The Companies (Northern Ireland) Order 1986 (revoked)

[F1 Exemptions from audit for certain categories of small company]F28 N.I.

F1 SR 1995/128

F28 Order repealed (prosp.) by Companies Act 2006 (c. 46), ss. 1284(2), 1295, 1300(2), Sch. 16 and the repeal being partly in force, as to which see individual Articles (with savings (with adaptations) by Companies Act 2006 (Commencement No. 6, Saving and Commencement Nos. 3 and 5 (Amendment)) Order 2008 (S.I. 2008/674), arts. 2(3), {4}, Sch. 2) and subject to amendments (6.4.2008) by Companies Act 2006 (Consequential Amendments etc) Order 2008 (S.I. 2008/948), arts. 2(2), 3(1)(b)(2), Sch. 1 paras. 135, 147, 148 {Sch. 2 Note 1} (with arts. 6, 11, 12) and subject to amendments (6.4.2008) by S.R. 2008/133, {regs. 2, 3}

Exemptions from audit N.I.

257A .F2 —(1) Subject to Article 257B, a company which meets the total exemption conditions set out below in respect of a financial year is exempt from the provisions of this Part relating to the audit of accounts in respect of that year.

(2) Subject to Article 257B,[F3 a company which is a charity and] which meets the report conditions set out below in respect of a financial year is exempt from the provisions of this Part relating to the audit of accounts in respect of that year if the directors cause a report in respect of the company's individual accounts for that year to be prepared in accordance with Article 257C and made to the company's members.

(3) The total exemption conditions are met by a company in respect of a financial year if—

(a) it qualifies as a small company in relation to that year for the purposes of Article 254,

(b) its turnover in that year is not more than[F4 £5.6 million], and

(c) its balance sheet total for that year is not more than[F4 £2.8 million].

[F3 (3A) In relation to any company which is a charity, paragraph (3)(b) shall have effect with the substitution—

(a) for the reference to turnover of a reference to gross income, and

(b) for the reference to[F4 £5.6 million] of a reference to £90,000.]

(4) The report conditions are met by[F3 a company which is a charity] in respect of a financial year if—

(a) it qualifies as a small company in relation to that year for the purposes of Article 254,

(b) its[F3 gross income] in that year is more than £90,000 but not more than[F3 £250,000], and

(c) its balance sheet total for that year is not more than £1.4 million.

Para. (5) rep. by SR 1997/500

(6) For a period which is a company's financial year but not in fact a year the maximum figures for turnover or gross income shall be proportionately adjusted.

[F3 (6A) A company is entitled to the exemption conferred by paragraph (1) or (2) notwithstanding that it falls within sub-paragraph (a) or (b) of[F5 Article 257AA(1)].]

(7) In this Article—

• “balance sheet total” has the meaning given by Article 255(5), and

• “gross income” means the company's income from all sources, as shown in the company's income and expenditure account.

F2 mod. SR 1994/133

F3 SR 1997/500

F4 SR 2004/190

F5 SR 2001/153

[F6 Dormant Companies N.I.

257AA.— (1) Subject to Article 257B(2) to (5), a company is exempt from the provisions of this Part 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 paragraph (2) applies.

(2) This paragraph applies if the company—

(a) is entitled in respect of its individual accounts for the financial year in question to prepare accounts in accordance with Article 254, or would be so entitled but for the application [F7 to it of paragraph (1A), (1B)(a) or (1C)(a) of Article 255A] , and

(b) is not required to prepare group accounts for that year.

(3) Paragraph (1) does not apply if at any time in the financial year in question the company was—

[F8 [F9 (a) an authorised insurance company, a banking company, an e-money issuer, an ISD investment firm or a UCITS management company;]

(b) a person who carries on insurance market activity.]

(4) A company is "dormant" during any period in which it has no significant accounting transaction.

(5) “Significant accounting transaction” means a transaction which—

(a) is required by Article 229 to be entered in the company's accounting records; but

(b) is not a transaction to which paragraph (6) or (7) applies.

(6) This paragraph applies to a transaction arising from the taking of shares in the company by a subscriber to the memorandum as a result of an undertaking of his in the memorandum.

(7) This paragraph applies to a transaction consisting of the payment of—

(a) a fee to the registrar on a change of name under Article 38 (change of name),

(b) a fee to the registrar on the re-registration of a company under Part III (re-registration as a means of altering a company's status),

(c) a penalty under Article 250A (penalty for failure to deliver accounts), or

(d) a fee to the registrar for the registration of an annual return under Chapter III of Part XII.]

F6 SR 2001/153

F7 Words in art. 257AA(2)(a) substituted (1.12.2006) by Companies (1986 Order) (Small Companies' Accounts and Audit) Regulations (Northern Ireland) 2006 (S.R. 2006/438), reg. 4(2)

F8 SI 2001/3649

F9 Art. 257AA(3)(a) substituted (1.12.2006) by Companies (1986 Order) (Small Companies' Accounts and Audit) Regulations (Northern Ireland) 2006 (S.R. 2006/438), reg. 4(3)

Cases where exemptions not available N.I.

