(This note is not part of the Regulations)
These Regulations require a company to which the Regulations apply to publish certain information about the company’s payment practices and policies and its performance by reference to those practices and policies.
Regulation 1(3) provides that these Regulations are to cease to have effect on 6th April 2024.
Regulation 2 sets out the definitions used in the Regulations.
Regulation 3 imposes a duty on a qualifying company to publish, for each reporting period, information on its payment practices and policies in relation to qualifying contracts and its performance in relation to those practices and policies. The Schedule sets out the information that is required in relation to each reporting period. The information must be published on a web-based service provided by or on behalf of the Secretary of State.
Regulation 4 provides that the information must be approved by a director of the qualifying company.
Regulation 5 defines which companies are qualifying companies. A company will be a qualifying company in relation to a financial year, if on the balance sheet dates for the two preceding financial years it exceeded certain thresholds in the Companies Act 2006 for medium-sized companies.
Regulation 6 defines which contracts are qualifying contracts. To be a qualifying contract, a relevant contract must not be for financial services, and must be governed by the law of a part of the United Kingdom other than by choice of the parties, or otherwise have a significant connection with the United Kingdom. A relevant contract is defined in section 3(2) of the Small Business, Enterprise and Employment Act 2015 – this is a contract for goods, services or intangible assets, made in connection with carrying on a business.
Regulation 7 determines the reporting periods for which a qualifying company must publish information. Generally there are two reporting periods per financial year. Regulation 7 provides for one or three reporting periods in a financial year if a company shortens or extends its accounting reference period under section 392 of the Companies Act 2006, so that a financial year lasts for 9 months or less, or for more than 15 months.
Failure to publish the information required, or publication of false or misleading information, is a criminal offence under regulations 8 and 9. Regulation 10 extends the time limit within which an offence under these Regulations can be prosecuted.
Regulation 11 requires the Secretary of State to review the operation and effect of these Regulations and publish a report within five years of the Regulations coming into force. Following the review it will fall to the Secretary of State to consider whether the Regulations should be allowed to expire as regulation 1(3) provides, be revoked early, or continue in force with or without amendment. A further instrument would be needed to continue the Regulations in force with or without amendments or to revoke them early.
A full impact assessment of the effect that this instrument will have on the costs to business and the voluntary sector is available from the Department for Business, Energy and Industrial Strategy at 1 Victoria Street, London SW1H 0ET and is published with an Explanatory Memorandum alongside the instrument on www.legislation.gov.uk.