The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008

(458) (1) The Commissioners for Her Majesty's Revenue and Customs may disclose information to the Financial Reporting Council Limited for the purpose of facilitating— (a) the taking of steps by the Financial Reporting Council Limited to discover whether there are grounds for an application to the court under section 456 (application in respect of defective accounts, strategic report or energy and carbon report etc), or (b) a decision by the Financial Reporting Council Limited 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 the Data Protection Act 1998 (c.29), information is not to be disclosed in contravention of that Act. (3) Information disclosed to the Financial Reporting Council Limited 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. (459) (1) This section applies where it appears to the Financial Reporting Council Limited that there is, or may be, a question whether an LLP's annual accounts , strategic report or energy and carbon report comply with the requirements of this Act. (2) The Financial Reporting Council Limited 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 LLP; (b) any member, employee, or auditor of the LLP; (c) any persons who fell within paragraph (b) at a time to which the document or information required by the Financial Reporting Council Limited relates. (4) If a person fails to comply with such a requirement, the Financial Reporting Council Limited 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. (460) (1) This section applies to information (in whatever form) obtained in pursuance of a requirement or order under section 459 (power of Financial Reporting Council Limited 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. (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 Financial Reporting Council Limited 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 Financial Reporting Council Limited of its 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) Financial Conduct Authority, (ea) 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 body known as the Professional Oversight Board established under the articles of association of the Financial Reporting Council Limited (registered number 02486368) to exercise its functions under Part 42 of this Act; (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 when acting otherwise than in its capacity as the Prudential Regulation Authority; (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 legislation relating to a society, other than a society registered as a credit union, which is— (aa) a registered society within the meaning given by section 1(1) of the Co-operative and Community Benefit Societies Act 2014, or (ab) a society registered or deemed to be registered under the Industrial and Provident Societies Act (Northern Ireland) 1969, (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; 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 Financial Reporting Council Limited to be similar to its 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 Financial Reporting Council Limited 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 Financial Reporting Council Limited could be used or further disclosed. (7) Nothing in this section authorises the making of a disclosure in contravention of the Data Protection Act 1998 (c.29).

PART 9 — ACCOUNTS AND REPORTS: SUPPLEMENTARY PROVISIONS

Accounting standards

25

Section 464 applies to LLPs, modified so that it reads as follows—

(464) (1) In this Part “accounting standards” means statements of standard accounting practice issued by the Financial Reporting Council Limited. (2) References in this Part to accounting standards applicable to an LLP's annual accounts are to such standards as are, in accordance with their terms, relevant to the LLP's circumstances and to the accounts

Medium-sized LLPs

26

Sections 465 to 467 apply to LLPs, modified so that they read as follows—

(465) (1) An LLP qualifies as medium-sized in relation to its first financial year if the qualifying conditions are met in that year. (2) An LLP 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 LLP 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 LLP qualified as medium-sized in relation to that year. (3) The qualifying conditions are met by an LLP in a year in which it satisfies two or more of the following requirements—

(4) For a period that is an LLP'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 LLP's balance sheet. (6) The number of employees means the average number of persons employed by the LLP 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 LLP 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 (LLPs qualifying as medium-sized: parent LLPs). (466) (1) A parent LLP qualifies as a medium-sized LLP 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 LLP'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 LLP— (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—

(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— 1. in the case of non-IAS accounts, in accordance with Schedule 3 to the Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008 (S.I. 2008/1913), 2. in the case of IAS accounts, in accordance with UK-adopted international accounting standards; and - “gross” means without those set-offs and other adjustments. - An LLP 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 LLP, that financial year, and (b) if not, its financial year ending last before the end of the financial year of the parent LLP. If those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures shall be taken. (467) (1) An LLP is not entitled to take advantage of any of the provisions of this Part relating to LLPs qualifying as medium-sized if it was at any time within the financial year in question— (a) a traded LLP, (b) an LLP that— (i) has permission under Part 4 of the Financial Services and Markets Act 2000 (c.8) to carry on a regulated activity, or (ii) carries on insurance market activity, (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), (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 or small LLP) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity, (ca) an e-money issuer, (d) a small company or small LLP that is an authorised insurance company, a banking company or banking LLP, ... 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) An LLP is a small LLP 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.

General power to make further provision about accounts

27

Section 468 applies to LLPs, modified so that it reads as follows—

(468) (1) The Secretary of State may make provision by regulations about— (a) the accounts that LLPs are required to prepare; (b) the categories of LLPs required to prepare accounts of any description; (c) the form and content of the accounts that LLPs are required to prepare; (d) the obligations of LLPs and others as regards— (i) the approval of accounts, (ii) the sending of accounts to members and others, (iii) the delivery of copies of accounts to the registrar, and (iv) the publication of accounts. (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(3) and (4) apply in relation to any such penalty.

Other supplementary provisions

28

Section 469 applies to LLPs, modified so that it reads as follows—

(469) (1) The amounts set out in the annual accounts of an LLP may also be shown in the same accounts translated into euros. (2) When complying with section 441 (duty to file accounts and auditor's report), the designated members of an LLP may deliver to the registrar an additional copy of the LLP'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 non-IAS individual accounts of an LLP for a financial year in which the LLP 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 LLP's annual accounts delivered to the registrar under subsection (2) above shall be treated as statutory accounts of the LLP. In the case of such a copy, references in those sections to the auditor's report on the LLP's annual accounts shall be read as references to the auditor's report on the annual accounts of which it is a copy.

Meaning of “annual accounts”

29

Section 471 applies to LLPs, modified so that it reads as follows—

(471) (1) In this Part an LLP's “annual accounts”, in relation to a financial year, means— (a) any individual accounts prepared by the LLP for that year (see section 394), and (b) any group accounts prepared by the LLP 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 this Part an LLP’s “annual accounts and reports” for a financial year are— (a) its annual accounts, (b) the strategic report (if any), (c) the energy and carbon report (if any), (d) the auditor’s report on those accounts and the strategic report (where this is covered by the auditor’s report), unless the LLP is exempt from audit.

Notes to the accounts

30

Section 472 applies to LLPs, modified so that it reads as follows—

(472) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1A) In the case of an LLP 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 regulation 5A of, and paragraph 55 of Part 3 of Schedule 1 to, the Small Limited Liability Partnerships (Accounts) Regulations 2008 (S.I. 2008/1912) must be included at the foot of the balance sheet. (2) References in this Part to an LLP'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 LLP accounts.

