Source: http://www.legislation.gov.uk/cy/uksi/2004/2947/made
Timestamp: 2019-05-19 17:47:51
Document Index: 286209666

Matched Legal Cases: ['art 1', 'art 1', 'art 8', 'art 2', 'art 3', 'art 1', 'art 1', 'ART 1', 'art 5', 'art 2', 'art 7', 'art 2', 'art 7', 'art 3', 'art 7', 'art 2']

The Secretary of State, in exercise of the powers conferred upon her by section 257 of the Companies Act 1985(1) and of all other powers enabling her in that behalf, hereby makes the following Regulations of which a draft has been laid before Parliament in accordance with section 257(2) of that Act and approved by resolution of each House of Parliament:
1.—(1) These Regulations may be cited as the Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004.
(2) These Regulations come into force on the day after the day on which they are made, and have effect as respects companies' financial years which begin on or after 1st January 2005.
2. For sections 226 and 227 of the 1985 Act (duty to prepare individual and group accounts)(2) substitute–
226.—(1) The directors of every company shall prepare accounts for the company for each of its financial years.
(2) A company’s individual accounts may be prepared–
(a)in accordance with section 226A (“Companies Act individual accounts”), or
This subsection is subject to the following provisions of this section and section 227C (consistency of accounts).
(3) The individual accounts of a company that is a charity must be Companies Act individual accounts.
(5) There is a relevant change of circumstance if, at any time during or after the first IAS year–
In this subsection “regulated market” has the same meaning as it has in Council Directive 93/22/EEC on investment services in the securities field.(3)
(6) If, having changed to preparing Companies Act individual accounts following a relevant change of circumstance, the directors again prepare IAS individual accounts for the company, subsections (4) and (5) apply again as if the first financial year for which such accounts are again prepared were the first IAS year.
226A.—(1) Companies Act individual accounts must comprise–
(3) Companies Act individual accounts must comply with the provisions of Schedule 4 as to the form and content of the balance sheet and profit and loss account and additional information to be provided by way of notes to the accounts.
(4) Where compliance with the provisions of that Schedule, and the other provisions of this Act as to the matters to be included in a company’s individual accounts or in notes to those accounts, would not be sufficient to give a true and fair view, the necessary additional information must be given in the accounts or in a note to them.
226B. Where the directors of a company prepare IAS individual accounts, they must state in the notes to those accounts that the accounts have been prepared in accordance with international accounting standards.
227.—(1) If at the end of a financial year a company is a parent company the directors, as well as preparing individual accounts for the year, shall prepare consolidated accounts for the group for the year.
Those accounts are referred to in this Part as the company’s “group accounts”.
(2) The group accounts of certain parent companies are required by Article 4 of the IAS Regulation to be prepared in accordance with international accounting standards (“IAS group accounts”).
(3) The group accounts of other companies may be prepared–
(a)in accordance with section 227A (“Companies Act group accounts”), or
(4) The group accounts of a parent company that is a charity must be Companies Act group accounts.
(6) There is a relevant change of circumstance if, at any time during or after the first IAS year–
(7) If, having changed to preparing Companies Act group accounts following a relevant change of circumstance, the directors again prepare IAS group accounts for the company, subsections (5) and (6) apply again as if the first financial year for which such accounts are again prepared were the first IAS year.
(8) This section is subject to the exemptions provided by sections 228 (parent companies included in accounts of larger EEA group), 228A (parent companies included in non-EEA group accounts), 229(5) (all subsidiary undertakings excluded from consolidation) and 248 (small and medium-sized groups).
227A.—(1) Companies Act group accounts must comprise–
(3) Companies Act group accounts must comply with the provisions of Schedule 4A as to the form and content of the consolidated balance sheet and consolidated profit and loss account and additional information to be provided by way of notes to the accounts.
(4) Where compliance with the provisions of that Schedule, and the other provisions of this Act as to the matters to be included in a company’s group accounts or in notes to those accounts, would not be sufficient to give a true and fair view, the necessary additional information must be given in the accounts or in a note to them.
227B. Where the directors of a parent company prepare IAS group accounts, they must state in the notes to those accounts that the accounts have been prepared in accordance with international accounting standards.
227C.—(1) The directors of a parent company must secure that the individual accounts of–
(2) Subsection (1) does not apply if the directors do not prepare group accounts for the parent company.
(4) Subsection (1) does not require accounts of undertakings that are charities to be prepared using the same financial reporting framework as accounts of undertakings which are not charities.
(5) Subsection (1)(a) does not apply where the directors of a parent company prepare IAS group accounts and IAS individual accounts.”
3. Schedule 1 (IAS accounts: consequential amendments to the 1985 Act) has effect.
4. After section 228 of the 1985 Act insert the following–
228A.—(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 –
5. In section 229 of the 1985 Act (subsidiary undertakings included in the consolidation)(4)–
(a)in subsection (3)(c), omit from “and the undertaking” to the end, and
6.—(1) Section 235 of the 1985 Act (auditors' report)(5) is amended as follows.
