C16C14C3C4C6C13Part 15Accounts and reports
Pts. 1-39 modified (31.12.2020) by Regulation (EC) No. 2157/2001, Art. AAA1(3) (as inserted by The European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1298), regs. 1, 97 (with regs. 140-145) (as amended by S.I. 2020/523, regs. 1(2), 5(a)-(f)); 2020 c. 1, Sch. 5 para. 1(1))
Pt. 15 applied (with modifications) (6.4.2008) by The Bank Accounts Directive (Miscellaneous Banks) Regulations 2008 (S.I. 2008/567), reg. 4, Sch. para. 1 (with Sch. para. 11)
Pt. 15 applied (with modifications) (6.4.2008) by The Partnerships (Accounts) Regulations 2008 (S.I. 2008/569), regs. 4, 7, Sch. Pt. 1
Pt. 15 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 16 (with transitional provisions and savings in regs. 7, 9, Sch. 2)
Pts. 1-39 (except for Pt. 7 and ss. 662-669), 45-47 extended (12.5.2011) by The Companies Act 2006 (Consequential Amendments and Transitional Provisions) Order 2011 (S.I. 2011/1265), art. 5(1), Sch. 1 para. 2
C5C15C17Chapter 5Directors' report
Pt. 15 Ch. 5 applied (with modifications) (6.4.2008) by The Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 2008 (S.I. 2008/565), reg. 3
Pt. 15 Ch. 5 applied (with modifications) (31.7.2015) by The European Grouping of Territorial Cooperation Regulations 2015 (S.I. 2015/1493), regs. 1(2), 7(1) (with reg. 11)
Pt. 15 Ch. 5 applied (with modifications) by S.I. 2008/565, reg. 3 (as substituted (with effect in accordance with reg. 2(4) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 2 para. 3 (with reg. 2(6)(7)))
Directors' report
C7C19C21415Duty to prepare directors' report
1
The directors of a company must prepare a directors' report for each financial year of the company.
F71A
Subsection (1) does not apply if the company qualifies as a micro-entity (see sections 384A and 384B).
2
For a financial year in which—
a
the company is a parent company, and
b
the directors of the company prepare group accounts,
the directors' report must be a consolidated report (a “group directors' report”) relating to the undertakings included in the consolidation.
3
A group directors' report may, where appropriate, give greater emphasis to the matters that are significant to the undertakings included in the consolidation, taken as a whole.
4
In the case of failure to comply with the requirement to prepare a directors' report, an offence is committed by every person who—
a
was a director of the company immediately before the end of the period for filing accounts and reports for the financial year in question, and
b
failed to take all reasonable steps for securing compliance with that requirement.
5
A person guilty of an offence under this section is liable—
a
on conviction on indictment, to a fine;
b
on summary conviction, to a fine not exceeding the statutory maximum.
C19C8C23415AF1Directors' report: small companies exemption
1
A company is entitled to small companies exemption in relation to the directors' report for a financial year if—
a
it is entitled to prepare accounts for the year in accordance with the small companies regime, or
b
it would be so entitled but for being or having been a member of an ineligible group.
F102
F102
The exemption is relevant to section 416(3) (contents of report: statement of amount recommended by way of dividend).
I1C9C19C22416Contents of directors' report: general
1
The directors' report for a financial year must state—
a
the names of the persons who, at any time during the financial year, were directors of the company, and
F5b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F62
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Except in the case of a company F2entitled to the small companies exemption, the report must state the amount (if any) that the directors recommend should be paid by way of dividend.
4
The Secretary of State may make provision by regulations as to other matters that must be disclosed in a directors' report.
Without prejudice to the generality of this power, the regulations may make any such provision as was formerly made by Schedule 7 to the Companies Act 1985.
F11417Contents of directors' report: business review
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C10C20418Contents of directors' report: statement as to disclosure to auditors
1
This section applies to a company unless—
a
it is exempt for the financial year in question from the requirements of Part 16 as to audit of accounts, and
b
the directors take advantage of that exemption.
2
The directors' report must contain a statement to the effect that, in the case of each of the persons who are directors at the time the report is approved—
a
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
b
he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information.
3
“Relevant audit information” means information needed by the company's auditor in connection with preparing his report.
4
A director is regarded as having taken all the steps that he ought to have taken as a director in order to do the things mentioned in subsection (2)(b) if he has—
a
made such enquiries of his fellow directors and of the company's auditors for that purpose, and
b
taken such other steps (if any) for that purpose,
as are required by his duty as a director of the company to exercise reasonable care, skill and diligence.
5
Where a directors' report containing the statement required by this section is approved but the statement is false, every director of the company who—
a
knew that the statement was false, or was reckless as to whether it was false, and
b
failed to take reasonable steps to prevent the report from being approved,
commits an offence.
6
A person guilty of an offence under subsection (5) is liable—
a
on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
b
on summary conviction—
i
in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);
ii
in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).
C2C1C11C20C18419Approval and signing of directors' report
1
The directors' report must be approved by the board of directors and signed on behalf of the board by a director or the secretary of the company.
2
F3If in preparing the report advantage is taken of the small companies exemption,, it must contain a statement to that effect in a prominent position above the signature.
3
If a directors' report is approved that does not comply with the requirements of this Act, every director of the company who—
a
knew that it did not comply, or was reckless as to whether it complied, and
b
failed to take reasonable steps to secure compliance with those requirements or, as the case may be, to prevent the report from being approved,
commits an offence.
4
A person guilty of an offence under this section is liable—
a
on conviction on indictment, to a fine;
b
on summary conviction, to a fine not exceeding the statutory maximum.
C20C12 419A F4Approval and signing of separate corporate governance statement
Any separate corporate governance statement must be approved by the board of directors and signed on behalf of the board by a director or the secretary of the company.
Pt. 15 applied (with modifications) (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212), regs. 1(2), 162, 163 (with reg. 189)