Parliamentary procedure for regulations under section 468

31

Section 473 applies to LLPs, modified so that it reads as follows—

(473) (1) This section applies to regulations under section 468 (general power to make further provision about accounts). (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 LLP 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

32

Section 474 applies to LLPs, modified so that it reads as follows—

(474) (1) In this Part— - “authorised insurance company” means a person (whether incorporated or not) who has permission under Part 4 of the Financial Services and Markets Act 2000 (c.8) to effect or carry out contracts of insurance, but does not include a friendly society within the meaning of the Friendly Societies Act 1992 (c.40); - “banking company” means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits, other than— 1. a person who is not a company, and 2. a person who has such permission only for the purpose of carrying on another regulated activity in accordance with permission under that Part; - “banking LLP” means an LLP which has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits (but does not include such an LLP which has permission to accept deposits only for the purpose of carrying on another regulated activity in accordance with that permission); - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - “e-money issuer” means a person who is registered as an authorised electronic money institution or a small electronic money institution within the meaning of the Electronic Money Regulations 2011 or who has permission under Part 4 of the Financial Services and Markets Act 2000 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); - “Financial Reporting Review Panel” means the body known as the Financial Reporting Review Panel established under the articles of association of the Financial Reporting Council Limited (registered number 02486368); - “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; - “insurance company” means— 1. an authorised insurance company, or 2. any other person (whether incorporated or not) who— 1. carries on insurance market activity (within the meaning of section 316(3) of the Financial Services and Markets Act 2000), or 2. may effect or carry out contracts of insurance under which the benefits provided by that person are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle, - “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; - “LLP” means a limited liability partnership registered under the Limited Liability Partnerships Act 2000; - “micro-entity minimum accounting item” means an item of information required by this Part or by the Small Limited Liability Partnerships (Accounts) Regulations 2008 (S.I. 2008/1912) to be contained in the non-IAS individual accounts of an LLP 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 the Small Limited Liability Partnerships (Accounts) Regulations 2008 (S.I. 2008/1912) relating specifically to the individual accounts of an LLP 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 21 April 2004 on markets in financial instruments other than— 1. an LLP which is exempted from the definition of “investment firm” by Schedule 3 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, 2. an LLP which is an exempt investment firm within the meaning of regulation 4A(3) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), and 3. any other LLP which fulfils all the requirements set out in regulation 4C(3) of those Regulations; - “profit and loss account”, in relation to an LLP 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)— 1. article 25A (arranging regulated mortgage contracts), 2. article 25B (arranging regulated home reversion plans), 3. article 25C (arranging regulated home purchase plans), 4. article 39A (assisting administration and performance of a contract of insurance), 5. article 53A (advising on regulated mortgage contracts), 6. article 53B (advising on regulated home reversion plans), 7. article 53C (advising on regulated home purchase plans), 8. article 21 (dealing as agent), article 25 (arranging deals in investments) or article 53 (advising on investments) where the activity concerns relevant investments that are not contractually based investments (within the meaning of article 3 of that Order), or 9. article 64 (agreeing to carry on a regulated activity of the kind mentioned in paragraphs (a) to (h)); - “traded company” means a company any of whose transferable securities are admitted to trading on a UK regulated market; - “traded LLP” means an LLP any of whose transferable securities are admitted to trading on a UK regulated market; - “turnover”, in relation to an LLP, means the amounts derived from the provision of goods and services..., after deduction of— 1. trade discounts, 2. value added tax, and 3. any other taxes based on the amounts so derived; - “UCITS management company” has the meaning given by the Glossary to the Handbook made by the Financial Conduct Authority under the Financial Services and Markets Act 2000; - “UK-adopted international accounting standards” means the international accounting standards which are adopted for use within the United Kingdom by virtue of the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019. - “wholly-owned subsidiary” has the meaning given in section 1159(2) of this Act. (2) In subsection (1)— (a) the definitions of “banking company” and “banking LLP”, and (b) references in the definition of “insurance company” to contracts of insurance and to the effecting or carrying out of such contracts, must be read with— 1. section 22 of the Financial Services and Markets Act 2000, 2. the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), and 3. Schedule 2 to that Act.

PART 10 — AUDIT REQUIREMENT

Requirement for audited accounts

33

Section 475 applies to LLPs, modified so that it reads as follows—

(475) (1) An LLP's annual accounts for a financial year must be audited in accordance with this Part unless the LLP is exempt from audit under— (a) section 477 (small LLPs), (aa) section 479A (subsidiary LLPs), or (b) section 480 (dormant LLPs). (2) An LLP is not entitled to any such exemption unless its balance sheet contains a statement by the members to that effect. (3) An LLP is not entitled to exemption under any of the provisions mentioned in subsection (1)(a) unless its balance sheet contains a statement by the members to the effect that the members 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.

Exemption from audit: small LLPs

34

Sections 477 to 479 apply to LLPs, modified so that they read as follows—

(477) (1) An LLP that qualifies as a small LLP 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 an LLP qualifies as a small LLP 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 478 (LLPs excluded from small LLPs exemption), and - section 479 (availability of small LLPs exemption in case of group LLP). (478) An LLP is not entitled to the exemption conferred by section 477 (small LLPs) if it was at any time within the financial year in question— (a) an LLP whose securities are admitted to trading on a UK regulated market, (b) an LLP that— (i) is an authorised insurance company, a banking LLP, 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) an employers' association as defined in section 122 of the Trade Union and Labour Relations (Consolidation) Act 1992 (c.52) or Article 4 of the Industrial Relations (Northern Ireland) Order 1992 (S.I. 1992/807 (N.I. 5)). (479) (1) An LLP is not entitled to the exemption conferred by section 477 (small LLPs) in respect of a financial year during any part of which it was a group LLP 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) An LLP is not excluded by subsection (1) if, throughout the whole of the period or periods during the financial year when it was a group LLP, it was both a subsidiary undertaking and dormant. (4) In this section— (a) “group LLP” means an LLP that is a parent LLP or a subsidiary undertaking, and (b) “the group”, in relation to a group LLP, means that LLP 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 (LLPs qualifying as small: parent LLPs); (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 LLPs or companies.

Exemption from audit: dormant LLPs

35

Sections 480 and 481 apply to LLPs, modified so that they read as follows—

(480) (1) An LLP is exempt from the requirements of this Act relating to the audit of accounts in respect of a financial year if— (a) it has been dormant since its formation, or (b) it has been dormant since the end of the previous financial year and the following conditions are met. (2) The conditions are that the LLP— (a) as regards its individual accounts for the financial year in question— (i) is entitled to prepare accounts in accordance with the small LLPs regime (see sections 381 to 384), or (ii) would be so entitled but for having been a member of an ineligible group, and (b) is not required to prepare group accounts for that year. (3) This section has effect subject to— - section 475(2) and (3) (requirements as to statements to be contained in balance sheet), and - section 481 (LLPs excluded from dormant LLPs exemption). (481) An LLP is not entitled to the exemption conferred by section 480 (dormant LLPs) if it was at any time within the financial year in question an LLP that— (za) is a traded LLP as defined in section 474(1), (a) is an authorised insurance company, a banking LLP, an e-money issuer, a MiFID investment firm or a UCITS management company, or (b) carries on insurance market activity.

