F2F3F4F5Part VIIIAccounts and Audit
Pt. VIII substituted by S.I. 1990/593 (N.I. 5), Pt. II
Pt. VIII modified by S.R. 2004/307 (as amended (1.10.2006) by Limited Liability Partnerships (Amendment) Regulations (Northern Ireland) 2006 (S.R. 2006/377), reg. 2, Sch. 1)
Pt. VIII modified by {S.R. 2004/496}
Chapter 1Provisions Applying to Companies Generally
Annual accounts
F6Duty to prepare individual accounts234
1
The directors of every company shall prepare accounts for the company for each of its financial years.
Those accounts are referred to in this Part as the company's “individual accounts”.
2
A company's individual accounts may be prepared—
a
in accordance with Article 234A ( “Companies Order individual accounts”), or
b
in accordance with international accounting standards ( “IAS individual accounts”).
This paragraph is subject to the following provisions of this Article and Article 235C.
3
The individual accounts of a company that is a charity must be Companies Order individual accounts.
4
After the first financial year in which the directors of a company prepare IAS individual accounts ( “the first IAS year”), all subsequent individual accounts of the company must be prepared in accordance with international accounting standards unless there is a relevant change of circumstance.
5
There is a relevant change of circumstance if, at any time during or after the first IAS year—
a
the company becomes a subsidiary undertaking of another undertaking that does not prepare IAS individual accounts,
b
the company ceases to be a company with securities admitted to trading on a regulated market, or
c
a parent undertaking of the company ceases to be an undertaking with securities admitted to trading on a regulated market.
In this paragraph “regulated market” has the same meaning as it has in Council Directive 93/22/EEC on investment services in the securities field.
6
If, having changed to preparing Companies Order individual accounts following a relevant change of circumstance, the directors again prepare IAS individual accounts for the company, paragraphs (4) and (5) apply again as if the first financial year for which such accounts are again prepared were the first IAS year.
F7Companies Order individual accounts234A
1
Companies Order individual accounts must comprise—
a
a balance sheet as at the last day of the financial year, and
b
a profit and loss account.
2
The balance sheet must give a true and fair view of the state of affairs of the company as at the end of the financial year; and the profit and loss account must give a true and fair view of the profit or loss of the company for the financial year.
3
Companies Order individual accounts must comply with the provisions of Schedule 4 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.
4
Where compliance with the provisions of that Schedule, and the other provisions of this Order as to the matters to be included in a company's individual accounts or in notes to those accounts, would not be sufficient to give a true and fair view, the necessary additional information must be given in the accounts or in a note to them.
5
If in special circumstances compliance with any of those provisions is inconsistent with the requirement to give a true and fair view, the directors must depart from that provision to the extent necessary to give a true and fair view.
6
Particulars of any such departure, the reasons for it and its effect must be given in a note to the accounts.
F8IAS individual accounts234B
Where the directors of a company prepare IAS individual accounts, they must state in the notes to those accounts that the accounts have been prepared in accordance with international accounting standards.
F9F10Duty to prepare group accounts235
1
If at the end of a financial year a company is a parent company the directors, as well as preparing individual accounts for the year, shall prepare consolidated accounts for the group for the year. Those accounts are referred to in this Part as the company's “group accounts”.
2
The group accounts of certain companies are required by Article 4 of the IAS Regulation to be prepared in accordance with international accounting standards ( “IAS group accounts”).
3
The group accounts of other companies may be prepared—
a
in accordance with Article 235A ( “Companies Order group accounts”), or
b
in accordance with international accounting standards ( “IAS group accounts”).
This paragraph is subject to the following provisions of this Article.
4
The group accounts of a parent company that is a charity must be Companies Order group accounts.
5
After the first financial year in which the directors of a parent company prepare IAS group accounts ( “the first IAS year”), all subsequent group accounts of the company must be prepared in accordance with international accounting standards unless there is a relevant change of circumstance.
6
There is a relevant change of circumstance if, at any time during or after the first IAS year—
a
the company becomes a subsidiary undertaking of another undertaking that does not prepare IAS group accounts,
b
the company ceases to be a company with securities admitted to trading on a regulated market, or
c
a parent undertaking of the company ceases to be an undertaking with securities admitted to trading on a regulated market.
In this paragraph “regulated market” has the same meaning as it has in Council Directive 93/22/EEC on investment services in the securities field.
7
If, having changed to preparing Companies Order group accounts following a relevant change of circumstance, the directors again prepare IAS group accounts for the company, paragraphs (5) and (6) apply again as if the first financial year for which such accounts are again prepared were the first IAS year.
8
This Article is subject to the exemptions provided by Articles 236, 236A, 237(5) and 256.