7. In section 236(1) of the 1985 Act (signature of auditors' report)(6), after “signed” insert “and dated”.
8. In section 240(3) of the 1985 Act (requirements in connection with publication of accounts)(7)–
(a)at the end of paragraph (c) omit “and”, and
(b)for paragraph (d) substitute–
“(d)whether any such auditors' report–
(ii)contained a statement under section 237(2) or (3) (accounting records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations); and
(e)whether any report made for the purposes of section 249A(2) was qualified;”.
9. Omit subsection (3) of section 244 of the 1985 Act (3 month extension of period allowed for laying and delivering accounts and reports where oversea interests)(8).
10.—(1) Section 245 of the 1985 Act (voluntary revision of defective accounts and reports)(9) is amended as follows.
(3) In subsection (3), after “annual accounts” insert “or a revised summary financial statement”.
(4) In subsection (4)(a) and (b), for “or report” substitute “, statement or report”.
11.—(1) For the heading before section 251 of the 1985 Act (provision of summary financial statement to shareholders)(10) substitute “ Summary financial statement”.
12.—(1) In section 258(4) of the 1985 Act (parent and subsidiary undertakings)(11)–
(a)omit “ it has a participating interest in the undertaking and”, and
(b)for paragraph (a) substitute–
(2) The modification of section 258(4) in paragraph (1) also applies for the purposes of—
(a)the Building Societies Act 1986(12), and
(b)the Financial Services and Markets Act 2000(13).
13.—(1) In Schedule 7 to the 1985 Act (disclosures to be made in directors' report)(14), after paragraph 5 insert–
(2) In sub-paragraph (1) the expressions “hedge accounting”, “price risk”, “credit risk”, “liquidity risk” and “cash flow risk” have the same meaning as they have in Council Directive 78/660/EEC on the annual accounts of certain types of companies, and in Council Directive 83/349/EEC on consolidated accounts, as amended.”(15)
(2) In section 246(4) of the 1985 Act (exemptions for small companies from disclosures in directors' report)(16), after paragraph (b) insert–
Amendment of Schedules to the 1985 Act
14.—(1) Schedule 4 to the 1985 Act (form and content of company accounts)(17) is amended in accordance with Schedule 2 to these Regulations.
(2) Schedule 8 to the 1985 Act (form and content of accounts prepared by small companies)(18) is amended in accordance with Schedule 3 to these Regulations.
(3) Schedule 8A to the 1985 Act (form and content of abbreviated accounts of small companies delivered to registrar)(19) is amended in accordance with Schedule 4 to these Regulations.
(4) Schedule 9 to the 1985 Act (form and content of accounts of banking companies and groups)(20) is amended in accordance with Schedule 5 to these Regulations.
(5) Schedule 9A to the 1985 Act (form and content of accounts of insurance companies and groups)(21) is amended in accordance with Schedule 6 to these Regulations.
Minister for Industry and the Regions and Deputy Minister for Women and Equality,
SCHEDULE 1IAS ACCOUNTS: CONSEQUENTIAL AMENDMENTS TO 1985 ACT
1. The 1985 Act is amended as follows.
4. In section 221 (duty to keep accounting records)(22), in subsections (1)(b) and (4)–
5. In section 222(3)(b) (accounts and returns to be sent to Great Britain)(23)–
6. In section 228 (exemption from obligation to prepare group accounts for parent companies included in accounts of larger group)(24), in subsection (2)(b) at the end insert “or in accordance with international accounting standards”.
8. In section 230 (treatment of individual profit and loss account where group accounts prepared)(25), in subsection (2) at the beginning insert “Where the company prepares Companies Act individual accounts,”.
231A.—(1) The following information with respect to the employees of the company must be given in notes to the company’s annual accounts–
10. In section 233(5) (criminal penalty for failing to comply with accounting requirements)(26), after “requirements of this Act” insert “(or, where applicable, of Article 4 of the IAS Regulation)”.
11.—(1) In sections 245 to 245C (revision of defective accounts or reports)(27) , after “requirements of this Act”, wherever occurring, insert “(or, where applicable, of Article 4 of the IAS Regulation)”.
12.—(1) Section 246 (special provisions for small companies)(28) is amended as follows.
13. In section 246A(1) (special provisions for medium-sized companies)(29), in subsection (1) at the end insert “and its directors prepare Companies Act individual accounts for that year”.
14. In section 247 (qualification of company as small or medium-sized)(30), for subsection (5) substitute–
15. In section 248A(1)(b) (group accounts prepared by small company)(31) for “group accounts” substitute “Companies Act group accounts”.
16. In section 249C (report required for the purposes of exemption from audit under section 249A)(32), in subsection (6)(a), for “section 226(3)” substitute “section 226A(3)”.
17. In section 255 (special provisions for banking and insurance companies)(33), after subsection (4) insert–
18.—(1) Section 255A (special provisions for banking and insurance groups)(34) is amended as follows.
19. In section 261(2) (notes to the accounts)(35), after “any provision of this Act” insert “or international accounting standards”.
20.—(1) Section 262 (minor definitions)(36) is amended as follows.
