The Companies and Partnerships (Accounts and Audit) Regulations 2013

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend certain accounting and auditing provisions in the Companies Act 2006 (“the 2006 Act”) and certain provisions of the 2006 Act as they are applied to LLPs by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911). The Regulations also make amendments to the Partnerships (Accounts) Regulations 2008 (S.I. 2008/569) (“the 2008 Partnerships Regulations”).

Regulation 2 amends section 448 of the 2006 Act. Where certain conditions are met section 448(1) exempts the directors of an unlimited company from the obligation which would otherwise arise under Chapter 10 of Part 15 of the 2006 Act to deliver accounts and reports in relation to the company to the registrar of companies. Section 448(3) provides that this exemption is not available in relation to certain descriptions of unlimited company. The purpose of section 448(3)(b) is to ensure that the exemption is not available in relation to unlimited companies covered by Council Directive 78/660/EEC on the annual accounts of certain types of companies (O.J. L222, 14.8.1978, p.11). However, it is drafted in such a way that the exemption is available to certain unlimited companies which are covered by that Directive. Regulation 2 remedies this defect by amending section 448(3) and replacing section 448(5).

Regulation 2 also amends the definition of e-money issuers in the Companies Act 2006 to take into account changes made to the regulation of the activity of e-money issuing under the Electronic Money Directive 2009/11/EC (O.J. L267, 10.10.2009, p.7) and applies these changes to limited liability partnerships, where this has not already been done in the Electronic Money Regulations 2011 (SI 2011/99). It ensures that e-money issuers are excluded from certain exemptions to accounting and auditing requirements under the 2006 Act.

Regulation 4 amends the 2008 Partnerships Regulations. It amends the United Kingdom’s implementation, in respect of partnerships, of Council Directive 90/605/EEC (O.J. L317, 16.11.1990, p.60), which amended Council Directive 78/660/EEC and Council Directive 83/349/EEC on consolidated accounts (O.J. L193, 18.7.1983, p.1), and of Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts (O.J. L157, 9.6.2006, p.87).

Regulation 4(3) replaces regulation 3 of the 2008 Regulations with new regulations 3 and 3A. New regulation 3 provides a new definition of “qualifying partnership”, replacing the definition in regulation 3(1) and (4) of the 2008 Regulations, and also re-enacts (with clarifications) the provision in existing regulation 3(3) dealing with the effect of changes in the constitution of a qualifying partnership. The purpose of providing for a new definition is to ensure that the “qualifying partnerships” covered by the 2008 Regulations are those United Kingdom partnerships to which Council Directive 78/660/EEC applies.

New regulation 3A defines references in regulations 4 to 15 of the 2008 Regulations to the members of a qualifying partnership. It replaces the provision made for that purpose by existing regulation 3(2) and (4) of the 2008 Regulations, read with existing regulation 2(2). The new provisions correct defects in the existing provisions and clarify their effect. They do not re-enact an existing provision which includes in the concept of a member of a qualifying partnership the members of certain connected partnerships.

Regulation 4(5) of these Regulations amends regulation 6 of the 2008 Regulations, which imposes requirements necessary to enable the United Kingdom to take advantage of the option to derogate in Article 47(1a) of Council Directive 78/660/EEC. The amendments correct defects in existing regulation 6(1) to 6(3), ensuring that the requirement in regulation 6(3) for partnership accounts to be available for inspection applies where the Directive requires it to apply.

Regulations 5 & 6 make amendments to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (S.I. 2008/409) and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410) to take account of the changes to the 2008 Partnership Regulations.

Regulation 7 corrects an oversight in the 2008 Regulations by revoking the Partnerships and Unlimited Companies (Accounts) (Amendment) Regulations 2005 (S.I. 2005/1987) and the Partnerships and Unlimited Companies (Accounts) (Amendment) Regulations (Northern Ireland) 2006 (NI) 2006 No 354). These are spent as they amend instruments which have been revoked.

A full regulatory impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available from the Business Environment Directorate, Department for Business, Innovation and Skills, 1 Victoria Street, London SW1H OET or from www.gov.uk/bis and is annexed to the Explanatory Memorandum which is available alongside the instrument at www.legislation.gov.uk.