PART 11 — APPOINTMENT OF AUDITORS

Appointment of auditors

36

Sections 485 to 488 apply to LLPs, modified so that they read as follows—

(485) (1) An auditor or auditors of an LLP must be appointed for each financial year of the LLP, unless the designated members reasonably determine otherwise on the ground that audited accounts are unlikely to be required. (2) For each financial year for which an auditor or auditors is or are to be appointed (other than the LLP's first financial year), the appointment must be made before the end of the period of 28 days beginning with— (a) the end of the time allowed for sending out copies of the LLP's annual accounts and reports for the previous financial year (see section 423), or (b) if earlier, the day on which copies of the LLP's annual accounts and reports for the previous financial year are sent out under section 423. This is the “period for appointing auditors”. (3) The designated members may appoint an auditor or auditors— (a) at any time before the LLP's first period for appointing auditors, (b) following a period during which the LLP (being exempt from audit) did not have any auditor, at any time before the LLP's next period for appointing auditors, or (c) to fill a casual vacancy in the office of auditor. (4) The members may appoint an auditor or auditors— (a) during a period for appointing auditors, (b) if the LLP should have appointed an auditor or auditors during a period for appointing auditors but failed to do so, or (c) where the designated members had power to appoint under subsection (3) but have failed to make an appointment. (5) An auditor or auditors of an LLP may only be appointed— (a) in accordance with this section, or (b) in accordance with section 486 or section 486A (default power of Secretary of State). This is without prejudice to any deemed re-appointment under section 487. (485A) (1) This section applies to the appointment under section 485(4) of an auditor or auditors of an LLP— (a) which is also a public interest entity; and (b) which has an audit committee. (2) But it does not apply to the appointment of an Auditor General as auditor or one of the auditors of the LLP. (3) Before an appointment to which this section applies is made— (a) the audit committee of the LLP must make a recommendation to the designated members in connection with the appointment, and (b) the designated members must propose an auditor or auditors for appointment. (4) Before the audit committee makes a recommendation or the designated members make a proposal under subsection (3), the committee must carry out a selection procedure in accordance with Article 16(3) of the Audit Regulation. (5) The audit committee must in its recommendation— (a) identify its first and second choice candidates for appointment, drawn from those auditors who have participated in a selection procedure under subsection (4), (b) give reasons for the choices so identified, (c) state that— (i) the recommendation is free from influence by a third party, and (ii) no contractual term of the kind mentioned in Article 16(6) of the Audit Regulation has been imposed on the LLP. (6) The designated members must include in their proposal— (a) the recommendation made by the audit committee in connection with the appointment, and (b) if the proposal of the designated members departs from the preference of the audit committee—— (i) a recommendation for a candidate or candidates for appointment drawn from those auditors who have participated in a selection procedure under subsection (4), and (ii) the reasons for not following the audit committee’s recommendation. (7) Where the audit committee recommends re-appointment of the LLP’s existing auditor or auditors, and the designated members are in agreement, subsections (4) and (5)(a) and (b) do not apply. (485B) (1) This section applies to the appointment under section 485(4) of an auditor or auditors of an LLP— (a) which is also a public interest entity; and (b) which does not have an audit committee. (2) But it does not apply to the appointment of an Auditor General as auditor or one of the auditors of the LLP. (3) Before an appointment to which this section applies is made the designated members must propose an auditor or auditors for appointment. (4) Before the designated members make a proposal under subsection (3), they must carry out a selection procedure in accordance with Article 16(3) of the Audit Regulation, from which their proposed auditor or auditors must be drawn. (5) Subsection (4) does not apply in relation to a proposal to re-appoint the LLP’s existing auditor or auditors. (485C) (1) A person who has been, or will have been, auditor of an LLP which is a public interest entity for every financial year comprised in the maximum engagement period (see section 494ZA) may not be appointed as auditor of the LLP for any financial year which begins within the period of 4 years beginning with the day after the last day of the last financial year of the maximum engagement period. (2) A person who is a member of the same network as the auditor mentioned in subsection (1) may not be appointed as auditor of the LLP for any financial year which begins within the period of 4 years mentioned in that subsection. (3) This section does not apply in relation to an Auditor General. (486) (1) If an LLP fails to appoint an auditor or auditors in accordance with section 485, the Secretary of State may appoint one or more persons to fill the vacancy. (2) Where subsection (2) of that section applies and the LLP fails to make the necessary appointment before the end of the period for appointing auditors, the LLP must within one week of the end of that period give notice to the Secretary of State of his power having become exercisable. (3) If an LLP fails to give the notice required by this section, an offence is committed by— (a) the LLP, and (b) every designated member who is in default. (4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale. (486A) (1) If— (a) an LLP appoints, or purports to appoint, an auditor or auditors, and (b) the appointment or purported appointment is made in breach of section 485A, 485B or 485C (requirements applying to appointment of auditors by public interest entities), the Secretary of State may appoint another auditor or auditors in place of the auditor or auditors referred to in paragraph (a). (2) The breach of section 485A, 485B or 485C does not invalidate any report made under Chapter 3 of this Part by the auditor or auditors on the LLP’s annual reports or accounts before the auditor or auditors are replaced under subsection (1) of this section. (3) But where the breach in question is a breach of section 485C, sections 1248 and 1249 (Secretary of State’s power to require second audit for companies) apply as if— (a) the LLP was a company; (b) the auditor was not an appropriate person, or the auditors were not appropriate persons, for the period during which the audit was conducted. (4) Within one week of becoming aware of the breach of section 485A, 485B or 485C, the LLP must give notice to the Secretary of State that the power under subsection (1) of this section has become exercisable. (5) If the LLP fails to give the notice required by subsection (4), an offence is committed by— (a) the LLP, and (b) every member of the LLP who is in default. (6) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale. (487) (1) An auditor or auditors of an LLP hold office in accordance with the terms of their appointment, subject to the requirements that— (a) they do not take office until any previous auditor or auditors cease to hold office, and (b) they cease to hold office at the end of the next period for appointing auditors unless re-appointed. (2) Where no auditor has been appointed by the end of the next period for appointing auditors, any auditor in office immediately before that time is deemed to be re-appointed at that time, unless— (a) the LLP agreement requires actual re-appointment, or (b) the deemed re-appointment is prevented by the members under section 488, or (c) the members have determined that he should not be re-appointed, or (d) the designated members have determined that no auditor or auditors should be appointed for the financial year in question, or (e) the auditor’s appointment would be in breach of section 485C. (3) This is without prejudice to the provisions of this Part as to removal and resignation of auditors. (4) No account shall be taken of any loss of the opportunity of deemed reappointment under this section in ascertaining the amount of any compensation or damages payable to an auditor on his ceasing to hold office for any reason. (488) (1) An auditor of an LLP is not deemed to be re-appointed under section 487(2) if the LLP has received notices under this section from members representing at least the requisite percentage of the total voting rights in the LLP that the auditor should not be re-appointed. (2) The “requisite percentage” is 5%, or such lower percentage as is specified for this purpose in the LLP agreement. (3) A notice under this section— (a) may be in hard copy or electronic form, (b) must be authenticated by the person or persons giving it, and (c) must be received by the LLP before the end of the accounting reference period immediately preceding the time when the deemed reappointment would have effect.