257B .F10 —(1)  [F11 Subject to[F12 paragraphs (1A) to (1C)],] a company is not entitled to the exemption conferred by paragraph (1) or (2) of Article 257A in respect of a financial year if at any time within that year—

(a) it was a public company,

[F13 (b) it was an authorised insurance company, a banking company, an e-money issuer, an ISD investment firm or a UCITS management company,]

[F14 (bb) it carried on an insurance market activity,]

Sub‐para. (c) rep. by SI 2001/1283

(d) F15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) it was an employers' association as defined in Article 4 of the Industrial Relations (Northern Ireland) Order 1992,

(f) it was a parent company or a subsidiary undertaking.

[F11 (1A) A company which, apart from this paragraph, would fall within paragraph (1)(f) by virtue of its being a subsidiary undertaking for any period within a financial year shall not be treated as so falling if it is dormant (within the meaning of[F16 Article 257AA]) throughout that period.]

[F12 (1B) A company which, apart from this paragraph, would fall within paragraph (1)(f) by virtue of its being a parent company or a subsidiary undertaking for any period within a financial year, shall not be treated as so falling if throughout that period it was a member of a group meeting the conditions set out in paragraph (1C).

(1C) The conditions referred to in paragraph (1B) are—

(a) that the group qualifies as a small group, in relation to the financial year within which the period falls, for the purposes of Article 257[F16 (or if all bodies corporate in such group were companies, would so qualify)] and is not, and was not at any time within that year, an ineligible group within the meaning of Article 256(2).

(b) that the group's aggregate turnover in that year (calculated in accordance with Article 257) is[F16 , where the company referred to in paragraph (1B) is a charity,] not more than £350,000 net (or £420,000 gross)[F16 or,where the company so referred to is not a charity,[F17 not more than £5.6 million net (or £6.72 million gross)]], and

(c) that the group's aggregate balance sheet total for that year (calculated in accordance with Article 257) is[F17 not more than £2.8 million net (or £3.36 million gross)].]

(2) Any member or members holding not less in the aggregate than 10 per cent in nominal value of the company's issued share capital or any class of it or, if the company does not have a share capital, not less than 10 per cent in number of the members of the company, may, by notice in writing deposited at the registered office of the company during a financial year but not later than one month before the end of that year, require the company to obtain an audit of its accounts for that year.

(3) Where a notice has been deposited under paragraph (2), the company is not entitled to the exemption conferred by paragraph (1) or (2) of Article 257A[F16 or by paragraph (1) of Article 257AA] in respect of the financial year to which the notice relates.

(4) A company is not entitled to the exemption conferred by paragraph (1) or (2) of Article 257A[F16 or by paragraph (1) of Article 257AA] unless its balance sheet contains a statement by the directors—

(a) [F11 to the effect] that for the year in question the company was entitled to exemption under paragraph (1) or (2)F16 . . . of Article 257A[F16 or paragraph (1) of Article 257AA],

[F16 (b) to the effect that members have not required the company to obtain an audit of its accounts for the year in question in accordance with paragraph (2), and]

(c) [F11 to the effect] that the directors acknowledge their responsibilities for—

(i) ensuring that the company keeps accounting records which comply with Article 229, and

(ii) preparing accounts which give a true and fair view of the state of affairs of the company as at the end of the financial year and of its profit or loss for the financial year in accordance with the requirements of Article 234, and which otherwise comply with the requirements of this Order relating to accounts, so far as applicable to the company.

(5) The statement required by paragraph (4) shall appear in the balance sheet[F11 above the signature required by Article 241].

F10 mod. SR 1994/133

F11 SR 1997/314

F12 SR 1997/500

F13 Art. 257B(1)(b) substituted (1.12.2006) by Companies (1986 Order) (Small Companies' Accounts and Audit) Regulations (Northern Ireland) 2006 (S.R. 2006/438), reg. 5(2)

F14 SI 2001/3649

F15 Art. 257B(1)(d) omitted (1.12.2006) by virtue of Companies (1986 Order) (Small Companies' Accounts and Audit) Regulations (Northern Ireland) 2006 (S.R. 2006/438), reg. 5(3)

F16 SR 2001/153

F17 SR 2004/190

The report required for the purposes of Article 257A(2) N.I.

257C .F18 —(1) The report required for the purposes of Article 257A(2) shall be prepared by a person (referred to in this Part as “the reporting accountant”) who is eligible under Article 257D.

(2) The report shall state whether in the opinion of the reporting accountant making it—

(a) the accounts of the company for the financial year in question are in agreement with the accounting records kept by the company under Article 229, and

(b) having regard only to, and on the basis of, the information contained in those accounting records, those accounts have been drawn up in a manner consistent with the provisions of this Order specified in paragraph (6), so far as applicable to the company.

