section 394), and

• (b) any group accounts prepared by the company for that year (see section 399).

This is subject to section 408 (option to omit individual profit and loss account from annual accounts where information given in notes to the individual balance sheet).

• (2) In the case of an unquoted company, its “annual accounts and reports” for a financial year are—

• (a) its annual accounts,

• (aa) the strategic report (if any),

• (ab) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) the directors' report, and

• (c) the auditor's report on those accounts, the strategic report (where this is covered by the auditor’s report) and the directors' report (unless the company is exempt from audit).

• (3) In the case of a quoted company, its “annual accounts and reports” for a financial year are—

• (a) its annual accounts,

• (b) the directors' remuneration report,

• (ba) the strategic report (if any),

• (c) the directors' report, and

• (d) the auditor's report on those accounts, on the auditable part of the directors' remuneration report, on the strategic report (where this is covered by the auditor’s report) and on the directors' report.

Notes to the accounts

472

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1A) ... In the case of a company which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B), the notes to the accounts for that year required by section 413 of this Act and regulation 5A of, and paragraph 57 of Part 3 of Schedule 1 to, the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 ( S.I. 2008/409 ) must be included at the foot of the balance sheet.

• (2) References in this Part to a company's annual accounts, or to a balance sheet or profit and loss account, include notes to the accounts giving information which is required by any provision of this Act or UK-adopted international accounting standards, and required or allowed by any such provision to be given in a note to company accounts.

Meaning of “corporate governance statement” etc

472A

• (1) In this Part “ corporate governance statement ” means the statement required by rules 7.2.1 to 7.2.11 in the Disclosure Rules and Transparency Rules sourcebook made by the Financial Conduct Authority .

• (2) Those rules were inserted by Annex C of the Disclosure Rules and Transparency Rules Sourcebook (Corporate Governance Rules) Instrument 2008 made by the Authority on 26th June 2008 (FSA 2008/32).

• (3) A “separate” corporate governance statement means one that is not included in the directors' report.

Parliamentary procedure for certain regulations under this Part

473

• (1) This section applies to regulations under the following provisions of this Part—

• section 396 (Companies Act individual accounts),

• section 404 (Companies Act group accounts),

• section 409 (information about related undertakings),

• section 412 (information about directors' benefits: remuneration, pensions and compensation for loss of office),

• section 416 (contents of directors' report: general),

• section 421 (contents of directors' remuneration report),

• section 444 (filing obligations of companies subject to small companies regime),

• section 445 (filing obligations of medium-sized companies),

• section 468 (general power to make further provision about accounts and reports).

• (2) Any such regulations may make consequential amendments or repeals in other provisions of this Act, or in other enactments.

• (3) Regulations that—

• (a) restrict the classes of company which have the benefit of any exemption, exception or special provision,

• (b) require additional matter to be included in a document of any class, or

• (c) otherwise render the requirements of this Part more onerous,

are subject to affirmative resolution procedure.

• (4) Otherwise, the regulations are subject to negative resolution procedure.

Minor definitions

474

• (1) In this Part—

• “e-money issuer” means— an electronic money institution, within the meaning of the Electronic Money Regulations 2011 (S.I. 2011/99), or a person who has permission under Part 4A of the Financial Services and Markets Act 2000 (c. 8) to carry on the activity of issuing electronic money within the meaning of article 9B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544);

• “group” means a parent undertaking and its subsidiary undertakings;

• ...

• “included in the consolidation”, in relation to group accounts, or “included in consolidated group accounts”, means that the undertaking is included in the accounts by the method of full (and not proportional) consolidation, and references to an undertaking excluded from consolidation shall be construed accordingly;

• “international accounting standards” means the international accounting standards, within the meaning of Article 2 of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards;

• “micro-entity minimum accounting item” means an item of information required by this Part or by regulations under this Part to be contained in the Companies Act individual accounts of a company for a financial year in relation to which it qualifies as a micro-entity (see sections 384A and 384B);

• “micro-entity provisions” means any provisions of this Part, Part 16 or regulations under this Part relating specifically to the individual accounts of a company which qualifies as a micro-entity;

• ...

