Companies Act 1985

Modified accounts

247 Entitlement to deliver accounts in modified form

(1) In certain cases a company's directors may, in accordance with Part I of Schedule 8, deliver modified accounts in respect of a financial year; and whether they may do so depends on the company qualifying, in particular financial years, as small or medium-sized.

(2) Modified accounts for a financial year may not be delivered in the case of a company which is, or was at any time in that year—

(a) a public company,

(b) a special category company (Chapter II of this Part), or

(c) subject to the next-but-one subsection, a member of a group which is ineligible for this purpose.

(3) " Group " here means a holding company and its subsidiaries together; and a group is ineligible if any of its members is—

(a) a public company or a special category company, or

(b) a body corporate (other than a company) which has power under its constitution to offer its snares or debentures to the public and may lawfully exercise that power, or

(c) a body corporate (other than a company) which is either a recognised bank or licensed institution within the [1979 c. 37.] Banking Act 1979 or an insurance company to which Part II of the [1982 c. 50.] Insurance Companies Act 1982 applies.

(4) Notwithstanding subsection (2)(c), modified accounts for a financial year may be delivered if the company is exempt under section 252 (dormant companies) from the obligation to appoint auditors and either—

(a) was so exempt throughout that year, or

(b) became so exempt by virtue of a special resolution under that section passed during that year.

(5) For purposes of sections 247 to 250 and Schedule 8, " deliver " means deliver to the registrar of companies under this Chapter; and for purposes of subsection (3)(b), " shares " and " debentures " have the same meaning as when used in relation to a company.

248 Qualification of company as small or medium-sized

(1) A company qualifies as small in a financial year if for that year two or more of the following conditions are satisfied—

(a) the amount of its turnover for the year is not more than £1.4 million;

(b) its balance sheet total is not more than £700.000;

(c) the average number of persons employed by the company in the year (determined on a weekly basis) does not exceed 50.

(2) A company qualifies as medium-sized in a financial year if for that year two or more of the following conditions are satisfied—

(a) the amount of its turnover for the year is not more than £5.75 million;

(b) its balance sheet total is not more than £2.8 million;

(c) the average number of persons employed by the company in the year (determined on a weekly basis) does not exceed 250.

(3) In subsections (1) and (2), "balance sheet total" means, in relation to a company's financial year—

(a) where in the company's accounts Format I of the balance sheet formats set out in Part I of Schedule 4 is adopted, the aggregate of the amounts shown in the balance sheet under the headings corresponding to items A to D in that Format, and

(b) where Format 2 is adopted, the aggregate of the amounts shown under the general heading " Assets ".

(4) The average number of persons employed as mentioned in subsections (1)(c) and (2)(c) is determined by applying the method of calculation prescribed by paragraph 56(2) and (3) of Schedule 4 for determining the number required by sub-paragraph (1)(a) of that paragraph to be stated in a note to the company's accounts.

(5) In applying subsections (1) and (2) to a period which is a company's financial year but not in fact a year, the maximum figures for turnover in paragraph (a) of each subsection are to be proportionately adjusted.

249 Modified individual accounts

(1) This section specifies the cases in which a company's directors may (subject to section 250, where the company has subsidiaries) deliver individual accounts modified as for a small or a medium-sized company; and Part I of Schedule 8 applies with respect to the deliver)' of accounts so modified.

(2) In respect of the company's first financial year the directors may—

(a) deliver accounts modified as for a small company, if in that year it qualifies as small,

(b) deliver accounts modified as for a medium-sized company, if in that year it qualifies as medium-sized.

(3) The next three subsections are concerned only with a company's financial year subsequent to the first.

(4) The directors may in respect of a financial year—

(a) deliver accounts modified as for a small company if in that year the company qualifies as small and it also so qualified in the preceding year,

(b) deliver accounts modified as for a medium-sized company if in that year the company qualifies as medium-sized and it also so qualified in the preceding year.

(5) The directors may in respect of a financial year—

(a) deliver accounts modified as for a small company (al though not qualifying in that year as small), if in the preceding year it so qualified and the directors were entitled to deliver accounts so modified in respect of that year, and

(b) deliver accounts modified as for a medium-sized company (although not qualifying in that year as medium-sized), if in the preceding year it so qualified and the directors were entitled to deliver accounts so modified in respect of that year.

(6) The directors may in respect of a financial year—

(a) deliver accounts modified as for a small company, if in that year the company qualifies as small and the directors were entitled under subsection (5)(a) to deliver accounts so modified for the preceding year (although the company did not in that year qualify as small), and

(b) deliver accounts modified as for a medium-sized company if in that year the company qualifies as medium-sized and the directors were entitled under subsection (5)(b) to deliver accounts so modified for the preceding year (although the company did not in that year qualify as medium-sized).

250 Modified accounts of holding company

(1) This section applies to a company (" the holding company ") where in respect of a financial year section 229 requires the preparation of group accounts for the company and its subsidiaries.

(2) The directors of the holding company may not under section 249—

(a) deliver accounts modified as for a small company, un less the group (meaning the holding company and its subsidiaries together) is in that year a small group,

(b) deliver accounts modified as for a medium-sized company, unless in that year the group is medium-sized ;

and the group is small or medium-sized if it would so qualify under section 248 (applying that section as directed by subsections (3) and (4) below), if it were all one company.

(3) The figures to be taken into account in determining whether the group is small or medium-sized (or neither) are the group account figures, that is—

(a) where the group accounts are prepared as consolidated accounts, the figures for turnover, balance sheet total and numbers employed which are shown in those accounts, and

(b) where not, the corresponding figures given in the group accounts, with such adjustment as would have been made if the accounts had been prepared in consolidated form,

aggregated in either case with the relevant figures for the subsidiaries (if any) omitted from the group accounts (excepting those for any subsidiary omitted under section 229(3)(a) on the ground of impracticability).

(4) In the case of each subsidiary omitted from the group accounts, the figures relevant as regards turnover, balance sheet total and numbers employed are those which are included in the accounts of that subsidiary prepared in respect of its relevant financial year (with such adjustment as would have been made if those figures had been included in group accounts prepared in consolidated form).

(5) For the purposes of subsection (4), the relevant financial year of the subsidiary is—

(a) if its financial year ends with that of the holding company to which the group accounts relate, that financial year, and

(b) if not, the subsidiary's financial year ending last before the end of the financial year of the holding company.

(6) If the directors are entitled to deliver modified accounts (whether as for a small or a medium-sized company), they may also deliver modified group accounts; and this means that the group accounts—

(a) if consolidated, may be in accordance with Part II of Schedule 8 (while otherwise comprising or corresponding with group accounts prepared under section 229). and

(b) if not consolidated, may be such as (together with any notes) give the same or equivalent information as required by paragraph (a) above;

and Part III of the Schedule applies to modified group accounts, whether consolidated or not.

251 Power of Secretary of State to modify ss. 247-250 and Sch. 8

(1) The Secretary of State may by regulations in a statutory instrument modify the provisions of sections 247(1) to (3), 248 to 250 and Schedule 8 ; and those provisions then apply as modified by regulations for the time being in force.

(2) Regulations under this section reducing the classes of companies which have the benefit of those provisions, or rendering the requirements of those provisions more onerous, shall not be made unless a draft of the instrument containing the regulations has been laid before Parliament and approved by a resolution of each House.

(3) Otherwise, a statutory instrument containing such regulations is subject to annulment in pursuance of a resolution of either House.