“ “IAS Regulation” means EC Regulation No. 1606/2002 of the European Parliament and of the Council of 19th July 2002 on the application of international accounting standards;”(37);
21.—(1) Section 262A (index of defined expressions)(38) is amended as follows.
“Companies Act accounts Section 262(1)”
“Companies Act group accounts Sections 227(2) and 255A(6A)”
“Companies Act individual accounts Sections 226(2) and 255(4A)”
“group accounts Section 227(1)”
“IAS accounts Section 262(1)”
“IAS group accounts Section 227(2) and (3)”
“IAS individual accounts Section 226(2)”
“IAS Regulation Section 262(1)”
“international accounting standards Section 262(1)”.
(3) After the entry for “profit and loss account (includes notes)” insert–
“(in relation to IAS accounts) Section 262(1)”.
(4) For the entry for “true and fair view” substitute–
“true and fair view Section 262(2A)”.
22. In section 264(2) (restriction on distribution of assets), after “Schedule 4” insert “that is made in Companies Act accounts and any provision that is made in IAS accounts”.
23. In section 265(2) (other distributions by investment companies)(39), at the end insert “that is made in Companies Act accounts and any provision that is made in IAS accounts”.
24. In section 268(2)(aa) (realised profits of insurance company with long term business)(40)–
25.—(1) Section 269(2) (treatment of development costs)(41) is amended as follows.
27. In section 272(3) (interim accounts must be properly prepared)(42) after “that section” insert “and sections 226A and 226B”.
29. In section 742(1) (expressions used in connection with accounts)(43) insert at the appropriate place “ “Companies Act accounts” ”, “ “Companies Act individual accounts” ”, “ “IAS accounts” ” and “ “IAS individual accounts” ”.
30.—(1) Section 744A (index of defined expressions)(44) is amended as follows.
“Companies Act accounts Sections 262(1) and 742(1)”
“Companies Act individual accounts Sections 226(2), 255(4A) and 742(1)”
“IAS accounts Sections 262(1) and 742(1)”
“IAS individual accounts Sections 226(2) and 742(1)”.
(3) In the definition of “profit and loss account”, in the second column, for “262(1)” substitute “262(1) and (2)”.
31.—(1) Schedule 4 (form and content of company accounts)(45) is amended as follows.
32. In paragraph 25 of Schedule 6 (disclosure of information: emoluments and other benefits of directors and others)(46), after “Schedule 4” insert “that is made in Companies Act accounts and any provision that is made in IAS accounts”.
33. In Schedule 7, in paragraph 12(5)(c) (identifying amounts owed to trade creditors for purposes of directors' report)(47) after “Schedule 9 or 9A” insert “or the company’s accounts are IAS accounts”.
34. In Part 1 of Schedule 9 (form and content of banking companies' accounts)(48)–
35. In Part 1 of Schedule 9A (form and content of insurance companies' accounts)(49)–
36.—(1) Schedule 11 (modifications of Part 8 for banking and insurance companies)(50) is amended as follows.
2. Omit sub-paragraph (7) of paragraph 3 (dividends in profit and loss account to be shown as separate items)(51).
3. After paragraph 5 insert–
(2) That expression occurs–
5. In paragraph 12(b) (extent to which liabilities and losses to be taken into account) omit “and losses” and “or are likely to arise”.
6.—(1) Part 2 (accounting principles and rules) is amended as follows.
(2) In paragraph 16 (general requirement to use historical cost accounting), for “Subject to section C” substitute “Subject to sections C and D”.
(3) After section C insert–
(2) Sub-paragraph (1) does not apply to financial instruments which constitute liabilities unless–
(3) Sub-paragraph (1) does not apply to–
34D.—(1) This paragraph applies to–
(2) Notwithstanding paragraph 12 of this Schedule, and subject to sub-paragraphs (3) and (4) below, a change in the value of the financial instrument or of the investment property or living animal or plant must be included in the profit and loss account.
(4) Where the instrument accounted for–
(2) The treatment for taxation purposes of amounts credited or debited to the fair value reserve must be disclosed in a note to the accounts.”
7.—(1) Part 3 (notes to the accounts) is amended as follows.
(2) After paragraph 35 insert–
35A. There must be stated–
(d)the aggregate amount of dividends that are proposed before the date of approval of the accounts, and not otherwise disclosed under paragraph (b) or (c)”.
(3) After paragraph 45(52) insert–
(b)for each category of financial instrument, the fair value of the instruments in that category and the changes in value–
(3) Where any amount is transferred to or from the fair value reserve during the financial year, there must be stated in tabular form–
45B. Where the company has derivatives that it has not included at fair value, there must be stated for each class of such derivatives–
45C.—(1) Sub-paragraph (2) applies if–
(c)the company has not made provision for diminution in value of those assets in accordance with paragraph 19(1) of this Schedule.
(3) In the case of investment property, for each balance sheet item affected there must be shown, either separately in the balance sheet or in a note to the accounts–
(4) In sub-paragraph (3) above, references in relation to any item to the comparable amounts determined in accordance with that sub-paragraph are references to–
(b)the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.”