• “MiFID investment firm” means an investment firm within the meaning of Article 2.1A of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments, other than— a company which is exempted from the definition of “investment firm” by Schedule 3 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), anda company which is an exempt investment firm as defined by regulation 8 (meaning of “exempt investment firm”) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017(S.I. 2017/701);

• “profit and loss account”, in relation to a company that prepares IAS accounts, includes an income statement or other equivalent financial statement required to be prepared by UK-adopted international accounting standards;

• “qualified”, in relation to an auditor’s report, means that the report does not state the auditor’s unqualified opinion that the accounts have been properly prepared in accordance with this Act;

• “regulated activity” has the meaning given in section 22 of the Financial Services and Markets Act 2000, except that it does not include activities of the kind specified in any of the following provisions of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544)—article 25A (arranging regulated mortgage contracts),article 25B (arranging regulated home reversion plans),article 25C (arranging regulated home purchase plans),article 25E (arranging regulated sale and rent back agreements),article 39A (assisting administration and performance of a contract of insurance),article 53A (advising on regulated mortgage contracts),article 53B (advising on regulated home reversion plans),article 53C (advising on regulated home purchase plans),article 53D (advising on regulated sale and rent back agreements),article 21 (dealing as agent), article 25 (arranging deals in investments) , article 25DB (operating an electronic system in relation to public offers of relevant securities) , article 53 (advising on investments) or article 55A (providing targeted support) where the activity concerns relevant investments that are not contractually based investments (within the meaning of article 3 of that Order), orarticle 64 (agreeing to carry on a regulated activity of the kind mentioned in paragraphs (a) to (h));

• “traded company” , unless the context otherwise requires, means a company any of whose transferable securities are admitted to trading on a UK regulated market;

• “turnover”, in relation to a company, means the amounts derived from the provision of goods and services ..., after deduction of—trade discounts,value added tax, andany other taxes based on the amounts so derived;

• “UCITS management company” has the meaning given by the Glossary forming part of the Handbook made by the Financial Conduct Authority under the Financial Services and Markets Act 2000 (c. 8);

• “UK-adopted international accounting standards” means the international accounting standards which are adopted for use within the United Kingdom by virtue of Chapter 2 or 3 of Part 2 of the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019.

• (2) In the case of an undertaking not trading for profit, any reference in this Part to a profit and loss account is to an income and expenditure account.

References to profit and loss and, in relation to group accounts, to a consolidated profit and loss account shall be construed accordingly.

Part 16 — Audit

Chapter 1 — Requirement for audited accounts

Requirement for audited accounts

Requirement for audited accounts

475

• (1) A company's annual accounts for a financial year must be audited in accordance with this Part unless the company—

• (a) is exempt from audit under—

• section 477 (small companies),

• section 479A (subsidiary companies) or

• section 480 (dormant companies);

or

• (b) is exempt from the requirements of this Part under section 482 (non-profit-making companies subject to public sector audit).

• (2) A company is not entitled to any such exemption unless its balance sheet contains a statement by the directors to that effect.

• (2) A company is not entitled to any such exemption unless its balance sheet contains a statement by the directors—

• (a) identifying the exemption in question, and

• (b) confirming that the company qualifies for the exemption.

• (3) A company is not entitled to exemption under any of the provisions mentioned in subsection (1)(a) unless its balance sheet contains a statement by the directors to the effect that—

• (a) the members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476, and

• (b) the directors acknowledge their responsibilities for complying with the requirements of this Act with respect to accounting records and the preparation of accounts.

• (4) The statement required by subsection (2) or (3) must appear on the balance sheet above the signature required by section 414.

Right of members to require audit

476

• (1) The members of a company that would otherwise be entitled to exemption from audit under any of the provisions mentioned in section 475(1)(a) may by notice under this section require it to obtain an audit of its accounts for a financial year.

• (2) The notice must be given by—

• (a) members representing not less in total than 10% in nominal value of the company's issued share capital, or any class of it, or

• (b) if the company does not have a share capital, not less than 10% in number of the members of the company.

• (3) The notice may not be given before the financial year to which it relates and must be given not later than one month before the end of that year.

Exemption from audit: small companies

Small companies: conditions for exemption from audit

477

• (1) A company that qualifies as a small company in relation to a financial year is exempt from the requirements of this Act relating to the audit of accounts for that year.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) For the purposes of this section—

• (a) whether a company qualifies as a small company shall be determined in accordance with section 382(1) to (6), . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) This section has effect subject to—

• section 475(2) and (3) (requirements as to statements to be contained in balance sheet),

• section 476 (right of members to require audit),

• section 478 (companies excluded from small companies exemption), and

• section 479 (availability of small companies exemption in case of group company).

Companies excluded from small companies exemption

478

A company is not entitled to the exemption conferred by section 477 (small companies) if it was at any time within the financial year in question—

• (a) a public company,

• (b) a company that—

• (i) is an authorised insurance company, a banking company, an e-money issuer, a MiFID investment firm or a UCITS management company, or

• (ii) carries on insurance market activity, or

• (iii) is a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 (interpretation of Part 1), or

• (c) a special register body as defined in section 117(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52) or an employers' association as defined in section 122 of that Act or Article 4 of the Industrial Relations (Northern Ireland) Order 1992 (S.I. 1992/807 (N.I. 5)).