Fixing of auditor remuneration

37

Section 492 applies to LLPs, modified so that it reads as follows—

(492) (1) The remuneration of an auditor appointed by the LLP must be fixed by the designated members or in such manner as the members of the LLP may determine. (2) The remuneration of an auditor appointed by the Secretary of State must be fixed by the Secretary of State. (3) For the purposes of this section “remuneration” includes sums paid in respect of expenses. (4) This section applies in relation to benefits in kind as to payments of money.

Disclosure of auditor remuneration

38

Section 494 applies to LLPs, modified so that it reads as follows—

(494) Parts 1 and 2 of the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 (S.I. 2008/489) apply to LLPs with the following modifications— (a) in regulation 3(1), omit the definition of “principal terms”; (b) references to 6th April 2008 are to be read as references to 1st October 2008; (c) references to a company include references to an LLP; and (d) except in paragraph 3 of Schedule 1, references to a director or to an officer of a company include references to a member of an LLP.

PART 12 — FUNCTIONS OF AUDITOR

Auditor's report

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Section 495 applies to LLPs, modified so that it reads as follows—

(495) (1) An LLP's auditor must make a report to the LLP's members on all annual accounts of the LLP of which copies are, during his tenure of office to be sent out to members under section 423. (2) The auditor's report must include— (a) an introduction identifying the annual accounts that are the subject of the audit and the financial reporting framework that has been applied in their preparation, and (b) a description of the scope of the audit identifying the auditing standards in accordance with which the audit was conducted. (3) The report must state clearly whether, in the auditor's opinion, the annual accounts— (a) give a true and fair view— (i) in the case of an individual balance sheet, of the state of affairs of the LLP as at the end of the financial year, (ii) in the case of an individual profit and loss account, of the profit or loss of the LLP for the financial year, (iii) in the case of group accounts, of the state of affairs as at the end of the financial year and of the profit or loss for the financial year of the undertakings included in the consolidation as a whole, so far as concerns members of the LLP; (b) have been properly prepared in accordance with the relevant financial reporting framework; and (c) have been prepared in accordance with the requirements of this Act. Expressions used in this subsection or subsection (3A) that are defined for the purposes of Part 15 (see sections 464, 471 and 474) have the same meaning as in that Part. (3A) Subsection (3B) applies to the auditors of an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B) in their consideration of whether the non-IAS individual accounts of the LLP for that year give a true and fair view as mentioned in subsection (3)(a). (3B) Where the accounts contain an item of information additional to the micro-entity minimum accounting items, the auditors must have regard to any provision of an accounting standard which relates to that item. (4) The auditor's report— (a) must be either unqualified or qualified, and (b) must include a reference to any matters to which the auditor wishes to draw attention by way of emphasis without qualifying the report.

Duties and rights of auditors

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Sections 498 to 502 apply to LLPs, modified so that they read as follows—

(498) (1) An LLP's auditor, in preparing his report, must carry out such investigations as will enable him to form an opinion as to— (a) whether adequate accounting records have been kept by the LLP and returns adequate for their audit have been received from branches not visited by him, and (b) whether the LLP's individual accounts are in agreement with the accounting records and returns. (2) If the auditor is of the opinion— (a) that adequate accounting records have not been kept, or that returns adequate for their audit have not been received from branches not visited by him, or (b) that the LLP's individual accounts are not in agreement with the accounting records and returns, the auditor shall state that fact in his report. (3) If the auditor fails to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit, he shall state that fact in his report. (4) If the members of the LLP have prepared accounts in accordance with the small LLPs regime and in the auditor's opinion they were not entitled so to do, the auditor shall state that fact in his report. (5) Where more than one person is appointed as auditor, the report must include a statement as to whether all the persons appointed agree on the statements given under subsections (2) to (5) and, if they cannot agree on those statements, the report must include the opinions of each person appointed and give reasons for the disagreement. (499) (1) An auditor of an LLP— (a) has a right of access at all times to the LLP's books, accounts and vouchers (in whatever form they are held), and (b) may require any of the following persons to provide him with such information or explanations as he thinks necessary for the performance of his duties as auditor. (2) Those persons are— (a) any member or employee of the LLP; (b) any person holding or accountable for any of the LLP's books, accounts or vouchers; (c) any subsidiary undertaking of the LLP which is a body corporate incorporated in the United Kingdom; (d) any officer, employee or auditor of any such subsidiary undertaking or any person holding or accountable for any books, accounts or vouchers of any such subsidiary undertaking; (e) any person who fell within any of paragraphs (a) to (d) at a time to which the information or explanations required by the auditor relates or relate. (3) A statement made by a person in response to a requirement under this section may not be used in evidence against him in criminal proceedings except proceedings for an offence under section 501. (4) Nothing in this section compels a person to disclose information in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings. (500) (1) Where a parent LLP has a subsidiary undertaking that is not a body corporate incorporated in the United Kingdom, the auditor of the parent LLP may require it to obtain from any of the following persons such information or explanations as he may reasonably require for the purposes of his duties as auditor. (2) Those persons are— (a) the undertaking; (b) any officer, employee or auditor of the undertaking; (c) any person holding or accountable for any of the undertaking's books, accounts or vouchers; (d) any person who fell within paragraph (b) or (c) at a time to which the information or explanations relates or relate. (3) If so required, the parent LLP must take all such steps as are reasonably open to it to obtain the information or explanations from the person concerned. (4) A statement made by a person in response to a requirement under this section may not be used in evidence against him in criminal proceedings except proceedings for an offence under section 501. (5) Nothing in this section compels a person to disclose information in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings. (501) (1) A person commits an offence who knowingly or recklessly makes to an auditor of an LLP a statement (oral or written) that— (a) conveys or purports to convey any information or explanations which the auditor requires, or is entitled to require, under section 499, and (b) is misleading, false or deceptive in a material particular. (2) A person guilty of an offence under subsection (1) 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). (3) A person who fails to comply with a requirement under section 499 without delay commits an offence unless it was not reasonably practicable for him to provide the required information or explanations. (4) If a parent LLP fails to comply with section 500, an offence is committed by— (a) the LLP, and (b) every member of the LLP who is in default. (5) A person guilty of an offence under subsection (3) or (4) is liable on summary conviction to a fine not exceeding level 3 on the standard scale. (6) Nothing in this section affects any right of an auditor to apply for an injunction (in Scotland, an interdict or an order for specific performance) to enforce any of his rights under section 499 or 500. (502) (1) An LLP's auditor is entitled— (a) to receive all notices of, and other communications relating to, any meeting which a member of the LLP is entitled to receive, where any part of the business of the meeting concerns them as auditors, (b) to attend any meeting of the LLP where any part of the business of the meeting concerns them as auditors, and (c) to be heard at any meeting which he attends on any part of the business of the meeting which concerns him as auditor. (2) Where the auditor is a firm, the right to attend or be heard at a meeting is exercisable by an individual authorised by the firm in writing to act as its representative at the meeting.