F11Companies Order group accounts235A
1
Companies Order group accounts must comprise—
a
a consolidated balance sheet dealing with the state of affairs of the parent company and its subsidiary undertakings, and
b
a consolidated profit and loss account dealing with the profit or loss of the parent company and its subsidiary undertakings.
2
The accounts must give a true and fair view of the state of affairs as at the end of the financial year, and 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 company.
3
Companies Order group accounts must comply with the provisions of Schedule 4A 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.
4
Where compliance with the provisions of that Schedule, and the other provisions of this Order as to the matters to be included in a company's group accounts or in notes to those accounts, would not be sufficient to give a true and fair view, the necessary additional information must be given in the accounts or in a note to them.
5
If in special circumstances compliance with any of those provisions is inconsistent with the requirement to give a true and fair view, the directors must depart from that provision to the extent necessary to give a true and fair view.
6
Particulars of any such departure, the reasons for it and its effect must be given in a note to the accounts.
F12IAS group accounts235B
Where the directors of a parent company prepare IAS group accounts, they must state in the notes to those accounts that the accounts have been prepared in accordance with international accounting standards.
F13Consistency of accounts235C
1
Subject to the following provisions of this Article, the directors of a parent company must secure that the individual accounts of—
a
the parent company, and
b
each of its subsidiary undertakings,
are all prepared using the same financial reporting framework, except to the extent that in their opinion there are good reasons for not doing so.
2
Paragraph (1) does not apply if the directors do not prepare group accounts for the parent company.
3
Paragraph (1) only applies to accounts of subsidiary undertakings that are required to be prepared under this Part.
4
Paragraph (1) does not require accounts of undertakings that are charities to be prepared using the same financial reporting framework as accounts of undertakings which are not charities.
5
Paragraph (1)(a) does not apply where the directors of a parent company prepare IAS group accounts and IAS individual accounts.
F14Exemption for parent companies included in accounts of larger group236 F15
1
A company is exempt from the requirement to prepare group accounts if it is itself a subsidiary undertaking and its immediate parent undertaking is established under the law ofF16 an EEA state, in the following cases—
a
where the company is a wholly‐owned subsidiary of that parent undertaking;
b
where that parent undertaking holds more than 50 per cent. of the shares in the company and notice requesting the preparation of group accounts has not been served on the company by shareholders holding in aggregate—
i
more than half of the remaining shares in the company, or
ii
5 per cent. of the total shares in the company.
Such notice must be served not later than 6 months after the end of the financial year before that to which it relates.
2
Exemption is conditional upon compliance with all of the following conditions—
a
that the company is included in consolidated accounts for a larger group drawn up to the same date, or to an earlier date in the same financial year, by a parent undertaking established under the law ofF16 an EEA state;
b
that those accounts are drawn up and audited, and that parent undertaking's annual report is drawn up, according to that law, in accordance with the provisions of the Seventh Directive (83/349/EEC)F17 (where applicable as modified by the provisions of the Bank Accounts Directive (86/635/EEC))F18 or the Insurance Accounts Directive (91/674/EEC)F16 or in accordance with international accounting standards;
c
that the company discloses in its individual accounts that it is exempt from the obligation to prepare and deliver group accounts;
d
that the company states in its individual accounts the name of the parent undertaking which draws up the group accounts referred to above and—
i
if it is incorporated outside Northern Ireland, the country in which it is incorporated, and
ii
if it is unincorporated, the address of its principal place of business;
e
that the company delivers to the registrar, within the period allowed for delivering its individual accounts, copies of those group accounts and of the parent undertaking's annual report, together with the auditors' report on them; and
f
that if any document comprised in accounts and reports delivered in accordance with sub‐paragraph (e) is in a language other than English, there is annexed to the copy of that document delivered a translation of it into English, certified in the prescribed manner to be a correct translation.
3
4
Shares held by directors of a company for the purpose of complying with any share qualification requirement shall be disregarded in determining for the purposes of paragraph (1)(a) whether the company is a wholly‐owned subsidiary.
5
For the purposes of paragraph (1)(b) shares held by a wholly‐owned subsidiary of the parent undertaking, or held on behalf of the parent undertaking or a wholly‐owned subsidiary, shall be attributed to the parent undertaking.
6
In paragraph (3) “securities” includes—
a
shares and stock,
b
debentures, including debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness,
c
warrants or other instruments entitling the holder to subscribe for securities falling within sub‐paragraph (a) or (b), and
d
certificates or other instruments which confer—
i
property rights in respect of a security falling within sub‐paragraph (a), (b) or (c),
ii
any right to acquire, dispose of, underwrite or convert a security, being a right to which the holder would be entitled if he held any such security to which the certificate or other instrument relates, or
iii
a contractual right (other than an option) to acquire any such security otherwise than by subscription.