Availability of small companies exemption in case of group company

479

• (1) A company is not entitled to the exemption conferred by section 477 (small companies) in respect of a financial year during any part of which it was a group company unless—

• (a) the group—

• (i) qualifies as a small group in relation to that financial year, and

• (ii) was not at any time in that year an ineligible group, or

• (b) subsection (3) applies.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) A company is not excluded by subsection (1) if, throughout the whole of the period or periods during the financial year when it was a group company, it was both a subsidiary undertaking and dormant.

• (4) In this section—

• (a) “group company” means a company that is a parent company or a subsidiary undertaking, and

• (b) “the group”, in relation to a group company, means that company together with all its associated undertakings.

For this purpose undertakings are associated if one is a subsidiary undertaking of the other or both are subsidiary undertakings of a third undertaking.

• (5) For the purposes of this section—

• (a) whether a group qualifies as small shall be determined in accordance with section 383 (companies qualifying as small: parent companies);

• (b) “ineligible group” has the meaning given by section 384(2) and (3);

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) The provisions mentioned in subsection (5) apply for the purposes of this section as if all the bodies corporate in the group were companies.

Exemption from audit: qualifying subsidiaries

Subsidiary companies: conditions for exemption from audit

479A

• (1) A company is exempt from the requirements of this Act relating to the audit of individual accounts for a financial year if—

• (a) it is itself a subsidiary undertaking, and

• (b) its parent undertaking is established under the law of any part of the United Kingdom.

• (2) Exemption is conditional upon compliance with all of the following conditions—

• (a) all members of the company must agree to the exemption in respect of the financial year in question,

• (b) the parent undertaking must give a guarantee under section 479C in respect of that year,

• (c) the company must be included in the consolidated accounts drawn up for that year or to an earlier date in that year by the parent undertaking in accordance with—

• (i) if the undertaking is a company, the requirements of Part 15 of this Act, or, if the undertaking is not a company, the legal requirements which apply to the drawing up of consolidated accounts for that undertaking, or

• (ii) UK-adopted international accounting standards (within the meaning given by section 474(1)),

• (d) the parent undertaking must disclose in the notes to the consolidated accounts that the company is exempt from the requirements of this Act relating to the audit of individual accounts by virtue of this section, and

• (e) the directors of the company must deliver to the registrar on or before the date that they file the accounts for that year—

• (i) a written notice of the agreement referred to in subsection (2)(a),

• (ii) the statement referred to in section 479C(1),

• (iii) a copy of the consolidated accounts referred to in subsection (2)(c),

• (iv) a copy of the auditor's report on those accounts, and

• (v) a copy of the consolidated annual report drawn up by the parent undertaking.

• (3) This section has effect subject to—

• section 475(2) and (3) (requirements as to statements contained in balance sheet), and

• section 476 (right of members to require audit).

Companies excluded from the subsidiary companies audit exemption

479B

A company is not entitled to the exemption conferred by section 479A (subsidiary companies) if it was at any time within the financial year in question—

• (a) a traded company as defined in section 474(1),

• (b) a company that—

• (i) is an authorised insurance company, a banking company, an e-money issuer, a MiFID investment firm or a UCITS management company, or

• (ii) carries on insurance market activity, or

• (iii) is a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 (interpretation of Part 1), or

• (c) a special register body as defined in section 117(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (c 52) or an employers' association as defined in section 122 of that Act or Article 4 of the Industrial Relations (Northern Ireland) Order 1992 (S.I. 1992/807) (NI 5).

Subsidiary companies audit exemption: parent undertaking declaration of guarantee

479C

• (1) A guarantee is given by a parent undertaking under this section when the directors of the subsidiary company deliver to the registrar a statement by the parent undertaking that it guarantees the subsidiary company under this section.

• (2) The statement under subsection (1) must be authenticated by the parent undertaking and must specify—

• (a) the name of the parent undertaking,

• (b) the registered number (if any) of the parent undertaking,

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) the name and registered number of the subsidiary company in respect of which the guarantee is being given,

• (e) the date of the statement, and

• (f) the financial year to which the guarantee relates.

• (3) A guarantee given under this section has the effect that—

• (a) the parent undertaking guarantees all outstanding liabilities to which the subsidiary company is subject at the end of the financial year to which the guarantee relates, until they are satisfied in full, and