Signature of auditor's report

41

Sections 503 to 506 apply to LLPs, modified so that they read as follows—

(503) (1) The auditor's report must state the name of the auditor and be signed and dated. (2) Where the auditor is an individual, the report must be signed by him. (3) Where the auditor is a firm, the report must be signed by the senior statutory auditor in his own name, for and on behalf of the auditor. (4) Where more than one person is appointed as auditor, the report must be signed by all those appointed. (504) (1) The senior statutory auditor means the individual identified by the firm as senior statutory auditor in relation to the audit in accordance with— (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) ... any relevant guidance issued by— (i) the Secretary of State, or (ii) the Financial Reporting Council Limited. (2) The person identified as senior statutory auditor must be eligible for appointment as auditor of the LLP in question (see Chapter 2 of Part 42 of this Act). (3) The senior statutory auditor is not, by reason of being named or identified as senior statutory auditor or by reason of his having signed the auditor's report, subject to any civil liability to which he would not otherwise be subject. (4) An order appointing a body for the purpose of subsection (1)(b)(ii) is subject to negative resolution procedure. (505) (1) Every copy of the auditor's report that is published by or on behalf of the LLP 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 determination has been made and notified to the Secretary of State in accordance with that section. (1A) If more than one person is appointed as auditor, the reference in subsection (1)(a) to the name of the auditor is to be read as a reference to the names of all the auditors. (2) For the purposes of this section an LLP is regarded as publishing the report if it publishes, issues or circulates it or otherwise makes it available for public inspection in a manner calculated to invite members of the public generally, or any class of members of the public, to read it. (3) If a copy of the auditor's report is published without the statement required by this section, an offence is committed by— (a) the LLP, and (b) every designated member of the LLP who is in default. (4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale. (506) (1) An auditor’s name and, where the auditor is a firm, the name of the person who signed the report as senior statutory auditor, may be omitted from— (a) published copies of the report, and (b) the copy of the report delivered to the registrar under Chapter 10 of Part 15 (filing of accounts and reports), if the following conditions are met. (2) The conditions are that the LLP— (a) considering on reasonable grounds that statement of the name would create or be likely to create a serious risk that the auditor or senior statutory auditor, or any other person, would be subject to violence or intimidation, has determined that the name should not be stated, and (b) has given notice of the determination to the Secretary of State, stating— (i) the name and registered number of the LLP, (ii) the financial year of the LLP to which the report relates, and (iii) the name of the auditor and (where the auditor is a firm) the name of the person who signed the report as senior statutory auditor.

Offences in connection with auditor's report

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Sections 507 to 509 apply to LLPs, modified so that they read as follows—

(507) (1) A person to whom this section applies commits an offence if he knowingly or recklessly causes a report under section 495 (auditor's report on LLP's annual accounts) to include any matter that is misleading, false or deceptive in a material particular. (2) A person to whom this section applies commits an offence if he knowingly or recklessly causes such a report to omit a statement required by— (a) section 498(2)(b) (statement that LLP's accounts do not agree with accounting records and returns), (b) section 498(3) (statement that necessary information and explanations not obtained), or (c) section 498(4) (statement that members wrongly prepared accounts in accordance with the small LLPs regime). (3) This section applies to— (a) where the auditor is an individual, that individual and any employee or agent of his who is eligible for appointment as auditor of the LLP; (b) where the auditor is a firm, any director, member, employee or agent of the firm who is eligible for appointment as auditor of the LLP. (4) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (508) (1) The Secretary of State may issue guidance for the purpose of helping relevant regulatory and prosecuting authorities to determine how they should carry out their functions in cases where behaviour occurs that— (a) appears to involve the commission of an offence under section 507 (offences in connection with auditor's report), and (b) has been, is being or may be investigated pursuant to arrangements— (i) under paragraph 15 of Schedule 10 (investigation of complaints against auditors and supervisory bodies), or (ii) of a kind mentioned in paragraph 24 of that Schedule (independent investigation for disciplinary purposes of public interest cases). (2) The Secretary of State must obtain the consent of the Attorney General before issuing any such guidance. (3) In this section “relevant regulatory and prosecuting authorities” means— (a) supervisory bodies within the meaning of Part 42 of this Act, (b) bodies to which the Secretary of State may make grants under section 16(1) of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c.27) (bodies concerned with accounting standards etc), (c) the Director of the Serious Fraud Office, (d) the Director of Public Prosecutions or the Director of Public Prosecutions for Northern Ireland, and (e) the Secretary of State. (4) This section does not apply to Scotland. (509) (1) The Lord Advocate may issue guidance for the purpose of helping relevant regulatory authorities to determine how they should carry out their functions in cases where behaviour occurs that— (a) appears to involve the commission of an offence under section 507 (offences in connection with auditor's report), and (b) has been, is being or may be investigated pursuant to arrangements— (i) under paragraph 15 of Schedule 10 (investigation of complaints against auditors and supervisory bodies), or (ii) of a kind mentioned in paragraph 24 of that Schedule (independent investigation for disciplinary purposes of public interest cases). (2) The Lord Advocate must consult the Secretary of State before issuing any such guidance. (3) In this section “relevant regulatory authorities” means— (a) supervisory bodies within the meaning of Part 42 of this Act, (b) bodies to which the Secretary of State may make grants under section 16(1) of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c.27) (bodies concerned with accounting standards etc), and (c) the Secretary of State. (4) This section applies only to Scotland.