8. In paragraph 46(1) (transfers to and from reserves and provisions)–
(a)in paragraph (b), for “provisions for liabilities and charges” substitute “provisions for liabilities”;
(b)in paragraph (c), for “provision for liabilities and charges” substitute “provision for liabilities”.
9. In paragraph 72(2) (distributions by investment companies), for “provision for liabilities or charges” substitute “provision for liabilities”.
10. After paragraph 76 (interpretation) insert–
76A. References to “derivatives” include commodity-based contracts that give either contracting party the right to settle in cash or in some other financial instrument, except when such contracts–
76B.—(1) The expressions listed in sub-paragraph (2) have the same meaning as they have in Council Directive 78/660/EEC on the annual accounts of certain types of companies, as amended.(53)
(2) Those expressions are “available for sale financial asset”, “business combination”, “commodity-based contracts”, “derivative”, “equity instrument”, “exchange difference”, “fair value hedge accounting system”, “financial fixed asset”, “financial instrument”, “foreign entity”, “hedge accounting”, “hedge accounting system”, “hedged items”, “hedging instrument”, “held for trading purposes”, “held to maturity”, “monetary item”, “receivables”, “reliable market” and “trading portfolio”.”
11. After paragraph 82 insert–
82A. “Investment property” means land held to earn rent or for capital appreciation.”
12. In paragraph 89 (interpretation of references to provisions for liabilities or charges)–
(b)for “or loss” substitute “the nature of which is clearly defined and” .
1. Schedule 8 to the 1985 Act (form and content of small company accounts)(54) is amended as follows.
“5A. The directors of a company must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.”
(d)the aggregate amount of dividends that are proposed before the date of approval of the accounts, and not otherwise disclosed under paragraph (b) or (c).”
(3) After paragraph 42 insert–
42B.—(1) Sub-paragraph (2) applies if–
8. In paragraph 43(1)(transfers to and from reserves and provisions)–
9. After paragraph 52 (interpretation) insert–
52A. References to “derivatives” include commodity-based contracts that give either contracting party the right to settle in cash or in some other financial instrument, except when such contracts–
52B.—(1) The expressions listed in sub-paragraph (2) have the same meaning as they have in Council Directive 78/660/EEC on the annual accounts of certain types of companies, as amended.(55)
(2) Those expressions are “available for sale financial asset”, “business combination”, “commodity-based contracts”, “derivative”, “equity instrument”, “exchange difference”, “fair value hedge accounting system”, “financial fixed asset”, “financial instrument”, “foreign entity”, “hedge accounting”, “hedge accounting system”, “hedged items”, “hedging instrument”, “held for trading purposes”, “held to maturity”, “monetary item”, “receivables”, “reliable market” and “trading portfolio””.
10. After paragraph 53 insert–
53A. “Investment property” means land held to earn rent or for capital appreciation.”
11. In paragraph 58 (interpretation of references to provisions for liabilities or charges)–
1. Schedule 8A to the 1985 Act (form and content of small company accounts delivered to registrar)(56) is amended as follows.
3. After paragraph 7 (notes to be included in small company accounts delivered to registrar of companies) insert–
7A—(1) Sub-paragraph (2) applies if–
(c)the reasons for not making a provision for diminution in value of those assets, including the nature of the evidence that provides the basis for the belief that the amount at which they are stated in the accounts will be recovered.”
1. Part 1 of Schedule 9 to the 1985 Act (form and content of accounts of banking companies and groups) is amended as follows.
2. Omit paragraph 8 (dividends in profit and loss account to be shown as separate items)(57).
3. After paragraph 8 insert–
“8A. The directors of a company must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.”
7. After paragraph 44 insert–
44D.—(1) This paragraph applies to–
(2) Notwithstanding paragraph 19 of this Schedule, and subject to sub-paragraphs (3) and (4) below, a change in the value of the financial instrument or of the investment property or living animal or plant must be included in the profit and loss account.
(2) The treatment for taxation purposes of amounts credited or debited to the fair value reserve shall be disclosed in a note to the accounts.”
8.—(1) Chapter 3 (notes to the accounts) is amended as follows.
(2) After paragraph 50 insert–
50A. There must be stated–
(3) After paragraph 58 insert–
58B. Where the company has derivatives that it has not included at fair value, there must be stated for each class of such derivatives–
58C.—(1) Sub-paragraph (2) applies if–
(c)the company has not made provision for diminution in value of those assets in accordance with paragraph 26(1) of this Part of this Schedule.
9. In paragraph 59(1) (transfers to and from reserves and provisions)–
(a)in paragraph (b), for “provisions for liabilities and charges” substitute “provisions for liabilities”, and
(b)in paragraph (c), for “provision for liabilities and charges” substitute “provision for liabilities”
10. In paragraph 82 (general interpretation), at the appropriate place, insert–
““Investment property” means land held to earn rent or for capital appreciation.”
