The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

Made: 19th February 2008

Coming into force: 6th April 2008

The Secretary of State makes the following Regulations in exercise of the powers conferred by sections 396(3), 404(3), 409(1) to (3), 412(1) to (3), 416(4), 421(1) and (2), 445(3)(a) and (b), 677(3)(a), 712(2)(b)(i), 831(3)(a), 832(4)(a), 836(1)(b)(i) and 1292(1) (a) and (c) of the Companies Act 2006 .

In accordance with sections 473(3) and 1290 of the Companies Act 2006 a draft of this instrument was laid before Parliament and approved by a resolution of each House of Parliament.

PART 1 — INTRODUCTION

Citation and interpretation

1

• (1) These Regulations may be cited as the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.

• (2) In these Regulations “the 2006 Act” means the Companies Act 2006.

Commencement and application

2

• (1) These Regulations come into force on 6th April 2008.

• (2) Subject to paragraph (3), they apply in relation to financial years beginning on or after 6th April 2008.

• (3) The requirement for disclosure in paragraph 4 of Schedule 8 to these Regulations (directors' remuneration report: disclosure relating to consideration of conditions in company and group) applies in relation to financial years beginning on or after 6th April 2009.

• (4) These Regulations apply to companies other than those which are subject to the small companies regime under Part 15 of the 2006 Act.

PART 2 — FORM AND CONTENT OF ACCOUNTS

Companies Act individual accounts (companies other than banking and insurance companies)

3

• (1) Subject to regulation 4, the directors of a company—

• (a) for which they are preparing Companies Act individual accounts under section 396 of the 2006 Act (Companies Act: individual accounts), and

• (b) which is not a banking company or an insurance company,

must comply with the provisions of Schedule 1 to these Regulations as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The profit and loss account of a company that falls within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared) need not contain the information specified in paragraphs 65 to 69 of Schedule 1 to these Regulations (information supplementing the profit and loss account).

Medium-sized companies: exemptions for Companies Act individual accounts

4

• (1) This regulation applies to a company—

• (a) which qualifies as medium-sized in relation to a financial year under section 465 of the 2006 Act , and

• (b) the directors of which are preparing Companies Act individual accounts under section 396 of that Act for that year.

• (2A) The individual accounts for the year need not comply with paragraph 45 (disclosure with respect to compliance with accounting standards) of Schedule 1 to these Regulations.

• (2B) Paragraph 72 (related party transactions) applies with the modification that only particulars of transactions which have not been concluded under normal market conditions with the following must be disclosed—

• (a) owners holding a participating interest in the company;

• (b) companies in which the company itself has a participating interest; and

• (c) the company's directors.

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

Companies Act individual accounts: banking companies

5

• (1) The directors of a company—

• (a) for which they are preparing Companies Act individual accounts under section 396 of the 2006 Act, and

• (b) which is a banking company,

must comply with the provisions of Schedule 2 to these Regulations as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The profit and loss account of a banking company that falls within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared) need not contain the information specified in paragraphs 85 to 91 of Schedule 2 to these Regulations (information supplementing the profit and loss account).

• (3) Accounts prepared in accordance with this regulation must contain a statement that they are prepared in accordance with the provisions of these Regulations relating to banking companies.

Companies Act individual accounts: insurance companies

6

• (1) The directors of a company—

• (a) for which they are preparing Companies Act individual accounts under section 396 of the 2006 Act, and

• (b) which is an insurance company,

must comply with the provisions of Schedule 3 to these Regulations as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The profit and loss account of a company that falls within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared) need not contain the information specified in paragraphs 83 to 89 of Schedule 3 to these Regulations (information supplementing the profit and loss account).

• (3) Accounts prepared in accordance with this regulation must contain a statement that they are prepared in accordance with the provisions of these Regulations relating to insurance companies.

Information about related undertakings (Companies Act or IAS individual or group accounts)

7

• (1) Companies Act or IAS individual or group accounts must comply with the provisions of Schedule 4 to these Regulations as to information about related undertakings to be given in notes to the company's accounts.