PART 13 — REMOVAL, RESIGNATION, ETC OF AUDITORS

Removal, resignation, etc of auditors

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• (1) Sections 510 to 512 apply to LLPs, modified so that they read as follows—

(510) (1) The members of an LLP may remove an auditor from office at any time. (2) Nothing in this section is to be taken as depriving the person removed of compensation or damages payable to him in respect of the termination— (a) of his appointment as auditor, or (b) of any appointment terminating with that as auditor. (3) An auditor may not be removed from office before the expiration of his term of office except— (a) by resolution under this section, or (b) in accordance with section 511A. (511) (1) No determination to remove an auditor before the expiration of his term of office may be made under section 510 unless the LLP has given 7 days' prior notice to any auditor whom it is proposed to remove (2) The auditor proposed to be removed may make with respect to the proposal representations in writing to the LLP (not exceeding a reasonable length) and request their notification to members of the LLP. (3) (3) The LLP must upon receipt send a copy of the representations to every member. (4) (4) Copies of the representations need not be sent out if, on the application either of the LLP or of any other person claiming to be aggrieved, the court is satisfied that the auditor is using the provisions of this section to secure needless publicity for defamatory matter. The court may order the LLP's costs (in Scotland, expenses) on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application. (511A) (1) This section applies only to a public interest LLP. (2) The competent authority may apply to the court for an order removing an auditor of an LLP from office if the authority considers that there are proper grounds for removing the auditor from office. (3) The members of an LLP may apply to the court for an order removing an auditor of the LLP from office if the applicant or applicants consider that there are proper grounds for removing the auditor from office. (4) If the court is satisfied, on hearing an application under subsection (2), that there are proper grounds for removing the auditor from office, it may make an order removing the auditor from office. (5) If the court is satisfied, on hearing an application under subsection (3), that— (a) the applicants represent in total not less than 5% of the voting rights of all the members having a right to vote at a general meeting of the LLP, and (b) there are proper grounds for removing the auditor from office, the court may make an order removing the auditor from office. (6) For the purposes of this section, divergence of opinions on accounting treatments or audit procedures are not to be taken to be proper grounds for removing an auditor from office. (512) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) Until section 1068(1) comes into force, the notice referred to in section 512(1) as applied to LLPs by paragraph (1) must be in the form prescribed for the purposes of section 391(2) of the 1985 Act or Article 399(2) of the 1986 Order as applied to LLPs.

Rights of auditor removed from office

44

• (1) Section 513 applies to LLPs, modified so that it reads as follows—

(513) (1) An auditor who has been removed by the members under section 510 or by order of the court under section 511A has, notwithstanding his removal, the rights conferred by section 502(1) in relation to any meeting of the LLP— (a) at which his term of office would otherwise have expired, or (b) at which it is proposed to fill the vacancy caused by his removal. (2) In such a case the references in that section to matters concerning the auditor as auditor shall be construed as references to matters concerning him as a former auditor.

• (2) In section 513 (applied to LLPs by paragraph (1)) as it applies in relation to an auditor appointed before 1st October 2008, the reference to rights under section 502(1) shall be read as a reference to rights under section 390(1) of the 1985 Act or Article 398(1) of the 1986 Order as applied to LLPs.

Rights of auditor not re-appointed

45

• (1) Sections 515 to 518 apply to LLPs, modified so that they read as follows—

(515) (1) If an LLP wishes to appoint a person as auditor in place of a person who is an auditor of the LLP and who is to cease to hold office at the end of a period for appointing auditors (the “outgoing auditor”), the LLP must give the outgoing auditor seven days’ notice; no person may be appointed as auditor in the absence of such notice. But notice is not required under this subsection if the auditor is to cease to hold office by virtue of section 510, 511A or 516. (2) The outgoing auditor may, in response to receipt of a notice given under subsection (1), make representations in writing to the LLP (not exceeding a reasonable length) and request their notification to members of the LLP. (3) The LLP must upon receipt send a copy of the representations to every member. (4) Copies of the representations need not be sent out if, on the application either of the LLP or of any other person claiming to be aggrieved, the court is satisfied that the auditor is using the provisions of this section to secure needless publicity for defamatory matter. The court may order the LLP's costs (in Scotland, expenses) on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application. (516) (1) An auditor of an LLP may resign his office by sending a notice to that effect to the LLP. (2) Where the LLP is a public interest LLP, the notice is not effective unless it is accompanied by the statement required by section 519. (3) An effective notice of resignation operates to bring the auditor's term of office to an end as of the date on which the notice is received or on such later date as may be specified in it. (517) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (518) (1) This section applies where an auditor’s (A’s) notice of resignation is accompanied by a statement under section 519 except where— (a) the LLP is a non-public interest LLP, and (b) the statement includes a statement to the effect that A considers that none of the reasons for A’s ceasing to hold office, and no matters (if any) connected with A’s ceasing to hold office, need to be brought to the attention of members or creditors of the LLP (as required by section 519(2E)). (2) He may send with the notice an authenticated requisition calling on the designated members of the LLP forthwith duly to convene a meeting of the members of the LLP for the purpose of receiving and considering such explanation of the reasons for, and matters connected with, his resignation as he may wish to place before the meeting. (3) He may request the LLP to circulate to its members before the meeting convened on his requisition, a statement in writing (not exceeding a reasonable length) of the reasons for, and matters connected with, his resignation. (4) The LLP must (unless the statement is received too late for it to comply)— (a) in any notice of the meeting given to members of the LLP, state the fact of the statement having been made, and (b) send a copy of the statement to every member of the LLP to whom notice of the meeting is or has been sent. (5) The designated members must within 21 days from the date on which the LLP receives a requisition under this section proceed duly to convene a meeting for a day not more than 28 days after the date on which the notice convening the meeting is given. (6) If default is made in complying with subsection (5), every designated member who failed to take all reasonable steps to secure that a meeting was convened commits an offence. (7) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction to a fine not exceeding the statutory maximum. (8) If a copy of the statement mentioned above is not sent out as required because received too late or because of the LLP's default, the auditor may (without prejudice to his right to be heard orally) require that the statement be read out at the meeting. (9) Copies of a statement need not be sent out and the statement need not be read out at the meeting if, on the application either of the LLP or of any other person who claims to be aggrieved, the court is satisfied that the auditor is using the provisions of this section to secure needless publicity for defamatory matter. The court may order the LLP's costs (in Scotland, expenses) on such an application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application. (10) An auditor who has resigned has, notwithstanding his resignation, the rights conferred by section 502(1) in relation to any such meeting of the LLP as is mentioned in subsection (3). In such a case the references in that section to matters concerning the auditor as auditor shall be construed as references to matters concerning him as a former auditor.