11. After paragraph 82 (general interpretation) insert–
82A. For the purposes of this Part of this Schedule, references to “derivatives” include commodity-based contracts that give either contracting party the right to settle in cash or in some other financial instrument, except when such contracts–
82B.—(1) The expressions listed in sub-paragraph (2) have the same meaning in paragraphs 44A to 44F, 58A to 58C and 82A of this Part of this Schedule as they have in Council Directives 78/660/EEC on the annual accounts of certain types of companies and 86/635/EEC on the annual accounts and consolidated accounts of banks and other financial institutions, as amended.(58)
12. In paragraph 85(c) (interpretation of references to provisions for liabilities or charges)–
1. Part 1 of Schedule 9A to the 1985 Act (form and content of accounts of insurance companies and groups) is amended as follows.
2. Omit paragraph 5 (dividends in profit and loss account to be shown as separate items)(59).
3. After paragraph 6 insert–
“6A. The directors of a company must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.”
19A.—(1) The amounts to be included in respect of assets of any description mentioned in paragraph 22 (valuation of assets: general) are determined either–
(2) The amounts to be included in respect of assets of any description mentioned in paragraph 23 (alternative valuation of fixed-income securities) may be determined–
(3) The amounts to be included in respect of assets which–
(4) Subject to sub-paragraphs (1) to (3), the amounts to be included in respect of all items shown in a company’s accounts are determined in accordance with section C.”
7.—(1) In Chapter 2 (accounting principles and rules), after paragraph 29 insert–
(3) Except where they fall to be included under Assets item D (assets held to cover linked liabilities), sub-paragraph (1) does not apply to–
29D.—(1) This paragraph applies to–
(2) Notwithstanding paragraph 16 in this Part of this Schedule, and subject to sub-paragraphs (3) and (4) below, a change in the value of the financial instrument or of the investment property or living animal or plant must be included in the profit and loss account.
8. After paragraph 57 insert–
57A. There must be stated–
9. After paragraph 65 (information supplementing the balance sheet)(60) insert–
65A—(1) This paragraph applies where financial instruments have been valued in accordance with paragraph 29A or 29C.
(4) There must be stated–
(5) Where any amount is transferred to or from the fair value reserve during the financial year, there must be stated in tabular form–
65B Where the company has derivatives that it has not included at fair value, there must be stated for each class of such derivatives–
65C—(1) Sub-paragraph (2) applies if–
(c)the company has not made provision for diminution in value of those assets in accordance with paragraph 33(2) of this Part of this Schedule.
65D—(1) This paragraph applies where the amounts to be included in a company’s accounts in respect of investment property or living animals and plants have been determined in accordance with paragraph 29D.
10. In paragraph 66(1)(b) and (c) (transfers to or from provisions)(61) , for “provisions for other risks and charges” substitute “provisions for other risks”.
11. In paragraph 81 (general interpretation)(62), at the appropriate place, insert–
12. After paragraph 81 (general interpretation) insert–
81A For the purposes of this Part of this Schedule, references to “derivatives” include commodity-based contracts that give either contracting party the right to settle in cash or some other financial instrument, except when such contracts–
81B—(1) The expressions listed in sub-paragraph (2) have the same meaning in Section BA of Chapter 2 and paragraphs 65A to 65C and 81A of this Part of this Schedule as they have in Council Directives 78/660/EEC on the annual accounts of certain types of companies and 91/674/EEC on the annual accounts and consolidated accounts of insurance undertakings, as amended.(63)
13. In paragraph 84(c) (interpretation of references to provisions for risks and charges)(64)–
PART 1AMENDMENTS OF THE COMPANIES ACT 1985
1. The following minor and consequential amendments to the 1985 Act have effect.
2. In section 152(2) (definition of “net assets” for Chapter 6 of Part 5), for “provision for liabilities or charges” substitute “provision for liabilities”.
3. In section 154(2)(b) (definition of “liabilities” for the purposes of the “net asset” test) for “or loss” substitute “the nature of which is clearly defined and”.
4.—(1) Section 228 (exemption for parent companies included in accounts of larger group) is amended as follows.
(2) In subsections (1) and (2)(a) for “a member State of the European Economic Community” substitute “an EEA State”.
(3) In subsection (3), omit from “listed” to the end, and substitute “admitted to trading on a regulated market of any EEA State within the meaning of Council Directive 93/22/EEC on investment services in the securities field”.
5. In section 231(5)(b) (disclosure required in notes to accounts of undertakings excluded from consolidation)(65), omit “or (4)”.
6. Omit section 243 (accounts of subsidiary undertakings to be appended in certain cases)(66).
7. In section 260 (definition of “participating interest”)(67), omit subsection (5).
8. In section 264(2) (restriction on distribution of assets), for “provision for liabilities or charges” substitute “provision for liabilities”.
9. In section 265(2) (other distributions by investment companies), for “provision for liabilities or charges” substitute “provision for liabilities”.
10. In Schedule 4A (interests in subsidiary undertakings excluded from consolidation)(68), omit paragraph 18.
12. In Part 2 of Schedule 9 (undertakings to be included in consolidation), omit paragraph 1.
13. In section 101A(6)(a) of the Government of Wales Act 1998 (whole of Government of Wales accounts) (69), after “(accounting standards)” insert “or to international accounting standards (as defined in section 262 of that Act)”.