F19Exemption for parent companies included in non‐EEA group accounts236A
1
A company is exempt from the requirement to prepare group accounts if it is itself a subsidiary undertaking and its parent undertaking is not established under the law of an EEA State, in the following cases—
a
where the company is a wholly-owned subsidiary of that parent undertaking;
b
where that parent undertaking holds more than 50 per cent of the shares in the company and notice requesting the preparation of group accounts has not been served on the company by shareholders holding in aggregate—
i
more than half of the remaining shares in the company, or
ii
5 per cent of the total shares in the company.
Such notice must be served not later than six months after the end of the financial year before that to which it relates.
2
Exemption is conditional upon compliance with all of the following conditions—
a
that the company and all of its subsidiary undertakings are included in consolidated accounts for a larger group drawn up to the same date, or to an earlier date in the same financial year, by a parent undertaking;
b
that those accounts and, where appropriate, the group's annual report, are drawn up in accordance with the provisions of the Seventh Directive (83/349/EEC) (where applicable as modified by the provisions of the Bank Accounts Directive (86/635/EEC) or the Insurance Accounts Directive (91/674/EEC)), or in a manner equivalent to consolidated accounts and consolidated annual reports so drawn up;
c
that the consolidated accounts are audited by one or more persons authorised to audit accounts under the law under which the parent undertaking which draws them up is established;
d
that the company discloses in its individual accounts that it is exempt from the obligation to prepare and deliver group accounts;
e
that the company states in its individual accounts the name of the parent undertaking which draws up the group accounts referred to above and—
i
if it is incorporated outside Northern Ireland, the country in which it is incorporated, and
ii
if it is unincorporated, the address of its principal place of business;
f
that the company delivers to the registrar, within the period allowed for delivering its individual accounts, copies of the group accounts and, where appropriate, of the consolidated annual report, together with the auditors' report on them.
3
The exemption does not apply to a company any of whose securities are admitted to trading on a regulated market of any EEA State within the meaning of Council Directive 93/22/EEC on investment services in the securities field.
4
Shares held by directors of a company for the purposes of complying with any share qualification requirement are disregarded in determining for the purposes of paragraph (1)(a) whether the company is a wholly-owned subsidiary.
5
For the purposes of paragraph (1)(b), shares held by a wholly-owned subsidiary of the parent undertaking or held on behalf of the parent undertaking or a wholly-owned subsidiary, are attributed to the parent undertaking.
6
In paragraph (3) “securities” includes—
a
shares and stock,
b
debentures, including debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness,
c
warrants or other instruments entitling the holder to subscribe for securities falling within sub-paragraph (a) or (b), and
d
certificates or other instruments which confer—
i
property rights in respect of a security falling within sub-paragraph (a), (b) or (c),
ii
any right to acquire, dispose of, underwrite or convert a security, being a right to which the holder would be entitled if he held any such security to which the certificate or other instrument relates, or
iii
a contractual right (other than an option) to acquire any such security otherwise than by subscription.
F20Subsidiary undertakings included in the consolidation237 F21
1
2
A subsidiary undertaking may be excluded from consolidationF22 in Companies Order group accounts if its inclusion is not material for the purpose of giving a true and fair view; but two or more undertakings may be excluded only if they are not material taken together.
3
In addition, a subsidiary undertaking may be excluded from consolidationF22 in Companies Order group accounts where—
a
severe long‐term restrictions substantially hinder the exercise of the rights of the parent company over the assets or management of that undertaking, or
b
the information necessary for the preparation of group accounts cannot be obtained without disproportionate expense or undue delay, or
c
the interest of the parent company is held exclusively with a view to subsequent resaleF22. . . .
The reference in sub‐paragraph (a) to the rights of the parent company and the reference in sub‐paragraph (c) to the interest of the parent company are, respectively, to rights and interests held by or attributed to the company for the purposes of Article 266 (definition of “parent undertaking”) in the absence of which it would not be the parent company.
Para. (4) rep. by SR 2004/496
This paragraph does not apply merely because some of the undertakings are industrial, some commercial and some provide services, or because they carry on industrial or commercial activities involving different products or provide different services.
F225
A parent company is exempt from the requirement to prepare group accounts if under paragraph (2) or (3) all of its subsidiary undertakings could be excluded from consolidation in Companies Order group accounts.
F23Treatment of individual profit and loss account where group accounts prepared238 F24
1
The following provisions apply with respect to the individual profit and loss account of a parent company where—
a
the company is required to prepare and does prepare group accounts in accordance with this Order, and
b
the notes to the company's individual balance sheet show the company's profit or loss for the financial year determined in accordance with this Order.
