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Companies Act 2006

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This is the original version (as it was originally enacted).

Group accounts: other companies

399Duty to prepare group accounts

(1)This section applies to companies that are not subject to the small companies regime.

(2)If at the end of a financial year the company is a parent company the directors, as well as preparing individual accounts for the year, must prepare group accounts for the year unless the company is exempt from that requirement.

(3)There are exemptions under–

  • section 400 (company included in EEA accounts of larger group),

  • section 401 (company included in non-EEA accounts of larger group), and

  • section 402 (company none of whose subsidiary undertakings need be included in the consolidation).

(4)A company to which this section applies but which is exempt from the requirement to prepare group accounts, may do so.

400Exemption for company included in EEA group accounts of larger group

(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 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% of the allotted 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 allotted shares in the company, or

(ii)5% of the total allotted 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)the company must be 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 of an EEA State;

(b)those accounts must be drawn up and audited, and that parent undertaking’s annual report must be drawn up, according to that law—

(i)in accordance with the provisions of the Seventh Directive (83/349/EEC) (as modified, where relevant, by the provisions of the Bank Accounts Directive (86/635/EEC) or the Insurance Accounts Directive (91/674/EEC)), or

(ii)in accordance with international accounting standards;

(c)the company must disclose in its individual accounts that it is exempt from the obligation to prepare and deliver group accounts;

(d)the company must state in its individual accounts the name of the parent undertaking that draws up the group accounts referred to above and—

(i)if it is incorporated outside the United Kingdom, the country in which it is incorporated, or

(ii)if it is unincorporated, the address of its principal place of business;

(e)the company must deliver to the registrar, within the period for filing its accounts and reports for the financial year in question, copies of—

(i)those group accounts, and

(ii)the parent undertaking’s annual report,

together with the auditor’s report on them;

(f)any requirement of Part 35 of this Act as to the delivery to the registrar of a certified translation into English must be met in relation to any document comprised in the accounts and reports delivered in accordance with paragraph (e).

(3)For the purposes of subsection (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.

(4)The exemption does not apply to a company any of whose securities are admitted to trading on a regulated market in an EEA State.

(5)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 this section whether the company is a wholly-owned subsidiary.

(6)In subsection (4) “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 paragraph (a) or (b), and

(d)certificates or other instruments that confer—

(i)property rights in respect of a security falling within 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.

401Exemption for company included in non-EEA group accounts of larger group

(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% of the allotted 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 allotted shares in the company, or

(ii)5% of the total allotted 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)the company and all of its subsidiary undertakings must be 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)those accounts and, where appropriate, the group’s annual report, must be drawn up—

(i)in accordance with the provisions of the Seventh Directive (83/349/EEC) (as modified, where relevant, by the provisions of the Bank Accounts Directive (86/635/EEC) or the Insurance Accounts Directive (91/674/EEC)), or

(ii)in a manner equivalent to consolidated accounts and consolidated annual reports so drawn up;

(c)the group accounts must be 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)the company must disclose in its individual accounts that it is exempt from the obligation to prepare and deliver group accounts;

(e)the company must state 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 the United Kingdom, the country in which it is incorporated, or

(ii)if it is unincorporated, the address of its principal place of business;

(f)the company must deliver to the registrar, within the period for filing its accounts and reports for the financial year in question, copies of—

(i)the group accounts, and

(ii)where appropriate, the consolidated annual report,

together with the auditor’s report on them;

(g)any requirement of Part 35 of this Act as to the delivery to the registrar of a certified translation into English must be met in relation to any document comprised in the accounts and reports delivered in accordance with paragraph (f).

(3)For the purposes of subsection (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.

(4)The exemption does not apply to a company any of whose securities are admitted to trading on a regulated market in an EEA State.

(5)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 this section whether the company is a wholly-owned subsidiary.

(6)In subsection (4) “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 paragraph (a) or (b), and

(d)certificates or other instruments that confer—

(i)property rights in respect of a security falling within 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.

402Exemption if no subsidiary undertakings need be included in the consolidation

A parent company is exempt from the requirement to prepare group accounts if under section 405 all of its subsidiary undertakings could be excluded from consolidation in Companies Act group accounts.

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