14. In the Government Resources and Accounts Act 2000(70), in–
(a)section 5(4)(a) (accounts of government departments), and
(b)section 9(5)(a) (whole of government accounts),
after “(accounting standards)” insert “ or to the international accounting standards, within the meaning of EC Regulation No.1606/2002 of the European Parliament and of the Council of 19th July 2002 on the application of international accounting standards, adopted from time to time by the European Commission in accordance with that Regulation”.
15. The amendments in this Part of this Schedule do not extend to Northern Ireland.
These Regulations amend Part 7 of the Companies Act 1985 (“the 1985 Act”) on accounts and audit in order to–
implement Directive 2003/51/EEC of the European Parliament and of the Council of 18th June 2003 amending Directives 78/660/EEC, 83/349/EEC, 86/635/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies, banks and other financial institutions and insurance undertakings (Official Journal No. L178/16 of 17th July 2003) (“the Accounts Modernisation Directive”) (with the exception of articles 1.14, 1.17(in part) and 2.10).
They also make certain other minor and consequential amendments to the 1985 Act and to other enactments.
Part 2 of the Regulations (regulations 2 and 3 and Schedule 1) amends Part 7 of the 1985 Act in order to give full effect to the requirement in article 4 of the IAS Regulation that companies whose securities are admitted to trading on a regulated market prepare their consolidated accounts in accordance with international accounting standards adopted pursuant to the Regulation. Article 4 defines regulated markets as having the meaning specified in article 1(13) of Council Directive 93/22/EEC of 10th May 1993 on investment services in the securities field (Official Journal No. L141/27 of 11th June 1993).
all other companies (again with the exception of charitable companies) to prepare their individual and consolidated accountsusing adopted international accounting standards (see the definition of “international accounting standards” inserted into section 262 of the 1985 Act by paragraph 20(2)(d) of Schedule 1).
Part 3 of the Regulations (regulations 4 to 15 and Schedules 2 to 7) contains the following further modifications of Part 7 of the 1985 Act –
regulation 4 inserts a new section 228A conferring an exemption from the obligation to prepare group accounts on a parent company that is included in group accounts drawn up by a parent undertaking that is not established under the law of a State that is a member of the European Economic Area. This implements the Member State option in article 11 of the 7th Council Directive 83/349/EEC of 13th June 1983 on consolidated accounts (Official Journal No. L193/1 of 18th July 1983);
regulation 5 amends section 229 of the 1985 Act in implementation of article 2.6 of the Accounts Modernisation Directive. It repeals section 229(4) which provided for a parent company to exclude a subsidiary undertaking from the parent’s consolidated accounts if that undertaking’s activities were so different from those of other undertakings to be included in the consolidation that its inclusion would be incompatible with the obligation to give a true and fair view;
regulations 6 to 8 amend sections 235, 236 and 240 of the 1985 Act on the auditors' report to implement articles 1.15 to 1.18 and 2.11 of the Accounts Modernisation Directive;
•regulation 9 amends section 244 of the 1985 Act to remove the ability for directors to extend by 3 months the period allowed for laying and delivering accounts and reports where the company has oversea interests;
regulation 10 amends section 245 of the 1985 Act to permit voluntary revision by directors of a company of a summary financial statement prepared under section 251 of the 1985 Act;
regulation 11 amends section 251 of the 1985 Act to extend the power of the Secretary of State to make regulations for companies to send out summary financial statements in place of the full accounts and reports so that such regulations are capable of applying to all companies, and not just to listed companies;
regulation 12 amends section 258 of the 1985 Act to remove the requirement in section 258(4) for a participating interest to exist in order for an undertaking to be a subsidiary undertaking, and otherwise to extend the circumstances in which a parent-subsidiary undertaking relationship exists. This implements article 2.1 of the Accounts Modernisation Directive. The amendment is extended to the Building Societies Act 1986 and the Financial Services and Markets Act 2000;
regulation 13 modifies Schedule 7 to the 1985 Act (disclosures to be made in directors' report) to implement the Fair Value Directive requirement for disclosures in relation to the use of financial instruments by a company and its subsidiary undertakings. Small companies are exempt from this requirement (see the amendment to section 246(4) of the 1985 Act in regulation 13(2)).
Regulation 14 of the Regulations introduces Schedules 2 to 6 to the Regulations which amend Schedules 4 (form and content of company accounts), 8 (form and content of accounts prepared by small companies), 8A (form and content of abbreviated accounts of small companies), 9 (form and content of accounts of banking companies and groups) and 9A (form and content of accounts of insurance companies and groups) to the 1985 Act.
Paragraphs 2 and 7(2) of Schedule 2 amend the rules in Schedule 4 to the 1985 Act on the disclosure of dividends in company accounts. Equivalent amendments are made to Schedules 8 , 9 and 9A to the 1985 Act by paragraphs 2 and 7(2) of Schedule 3, paragraphs 2 and 8(2) of Schedule 5 and paragraphs 2 and 8 of Schedule 6 respectively.
Paragraph 3 of Schedule 2 implements article 1.2 of the Accounts Modernisation Directive by requiring that amounts be presented within items in the profit and loss account and balance sheet having regard to the substance of the reported transaction. Equivalent amendments are made to Schedules 8 , 9 and 9A to the 1985 Act by paragraphs 3 of Schedules 3, 5 and 6 .