• (2) In section 518 (applied to LLPs by paragraph (1)) as it applies in relation to an auditor appointed before 1st October 2008, the reference to rights under section 502(1) shall be read as a reference to rights under section 390(1) of the 1985 Act or Article 398(1) of the 1986 Order as applied to LLPs.

Auditor statements

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Sections 519 to 526 apply to LLPs, modified so that they read as follows—

(519) (1) An auditor of a public interest LLP who is ceasing to hold office (at any time and for any reason) must send to the LLP a statement of the reasons for doing so. (2) An auditor (“A”) of a non-public interest LLP who is ceasing to hold office must send to the LLP a statement of the reasons for doing so unless A satisfies the first or second condition. (2A) The first condition is that A is ceasing to hold office at the end of a period for appointing auditors. (2B) The second condition is that— (a) A’s reasons for ceasing to hold office are all exempt reasons (as to which see section 519A(3)), and (b) there are no matters connected with A’s ceasing to hold office that A considers need to be brought to the attention of members or creditors of the LLP. (2C) A statement under this section must include— (a) the auditor’s name and address; (b) the number allocated to the auditor on being entered in the register of auditors kept under section 1239; (c) the LLP’s name and registered number. (2D) Where there are matters connected with an auditor’s ceasing to hold office that the auditor considers need to be brought to the attention of members or creditors of the LLP, the statement under this section must include details of those matters. (2E) Where— (a) an auditor (“A”) of a non-public interest LLP is required by subsection (2) to send a statement, and (b) A considers that none of the reasons for A’s ceasing to hold office, and no matters (if any) connected with A’s ceasing to hold office, need to be brought to the attention of members or creditors of the LLP, A’s statement under this section must include a statement to that effect. (3) A statement under this section must be sent— (a) in the case of resignation, along with the notice of resignation; (b) in the case of failure to seek re-appointment, not less than 14 days before the end of the time allowed for next appointing an auditor; (c) in any other case, not later than the end of the period of 14 days beginning with the date on which he ceases to hold office. (4) A person ceasing to hold office as auditor who fails to comply with this section commits an offence. (5) In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence. (6) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (7) 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 acts 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. (519A) (1) In this Chapter— - “public interest LLP” means an LLP—an issuer whose transferable securities are admitted to trading on a UK regulated market; ora credit institution within the meaning given by Article 4(1)(1) of Regulation (EU) No. 575/2013 of the European Parliament and of the Council, which is a CRR firm within the meaning of Article 4(1)(2A) of the same Regulation; - “non-public interest LLP” means an LLP that is not a public interest LLP. (2) For the purposes of the definition of “public interest LLP”— - “issuer” has the same meaning as in Part 6 of the Financial Services and Markets Act 2000 (see section 102A(6)); - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) In the application of this Chapter to an auditor (“A”) of an LLP ceasing to hold office, the following are “exempt reasons”— (a) A is no longer to carry out statutory audit work within the meaning of Part 42 (see section 1210(1)); (b) the LLP is, or is to become, exempt from audit under section 477, 479A or 480, and intends to include in its balance sheet a statement of the type described in section 475(2); (c) the LLP is a subsidiary undertaking of a parent undertaking that is incorporated in the United Kingdom and— (i) the parent undertaking prepares group accounts, and (ii) A is being replaced as auditor of the LLP by the auditor who is conducting, or is to conduct, an audit of the group accounts; (d) the LLP is being wound up under Part 4 of the Insolvency Act 1986 or Part 5 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), whether voluntarily or by the court, or a petition under Part 4 of that Act or Part 5 of that Order (as applied to LLPs) for the winding up of the LLP has been presented and not finally dealt with or withdrawn. In this paragraph the references— (i) to Part 4 of the Insolvency Act 1986 are to that Part as applied to LLPs by the Limited Liability Partnerships Regulations 2001 (S.I. 2001/1090), and (ii) to Part 5 of the Insolvency (Northern Ireland) Order 1989 are to that Part as applied to LLPs by the Limited Liability Partnerships Regulations (Northern Ireland) 2004 (S.R. (NI) 2004 No 307). (4) But the reason described in subsection (3)(c) is only an exempt reason if the auditor who is conducting, or is to conduct, an audit of the group accounts is also conducting, or is also to conduct, the audit (if any) of the accounts of each of the subsidiary undertakings (of the parent undertaking) that is incorporated in the United Kingdom and included in the consolidation. (520) (1) This section applies where an LLP receives from an auditor (“A”) who is ceasing to hold office a statement under section 519 except where— (a) the LLP is a non-public interest LLP, and (b) the statement includes a statement to the effect that A considers that none of the reasons for A’s ceasing to hold office, and no matters (if any) connected with A’s ceasing to hold office, need to be brought to the attention of members or creditors of the LLP (as required by section 519(2E)). (2) Where this section applies, the LLP must within 14 days of the receipt of the statement either— (a) send a copy of it to every person who under section 423 is entitled to be sent copies of the accounts, or (b) apply to the court. (3) If it applies to the court, the LLP must notify the auditor of the application. (4) If the court is satisfied that the auditor is using the provisions of section 519 to secure needless publicity for defamatory matter— (a) it shall direct that copies of the statement need not be sent out, and (b) it may further order the LLP's costs (in Scotland, expenses) on the application to be paid in whole or in part by the auditor, even if he is not a party to the application. The LLP must within 14 days of the court's decision send to the persons mentioned in subsection (2)(a) a statement setting out the effect of the order. (5) If no such direction is made the LLP must send copies of the statement to the persons mentioned in subsection (2)(a) within 14 days of the court's decision or, as the case may be, of the discontinuance of the proceedings. (6) In the event of default in complying with this section an offence is committed by every designated member of the LLP who is in default. (7) In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence. (8) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (521) (A1) This section applies where an auditor (“A”) of an LLP sends a statement to the LLP under section 519 except where— (a) the LLP is a non-public interest LLP, and (b) the statement includes a statement to the effect that A considers that none of the reasons for A’s ceasing to hold office, and no matters (if any) connected with A’s ceasing to hold office, need to be brought to the attention of members or creditors of the LLP (as required by section 519(2E)). (1) Where this section applies, unless within 21 days beginning with the day on which he sent the statement under section 519 the auditor receives notice of an application to the court under section 520, he must within a further seven days send a copy of the statement to the registrar. (2) If an application to the court is made under section 520 and the auditor subsequently receives notice under subsection (5) of that section, he must within seven days of receiving the notice send a copy of the statement to the registrar. (3) An auditor who fails to comply with subsection (1) or (2) commits an offence. (4) In proceedings for such an offence it is a defence for the person charged to show that 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 a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (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 acts 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. (522) (1) Where an auditor of an LLP sends a statement under section 519, the auditor must at the same time send a copy of the statement to the appropriate audit authority. (5) A person ceasing to hold office as auditor who fails to comply with this section commits an offence. (6) If that person is a firm an offence is committed by— (a) the firm, and (b) every officer of the firm who is in default. (7) In proceedings for an offence under this section it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence. (8) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (523) (1) This section applies if an auditor is ceasing to hold office at any time other than at the end of a period for appointing auditors. (1A) But this section does not apply if the LLP reasonably believes that the only reasons for the auditor’s ceasing to hold office are exempt reasons (as to which see section 519A(3)). (2) Where this section applies, the LLP must give notice to the appropriate audit authority that the auditor is ceasing to hold office. (2A) The notice is to take the form of a statement by the LLP of what the LLP believes to be the reasons for the auditor’s ceasing to hold office and must include the information listed in section 519(2C). This is subject to subsection (2C). (2B) Subsection (2C) applies where— (a) the LLP receives a statement from the auditor under section 519, (b) the statement is sent at the time required by section 519(3), and (c) the LLP agrees with the contents of the statement. (2C) Where this subsection applies, the notice may instead take the form of a copy of the statement endorsed by the LLP to the effect that it agrees with the contents of the statement. (3) A notice under this section must be given within the period of 28 days beginning with the day on which the auditor ceases to hold office. (4) If an LLP fails to comply with this section, an offence is committed by— (a) the LLP, and (b) every designated member of the LLP who is in default. (5) In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence. (6) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (524) (1) Where the appropriate audit authority receives a statement under section 522 or a notice under section 523, the authority may forward to the accounting authorities— (a) a copy of the statement or notice, and (b) any other information the authority has received from the auditor or the LLP concerned in connection with the auditor’s ceasing to hold office. (2) The accounting authorities are— (a) the Secretary of State, and (b) the Financial Reporting Council Limited. (3) If either of the accounting authorities is also the appropriate audit authority it is only necessary to comply with this section as regards any other accounting authority. (4) If the court has made an order under section 520(4) directing that copies of the statement need not be sent out by the LLP, sections 460 and 461 (restriction on further disclosure) apply in relation to the copies sent to the accounting authorities as they apply to information obtained under section 459 (power to require documents etc). (525) (1) In sections 522, 523 and 524 “appropriate audit authority” means— (a) in relation to an auditor of a public interest LLP (other than an Auditor General), the body known as the Professional Oversight Board established under the articles of association of the Financial Reporting Council Limited (registered number 02486368); (b) in relation to an auditor of a non-public interest LLP (other than an Auditor General), the relevant supervisory body; (c) in relation to an Auditor General, the Independent Supervisor. “Supervisory body” and “Independent Supervisor” have the same meaning as in Part 42 (statutory auditors) (see sections 1217 and 1228). (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (526) If an auditor ceases to hold office for any reason, any surviving or continuing auditor or auditors may continue to act.