(3) The report shall also state that in the opinion of the reporting accountant, having regard only to, and on the basis of, the information contained in the accounting records kept by the company under Article 229, the company satisfied the requirements of paragraph (4) of Article 257AF19 . . . for the financial year in question, and did not fall within Article 257B(1)(a) to (f) at any time within that financial year.

(4) The report shall state the name of the reporting accountant and be signed by him.

(5) Where the reporting accountant is a body corporate or partnership, any reference to signature of the report, or any copy of the report, by the reporting accountant is a reference to signature in the name of the body corporate or partnership by a person authorised to sign on its behalf.

(6) The provisions referred to in paragraph (2)(b) are—

(a) [F20 Article 234A(3)] and Schedule 4,

(b) Article 239 and paragraphs 7 to 9A and 13(1), (3) and (4) of Schedule 5, and

(c) Article 240 and Schedule 6,

where appropriate as modified by[F21 Article 254(2) and (3)].

F18 mod. SR 1994/133

F19 SR 2001/153

F20 SR 2004/496

F21 SR 1997/436

The reporting accountant N.I.

257D .F22 —(1) The reporting accountant shall be either—

(a) any member of a body listed in paragraph (4) who, under the rules of the body—

(i) is entitled to engage in public practice, and

(ii) is not ineligible for appointment as a reporting accountant, or

(b) any person (whether or not a member of any such body) who—

(i) is subject to the rules of any such body in seeking appointment or acting as auditor under Chapter V of Part XII, and

(ii) under those rules, is eligible for appointment as auditor under that Chapter.

(2) In paragraph (1), references to the rules of a body listed in paragraph (4) are to the rules (whether or not laid down by the body itself) which the body has power to enforce and which are relevant for the purposes of Part III of the Companies (Northern Ireland) Order 1990 or this Article.

This includes rules relating to the admission and expulsion of members of the body, so far as relevant for the purposes of that Part or this Article.

(3) An individual, a body corporate or a partnership may be appointed as a reporting accountant, and Article 29 of the Companies (Northern Ireland) Order 1990 (effect of appointment of partnership) shall apply to the appointment as reporting accountant of a partnership constituted under the law of England and Wales or Northern Ireland, or under the law of any other country or territory in which a partnership is not a legal person.

(4) The bodies referred to in paragraphs (1) and (2) are—

(a) the Institute of Chartered Accountants in England and Wales,

(b) the Institute of Chartered Accountants of Scotland,

(c) the Institute of Chartered Accountants in Ireland,

(d) [F23 the Association of Chartered Certified Accountants,]F24 . . .

(e) the Association of Authorised Public Accountants[F24 ,and]

[F24 (f) the Institute of Chartered Secretaries and Administrators.]

.

(5) A person is ineligible for appointment by a company as a reporting accountant if he would be ineligible for appointment as an auditor of that company under Article 30 of the Companies (Northern Ireland) Order 1990 (ineligibility on ground of lack of independence).

F22 mod. SR 1994/133

F23 SR 1997/500

F24 SR 2004/190

Effect of exemptions N.I.

257E .F25 —(1) Where the directors of a company have taken advantage of the exemption conferred by Article 257A(1) [F26 or 257AA(1)]

(a) Articles 246 and 247 (right to receive or demand copies of accounts and reports) shall have effect with the omission of references to the auditors' report;

(b) no copy of an auditors' report need be delivered to the registrar or laid before the company in general meeting;

(c) paragraphs (3) to (5) of Article 279 (accounts by reference to which distribution to be justified) shall not apply.

[F26 (1A) Where the directors of a company have taken advantage of the exemption conferred by Article 257AA, then for the purposes of that Article the company shall be treated as a company entitled to prepare accounts in accordance with Article 254 even though it is a member of an ineligible group.]

(2) Where the directors of a company have taken advantage of the exemption conferred by Article 257A(2)—

(a) paragraphs (2) to (4) of Article 244 (which require copies of the auditors' report to state the names of the auditors) shall have effect with the substitution for references to the auditors and the auditors' report of references to the reporting accountant and the report made for the purposes of Article 257A(2) respectively;

(b) Articles 246 and 247 (right to receive or demand copies of accounts and reports), Article 249 (accounts and reports to be laid before company in general meeting) and Article 250 (accounts and reports to be delivered to the registrar) shall have effect with the substitution for references to the auditors' report of references to the report made for the purposes of Article 257A(2);

(c) paragraphs (3) to (5) of Article 279 (accounts by reference to which distribution to be justified) shall not apply;

(d) F27 Article 397A(1) and (2) (rights to information) shall have effect with the substitution for references toF27 the auditors of references to the reporting accountant.

F25 mod. SR 1994/133

F26 SR 2001/153

F27 prosp. subst. by 2005 NI 17

Art. 258 rep. by SR 2001/153