The Companies (Disclosure of Auditor Remuneration) Regulations 2005

Citation, commencement and transitional provision

1.—(1) These Regulations may be cited as the Companies (Disclosure of Auditor Remuneration) Regulations 2005 and shall come into force on 1st October 2005.

(2) These Regulations shall not apply to the accounts of a company for any financial year beginning before 1st October 2005; and the Companies Act 1985 (Disclosure of Remuneration for Non-Audit Work) Regulations 1991(1) shall not apply to the accounts of a company for any financial year beginning on or after that date.

Interpretation

2.—(1) In these Regulations—

“the 1985 Act” means the Companies Act 1985;

“associated pension scheme” means, in relation to a company, a scheme for the provision of benefits for or in respect of directors or employees (or former directors or employees) of the company or any subsidiary of the company where—

(a)

the benefits consist of or include any pension, lump sum, gratuity or other like benefit given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service, after retirement or death, and

(b)

either—

(i)

a majority of the trustees are appointed by (or by a person acting on behalf of) the company or a subsidiary of the company, or

(ii)

the company, or a subsidiary of the company, exercises a dominant influence over the appointment of the auditor (if any) of the scheme;

“director” has the meaning given in section 53(1) of the Companies Act 1989(2);

“parent” and “subsidiary” mean respectively a parent undertaking and a subsidiary undertaking as defined in section 258 of the 1985 Act(3) which is a body corporate; and a “parent company” and a “subsidiary company” are respectively a parent and a subsidiary which is a company;

“remuneration” includes payments in respect of expenses and benefits in kind.

(2) For the purposes of these Regulations—

(a) a company is small or medium-sized in relation to a financial year if it qualifies as small or medium-sized in relation to that year by virtue of section 247 of the 1985 Act(4) and is entitled to the exemptions mentioned in section 246 or 246A (as the case may be) of that Act(5) in its accounts for that year;

(b) references to an associate of a company are references to—

(i) any subsidiary of that company, other than a subsidiary in respect of which severe long-term restrictions substantially hinder the exercise of the rights of the company over the assets or management of the subsidiary; and

(ii) any scheme which is an associated pension scheme in relation to that company.

(c) a person is to be regarded as an associate of a company’s auditors if he is a person specified as such by Schedule 1 to these Regulations.

Disclosure of remuneration: small and medium-sized companies

3.—(1) In the notes to the annual accounts of a small or medium-sized company, there shall be disclosed the amount of any remuneration receivable by the company’s auditors for the auditing of the accounts.

(2) Where remuneration includes benefits in kind, its nature and estimated money-value shall also be disclosed in the notes.

(3) Where more than one person has been appointed as a company’s auditor during the period to which the accounts relate, separate disclosure is required in respect of remuneration of each such person.

Disclosure of remuneration: other companies

4.—(1) In the notes to the annual accounts of a company which is not a small or medium-sized company, there shall be disclosed the amount of—

(a) any remuneration receivable by the company’s auditors for the auditing of the accounts and

(b) subject to regulation 5(2), any remuneration receivable by—

(i) the company’s auditors or

(ii) any person who was, at any time during the period to which the accounts relate, an associate of the company’s auditors

for the supply of other services to the company or its associates.

(2) Where remuneration includes benefits in kind, its nature and estimated money-value shall also be disclosed in the notes.

(3) Separate disclosure is required in respect of the auditing of the accounts in question and of each type of service specified in Schedule 2, but not in respect of each service falling within a type of service.

(4) Separate disclosure is required in respect of services supplied to the company and its subsidiaries on the one hand and to associated pension schemes on the other.

(5) Where more than one person has been appointed as a company’s auditor during the period to which the accounts relate, separate disclosure is required in respect of the remuneration of each such person and his associates.

Group accounts

5.—(1) Group accounts shall comply with regulation 4(1)(b) as if the undertakings included in the consolidation were a single company, except where the group qualifies as small or medium-sized under section 249 of the 1985 Act(6) and is not an ineligible group under section 248(2) of that Act(7).

(2) The notes to the individual accounts of—

(a) a parent company which is required to prepare and does prepare group accounts in accordance with the 1985 Act; and

(b) a subsidiary company where its parent is required to prepare and does prepare group accounts in accordance with the 1985 Act and the company is included in the consolidation,

need not disclose the information required by regulation 4(1)(b) if the group accounts are required to comply with paragraph (1) of this regulation and the individual accounts state that the group accounts are so required.

Duty of auditors to supply information

6.  The auditors of a company shall supply the directors of the company with such information as is necessary to enable the disclosure required by regulation 4(1)(b) or 5(1) to be made.

Failure to make the required disclosure

7.  Sections 233(5) and 245 to 245C of the 1985 Act(8) shall apply in relation to a failure to make the disclosure required by regulations 3 and 4 as they apply in relation to a failure to comply with a requirement of the 1985 Act.

Barry Gardiner

Parliamentary Under-Secretary of State for Competitiveness

Department of Trade and Industry

25th August 2005