• (2) In Schedule 4—

• Part 1 contains provisions applying to all companies

• Part 2 contains provisions applying only to companies not required to prepare group accounts

• Part 3 contains provisions applying only to companies required to prepare group accounts

• Part 4 contains additional disclosures for banking companies and groups

• Part 5 contains interpretative provisions.

• (3) Information otherwise required to be given by Schedule 4 need not be disclosed with respect to an undertaking that—

• (a) is established under the law of a country outside the United Kingdom, or

• (b) carries on business outside the United Kingdom,

if the conditions specified in section 409(4) of the 2006 Act are met (see section 409(5) of the 2006 Act for disclosure required where advantage taken of this exemption). This paragraph does not apply in relation to the information otherwise required by paragraph 3, 7 or 21 of Schedule 4.

Information about directors' benefits: remuneration (Companies Act or IAS individual or group accounts: quoted and unquoted companies)

8

• (1) Companies Act or IAS individual or group accounts must comply with the provisions of Schedule 5 to these Regulations as to information about directors' remuneration to be given in notes to the company's accounts.

• (2) In Schedule 5—

• Part 1 contains provisions applying to quoted and unquoted companies,

• Part 2 contains provisions applying only to unquoted companies, and

• Part 3 contains supplementary provisions.

Companies Act group accounts

9

• (1) Subject to paragraphs (2) and (3), where the directors of a parent company prepare Companies Act group accounts under section 403 of the 2006 Act (group accounts: applicable accounting framework), those accounts must comply with the provisions of Part 1 of Schedule 6 to these Regulations as to the form and content of the consolidated balance sheet and consolidated profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The directors of the parent company of a banking group preparing Companies Act group accounts must do so in accordance with the provisions of Part 1 of Schedule 6 as modified by Part 2 of that Schedule.

• (3) The directors of the parent company of an insurance group preparing Companies Act group accounts must do so in accordance with the provisions of Part 1 of Schedule 6 as modified by Part 3 of that Schedule.

• (4) Accounts prepared in accordance with paragraph (2) or (3) must contain a statement that they are prepared in accordance with the provisions of these Regulations relating to banking groups or to insurance groups, as the case may be.

PART 3 — DIRECTORS' REPORT

Directors' report

10

• (1) The report which the directors of a company are required to prepare under section 415 of the 2006 Act (duty to prepare directors' report) must disclose the matters specified in Schedule 7 to these Regulations.

• (2) In Schedule 7—

• Part 1 relates to matters of a general nature including political donations and expenditure,

• Part 2 relates to the acquisition by a company of its own shares or a charge on them,

• ...

• ...

• Part 6 relates to certain disclosures required by publicly traded companies, ...

• Part 7 relates to disclosures in relation to greenhouse gas emissions, energy consumption and energy efficiency action by quoted companies,

• Part 7A relates to disclosures in relation to greenhouse gas emissions, energy consumption and energy efficiency action by unquoted companies, ...

• Part 8 relates to the statement of corporate governance arrangements , and

• Part 9 relates to a company’s payment practices and performance in respect of payments made by the company to its suppliers.

PART 4 — DIRECTORS' REMUNERATION REPORT

Directors' remuneration report (quoted companies ...)

11

• (1) The remuneration report which the directors of a quoted company ... are required to prepare under section 420 of the 2006 Act (duty to prepare directors' remuneration report) must contain the information specified in Schedule 8 to these Regulations, and must comply with any requirement of that Schedule as to how information is to be set out in the report.

• (1A) The document setting out a revised directors’ remuneration policy in accordance with section 422A of the 2006 Act must contain the information specified in Schedule 8 to these Regulations, and must comply with any requirements in that Schedule as to how that information is to be set out.

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

• (3) For the purposes of section 497 in Part 16 of the 2006 Act (auditor's report on auditable part of directors' remuneration report), “the auditable part” of a directors' remuneration report is the information set out in the report as identified in Part 5 of Schedule 8 to these Regulations.