Paragraphs 4, 5, 8, 9 and 12 of Schedule 2 implement articles 1.4, 1.5, 1.7, 1.9 and 1.11 of the Accounts Modernisation Directive by making minor changes to the terminology of the 1985 Act relating to “provisions”. Equivalent amendments are made to Schedules 8 , 8A, 9 and 9A to the 1985 Act by paragraphs 4, 5, 8 and 11 of Schedule 3, paragraph 2 of Schedule 4, paragraphs 4, 5, 9 and 12 of Schedule 5 and paragraphs 4, 5, 10 and 13 of Schedule 6 respectively.
Paragraph 6 of Schedule 2 inserts a new Section D in Part 2 of Schedule 4 to the 1985 Act in order to implement the Fair Value Directive and article 1.12 of the Accounts Modernisation Directive. New Section D permits a company to include certain financial instruments (including derivatives), and investment property, living animals and plants in its accounts at fair value. It specifies –
Paragraph 7(3) of Schedule 2 requires information about fair valuation of financial instruments, investment property and living animals and plants to be given in the notes to a company’s accounts, including where a company has chosen not to fair value its financial instruments. Paragraphs 10 and 11 insert definitions of relevant terms.
Equivalent modifications on fair valuation are made to–
Schedules 8 and 8A (small company accounts – see paragraphs 6, 7(3), 9 and 10 of Schedule 3 to the Regulations and paragraph 3 of Schedule 4 to the Regulations),
Schedule 9 (banking company accounts – see paragraphs 6, 7, 8(3), 10 and 11 of Schedule 5 to the Regulations), and
Schedule 9A (insurance company accounts – see paragraphs 6, 7, 9, 11 and 12 of Schedule 6 to the Regulations).
Finally, regulation 15 of, and Schedule 7 to, the Regulations make minor and consequential amendments to the 1985 Act and to other enactments.
Full regulatory impact assessments of the effect that this instrument will have on the costs of business are available from the Department of Trade and Industry, Corporate Law and Governance Directorate, Elizabeth House, 39 York Road, London SE1 7LJ (they are also available electronically at ). Copies have also been placed in the libraries of both Houses of Parliament.
Section 226 was substituted by section 4(1) of the Companies Act 1989, and section 227 by section 5(1) of that Act.
O.J. L141 of 11.6.1993 page 27, as last amended by Directive 2000/64/EEC of the European Parliament and of the Council (O.J. L290 of 17.11.2000, page 27).
Section 229 was substituted by section 5 of the Companies Act 1989.
Section 245 was substituted by section 12 of the Companies Act 1989, and amended by regulation 4 of, and paragraph 2 in Part I of Schedule 1 to, S.I. 1994/1935 and regulation 10(9) of S.I. 2002/1986.
Section 258 was substituted by section 21(1) of the Companies Act 1989.
1986 c. 53 (as amended by the Companies Act 1989 and the Building Societies Act 1997).
The paragraph in Schedule 7 previously numbered 5A was repealed by regulation 14 of S.I. 1996/189.
O.J. L222 of 14.8.1978 page 11 and O.J. L193 of 18.7.1983 page 1, as amended in particular by Directives 2001/65/EEC and 2003/51/EEC of the European Parliament and of the Council (O.J. L238 of 27.12.2001, page 28, and O.J. L178 of 17.7.2003, page 16).
Section 246 was substituted by regulation 2(1) of S.I. 1997/220, and amended by regulation 6(1) of S.I. 1997/570, and by regulation 8(1) of S.I. 2000/1430.
Parts I to III of Schedule 9 were inserted before a re-numbered Schedule 9A by regulation 5(1) of, and Schedule 1 to, S.I. 1991/2705. Part IV of Schedule 9 was substituted by section 18(3) and (4) of, and Part IV of Schedule 7 to, the Companies Act 1989.
Section 221 was substituted by section 2 of the Companies Act 1989.
Section 222 was substituted by section 2 of the Companies Act 1989.
Section 230 was substituted by section 5(4) of the Companies Act 1989.
Sections 245 to 245C were inserted by section 12 of the Companies Act 1989. Section 245 was amended by regulation 4 of, and paragraph 2 in Part I of Schedule 1 to, S.I. 1994/1935, and by regulation 10 of S.I. 2002/1986. Section 245B was also amended by regulation 10 of S.I. 2002/1986.
Section 246 was substituted by section 13 of the Companies Act 1989, and amended by regulation 2(1) of S.I. 1997/220, by regulation 6(1) of S.I. 1997/570 and by regulation 8(1) of S.I. 2000/1430.
Section 248A was inserted by regulation 6 of S.I. 1997/220.
Section 261 was substituted by section 22 of the Companies Act 1989.
Section 262 was substituted by section 22 of the Companies Act 1989, and amended by regulation 7 of S.I. 1992/3178, by regulation 12(1) of S.I. 1996/189, by regulation 4 of S.I. 1997/2306, by regulation 2 of S.I. 2000/2952, by article 16(1) of S.I. 2000/3373, by regulation 2 of S.I. 2002/765 and by regulation 10 of S.I. 2002/1986.