2
F25Where the company prepares Companies Order individual accounts, The profit and loss account need not contain the information specified in paragraphs 52 to 57 of Schedule 4 (information supplementing the profit and loss account).
3
The profit and loss account must be approved in accordance with Article 241(1) (approval by board of directors) but may be omitted from the company's annual accounts for the purposes of the other provisions below in this Chapter.
4
The exemption conferred by this Article is conditional upon its being disclosed in the company's annual accounts that the exemption applies.
F26Disclosure required in notes to accounts: related undertakings239 F27
1
The information specified in Schedule 5 shall be given in notes to a company's annual accounts.
2
Where the company is not required to prepare group accounts, the information specified in Part I of that Schedule shall be given; and where the company is required to prepare group accounts, the information specified in Part II of that Schedule shall be given.
3
The information required by Schedule 5 need not be disclosed with respect to an undertaking which—
a
is established under the law of a country outside the United Kingdom, or
b
carries on business outside the United Kingdom,
if in the opinion of the directors of the company the disclosure would be seriously prejudicial to the business of that undertaking, or to the business of the company or any of its subsidiary undertakings, and the Department agrees that the information need not be disclosed.
This paragraph does not apply in relation to the information required underF28 paragraphF29. . . 6, 9A, 20 or 28A of that Schedule.
4
Where advantage is taken of paragraph (3), that fact shall be stated in a note to the company's annual accounts.
5
If the directors of the company are of the opinion that the number of undertakings in respect of which the company is required to disclose information under any provision of Schedule 5 is such that compliance with that provision would result in information of excessive length being given, the information need only be given in respect of—
a
the undertakings whose results or financial position, in the opinion of the directors, principally affected the figures shown in the company's annual accounts, and
b
undertakings excluded from consolidation under Article 237(3)F30. . . .
F29. . .
6
If advantage is taken of paragraph (5)—
a
there shall be included in the notes to the company's annual accounts a statement that the information is given only with respect to such undertakings as are mentioned in that paragraph, and
b
the full information (both that which is disclosed in the notes to the accounts and that which is not) shall be annexed to the company's next annual return.
For this purpose the “next annual return” means that next delivered to the registrar after the accounts in question have been approved under Article 241.
7
If a company fails to comply with paragraph (6)(b), the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.
F31Disclosure required in notes to annual accounts: particulars of staff239A
1
The following information with respect to the employees of the company must be given in notes to the company's annual accounts—
a
the average number of persons employed by the company in the financial year, and
b
the average number of persons so employed within each category of persons employed by the company.
2
The average number required by paragraph (1)(a) or (b) is determined by dividing the relevant annual number by the number of months in the financial year.
3
The relevant annual number is determined by ascertaining for each month in the financial year—
a
for the purposes of paragraph (1)(a), the number of persons employed under contracts of service by the company in that month (whether throughout the month or not);
b
for the purposes of paragraph (1)(b), the number of persons in the category in question of persons so employed;
and, in either case, adding together all the monthly numbers.
4
In respect of all persons employed by the company during the financial year who are taken into account in determining the relevant annual number for the purposes of paragraph (1)(a) there must also be stated the aggregate amounts respectively of—
a
wages and salaries paid or payable in respect of that year to those persons;
b
social security costs incurred by the company on their behalf; and
c
other pension costs so incurred.
This does not apply in so far as those amounts, or any of them, are stated elsewhere in the company's accounts.
5
For the purposes of paragraph (1)(b), the categories of person employed by the company are such as the directors may select, having regard to the manner in which the company's activities are organised.
6
This Article applies in relation to group accounts as if the undertakings included in the consolidation were a single company.
7
In this Article “social security costs” and “pension costs” have the same meaning as in Schedule 4 (see paragraph 92(1) and (2) of that Schedule).
F32Disclosure required in notes to accounts: emoluments and other benefits of directors and others240 F33
F341
The information specified in Schedule 6 shall be given in notes to a company's annual accounts, save that the information specified in paragraphs 2 to 14 in Part I of Schedule 6 shall be given only in the case of a company which is not a quoted company.
2
In that Schedule—
Part I relates to the emoluments of directors (including emoluments waived), pensions of directors and past directors, compensation for loss of office to directors and past directors and sums paid to third parties in respect of directors' services,
Part II relates to loans, quasi‐loans and other dealings in favour of directors and connected persons, and
Part III relates to transactions, arrangements and agreements made by the company or a subsidiary undertaking for officers of the company other than directors.
3
It is the duty of any director of a company, and any person who is or has at any time in the preceding 5 years been an officer of the company, to give notice to the company of such matters relating to himself as may be necessary for the purposes of Part I of Schedule 6.
4
A person who makes default in complying with paragraph (3) commits an offence and is liable to a fine.
mod. SR 1994/133