PART 5 — INTERPRETATION

Definition of “provisions”

12

Schedule 9 to these Regulations defines “provisions” for the purposes of these Regulations and for the purposes of—

• (a) section 677(3)(a) (Companies Act accounts: relevant provisions for purposes of financial assistance) in Part 18 of the 2006 Act,

• (b) section 712(2)(b)(i) (Companies Act accounts: relevant provisions to determine available profits for redemption or purchase by private company out of capital) in that Part, ...

• (c) sections 831(3)(a) (Companies Act accounts: net asset restriction on public company distributions), 832(4)(a) (Companies Act accounts: investment companies distributions) and 836(1)(b)(i) (Companies Act accounts: relevant provisions for distribution purposes) in Part 23 of that Act, and

• (d) section 841(2)(a) (Companies Act accounts: provisions to be treated as realised losses) in that Part.

General interpretation

13

Schedule 10 to these Regulations contains general definitions for the purposes of these Regulations.

SCHEDULE 1 — COMPANIES ACT INDIVIDUAL ACCOUNTS: COMPANIES WHICH ARE NOT BANKING OR INSURANCE COMPANIES

PART 1 — GENERAL RULES AND FORMATS

SECTION A — GENERAL RULES

1

• (1) Subject to the following provisions of this Schedule—

• (a) every balance sheet of a company must show the items listed in either of the balance sheet formats in Section B of this Part, and

• (b) every profit and loss account must show the items listed in any one of the profit and loss account formats in Section B.

• (2) References in this Schedule to the items listed in any of the formats in Section B are to those items read together with any of the notes following the formats which apply to those items.

• (3) The items must be shown in the order and under the headings and sub-headings given in the particular format used, but—

• (a) the notes to the formats may permit alternative positions for any particular items, and

• (b) the heading or sub-heading for any item does not have to be distinguished by any letter or number assigned to that item in the format used.

2

• (1) Where in accordance with paragraph 1 a company’s balance sheet or profit and loss account for any financial year has been prepared by reference to one of the formats in Section B, the company’s directors must use the same format in preparing Companies Act individual accounts for subsequent financial years, unless in their opinion there are special reasons for a change.

• (2) Particulars of any such change must be given in a note to the accounts in which the new format is first used, and the reasons for the change must be explained.

3

• (1) Any item required to be shown in a company’s balance sheet or profit and loss account may be shown in greater detail than required by the particular format used.

• (2) The balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not otherwise covered by any of the items listed in the format used, save that none of the following may be treated as assets in any balance sheet—

• (a) preliminary expenses,

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

• (c) costs of research.

4

• (1) Where the special nature of the company’s business requires it, the company’s directors must adapt the arrangement, headings and sub-headings otherwise required in respect of items given an Arabic number in the balance sheet or profit and loss account format used.

• (2) The directors may combine items to which Arabic numbers are given in any of the formats in Section B if—

• (a) their individual amounts are not material to assessing the state of affairs or profit or loss of the company for the financial year in question, or

• (b) the combination facilitates that assessment.

• (3) Where sub-paragraph (2)(b) applies, the individual amounts of any items which have been combined must be disclosed in a note to the accounts.

5

• (1) Subject to sub-paragraph (2), the directors must not include a heading or sub-heading corresponding to an item in the balance sheet or profit and loss account format used if there is no amount to be shown for that item for the financial year to which the balance sheet or profit and loss account relates.

• (2) Where an amount can be shown for the item in question for the immediately preceding financial year that amount must be shown under the heading or sub-heading required by the format for that item.

6

Every profit and loss account must show the amount of a company’s profit or loss on ordinary activities before taxation.

7

• (1) For every item shown in the balance sheet or profit and loss account the corresponding amount for the immediately preceding financial year must also be shown.

• (2) Where that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount may be adjusted, and particulars of the non-comparability and of any adjustment must be disclosed in a note to the accounts.

8

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

9

The company’s directors must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.

SECTION B — THE REQUIRED FORMATS FOR ACCOUNTS