Official Journal of 11th September 2002 (O.J.L243).
Section 262A was inserted by section 22 of the Companies Act 1989, and amended by regulation 6 of, and paragraph 3 of Schedule 2 to, S.I. 1991/2705, by regulation 5 of, and paragraph 5 of Schedule 2 to, S.I. 1993/3246, by regulation 4(2) of S.I. 1994/233, by regulation 4 of, and paragraph 3 of Schedule 1 to, S.I. 1994/1935, by regulation 12(2) of S.I. 1996/189, by regulation 7 of S.I. 1997/220, by regulation 4(4) of S.I. 1997/2306, by article 16(2) of S.I. 2000/3373 and by regulation 10 of S.I. 2002/1986.
Section 265 was amended by section 212 of, and paragraph 19 of Schedule 16 to, the Financial Services Act 1986, by regulation 2 of S.I. 1999/2770 and by article 17 of S.I. 2001/3649.
Section 268 was amended by regulation 13 of S.I. 1996/189 and by article 18 of S.I. 2001/3649.
Section 269 was amended by regulation 7 of S.I. 1997/220.
Section 272 was amended by section 23 of, and paragraphs 5 and 6 of Schedule 10 to, the Companies Act 1989, and by section 30 of the Welsh Language Act 1993 (c. 38).
Section 742 was substituted by section 23 of, and paragraph 15 of Schedule 10 to, the Companies Act 1989 and amended by article 28 of S.I. 2000/3373.
Section 744A was inserted by section 145 of, and paragraph 20 of Schedule 19 to, the Companies Act 1989 and amended by section 79 of, and paragraph 4 of Schedule 5 to, the Criminal Justice Act 1993, regulation 4 of S.I. 1997/2306, article 30 of S.I. 2000/3373, article 31 of S.I. 2001/3649 and by regulation 4 of, and paragraph 29 of the Schedule to, S.I. 2003/1116.
Paragraph 25 and its internal cross-references were renumbered by section 6 of, and paragraph 4 of Schedule 4 to, the Companies Act 1989.
Paragraph 12 was inserted by regulation 14 of S.I. 1996/189 and substituted by regulation 2 of S.I. 1997/571.
Parts I to III of Schedule 9 were inserted before a re-numbered Schedule 9A by regulation 5 of, and Schedule 1 to, S.I. 1991/2705. Part IV of Schedule 9 was substituted by section 18(3) and (4) of and Part IV of Schedule 7 to, the Companies Act 1989.
Schedule 11 was amended by section 23 of, and paragraph 21 of Schedule 10 to, the Companies Act 1989, by regulation 7 of, and Schedule 3 to, S.I. 1991/2705, and by regulation 5 of, and paragraph 8 of Schedule 2 to, S.I. 1993/3246 and by regulation 14 of, and Schedule 6 to, S.I. 1996/189.
Paragraph 3(7) was amended by regulation 14(1) of, and paragraphs 1 and 2 of Schedule 1 to, S.I. 1996/189.
Paragraph 45 was amended by regulation 14(1) of, and paragraphs 1 and 7 of Schedule 1 to, S.I. 1996/189.
O.J. L222 of 14.8.1978, page 11, as amended in particular by Directive 2001/65/EEC (O.J. L238 of 27.12.2001, page 28).
Paragraph 8 was amended by regulation 14(6) of, and paragraphs 1 and 2 of Schedule 4 to, S.I. 1996/189.
O.J. L222 of 14.8.1978, page 11, and O.J. L372 of 31.12.1986, page 1, as amended in particular by Directive 2001/65/EEC (O.J. L238 of 27.12.2001, page 28).
Paragraph 5 was amended by regulation 14(7) of, and paragraphs 1 and 2 of Schedule 5 to, S.I. 1996/189.
Paragraph 65 was amended by regulation 14(7) of, and paragraphs 1 and 9 of Schedule 5 to, S.I. 1996/189.
Paragraph 66 was amended by regulation 14 of, and paragraphs 1 and 10 of Schedule 5 to, S.I. 1996/189.
Paragraph 81 was amended by article 36 of S.I. 2001/3649.
O.J. L222 of 14.8.1978, page 11, and O.J. L374 of 31.12.1991, page 7, as amended in particular by article 4 of Directive 2003/51/EEC of the European Parliament and of the Council (O.J. L178 of 17.7.2003, page 16).
Paragraph 84(c) was amended by regulation 14(7) of, and paragraphs 1 and 18 of Schedule 5 to, S.I. 1996/189.
Section 231 was substituted by section 6(1) of the Companies Act 1989, and subsection (5) was amended by regulation 15 of S.I. 1996/189.
Section 260 was substituted by section 22 of the Companies Act 1989, and amended by regulation 5(1) of, and paragraph 4 of Schedule 2 to, S.I. 1993/3246, and by regulation 7(5) of S.I. 1997/220.
1998 c. 38. Section 101A was inserted by paragraph 24 of Schedule 1 to the Government Resources and Accounts Act 2000.