PART 14 — LLP AUDIT: SUPPLEMENTARY PROVISIONS

Minor definitions

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Section 539 applies to LLPs, modified so that it reads as follows—

(539) In this Part— - “e-money issuer” means a person who is registered as an authorised electronic money institution or a small electronic money institution within the meaning of the Electronic Money Regulations 2011 or who has permission under Part 4 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); - “LLP agreement” means any agreement express or implied between the members of the LLP or between the LLP and the members of the LLP which determines the mutual rights and duties of the members, and their rights and duties in relation to the LLP; - “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 and amending Regulation (EU) No.648/2012, other than— 1. an LLP which is exempted from the definition of “investment firm” by Schedule 3 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544), 2. an LLP which is an exempt investment firm as defined by regulation 8 (meaning of exemption of investment firm in Chapter 1) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (SI 2017/701), and 3. any other LLP which fulfils all the requirements set out in regulation 6(3) of those Regulations; - “qualified”, in relation to an auditor's report (or a statement contained in an auditor's report), means that the report or statement does not state the auditor's unqualified opinion that the accounts have been properly prepared in accordance with this Act or, in the case of an undertaking not required to prepare accounts in accordance with this Act, under any corresponding legislation under which it is required to prepare accounts; - “turnover”, in relation to an LLP, means the amounts derived from the provision of goods and services falling within the LLP's ordinary activities, after deduction of— 1. trade discounts, 2. value added tax, and 3. any other taxes based on the amounts so derived; - “UCITS management company” has the meaning given by the Glossary to the Handbook made by the Financial Conduct Authority under the Financial Services and Markets Act 2000;

PART 15 — STATUTORY AUDITORS

Extension of Part 42

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For the purposes of section 1210(1)(h) (meaning of “statutory auditor”)—

• (a) an LLP is a prescribed person, and

• (b) Part 16 of the Companies Act 2006 as applied to LLPs is a prescribed enactment,

(and accordingly a person appointed as auditor of an LLP under Part 16 of that Act as applied to LLPs by these Regulations is a statutory auditor).

PART 16 — OFFENCES

Liability of member in default

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Sections 1121 and 1122 apply to LLPs for the purposes of these Regulations, modified so that they read as follows—

(1121) (1) This section has effect for the purposes of any provision of the Companies Acts to the effect that, in the event of contravention of an enactment in relation to an LLP, an offence is committed by every member or, as the case may be, every designated member of the LLP who is in default. (2) A member or designated member is “in default” for the purposes of the provision if he authorises or permits, participates in, or fails to take all reasonable steps to prevent, the contravention. (1122) (1) Where a company is a member or designated member of an LLP, it does not commit an offence as a member or designated member in default unless one of its officers is in default. (2) Where any such offence is committed by a company the officer in question also commits the offence and is liable to be proceeded against and punished accordingly. (3) In this section— (a) officer” includes any director, manager or secretary, and (b) an officer is “in default” for the purposes of the provision if he authorises or permits, participates in, or fails to take all reasonable steps to prevent, the contravention.

General provisions

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Sections 1125 to 1132 apply to LLPs for the purposes of these Regulations, modified so that they read as follows—