Companies Act 1985

Form and content of company individual and group accounts

228 Form and content of individual accounts

(1) A company's accounts prepared under section 227 shall comply with the requirements of Schedule 4 (so far as applicable) with respect to the form and content of the balance sheet and profit and loss account and any additional information to be provided by way of notes to the accounts.

(2) The balance sheet shall give a true and fair view of the state of affairs of the company as at the end of the financial year; and the profit and loss account shall give a true and fair view of the profit or loss of the company for the financial year.

(3) Subsection (2) overrides—

(a) the requirements of Schedule 4, and

(b) all other requirements of this Act as to the matters to be included in a company's accounts or in notes to those accounts;

and accordingly the following two subsections have effect.

(4) If the balance sheet or profit and loss account drawn up in accordance with those requirements would not provide sufficient information to comply with subsection (2), any necessary additional information must be provided in that balance sheet or profit and loss account, or in a note to the accounts.

(5) If, owing to special circumstances in the case of any company, compliance with any such requirement in relation to the balance sheet or profit and loss account would prevent compliance with subsection (2) (even if additional information were provided in accordance with subsection (4)), the directors shall depart from that requirement in preparing the balance sheet or profit and loss account (so far as necessary in order to comply with subsection (2)).

(6) If the directors depart from any such requirement, particulars of the departure, the reasons for it and its effect shall be given in a note to the accounts.

(7) Subsections (1) to (6) do not apply to group accounts prepared under the next section ; and subsections (1) and (2) do not apply to a company's profit and loss account (or require the notes otherwise required in relation to that account) if—

(a) the company has subsidiaries, and

(b) the profit and loss account is framed as a consolidated account dealing with all or any of the company's subsidiaries as well as the company, and—

(i) complies with the requirements of this Act relating to consolidated profit and loss accounts, and

(ii) shows how much of the consolidated profit or loss for the financial year is dealt with in the company's individual accounts.

If group accounts are prepared, and advantage is taken of this subsection, that fact shall be disclosed in a note to the group accounts.

229 Group accounts of holding company

(1) If at the end of its financial year a company has subsidiaries, the directors shall, as well as preparing individual accounts for that year, also prepare group accounts, being accounts or statements which deal with the state of affairs and profit or loss of the company and the subsidiaries.

(2) This does not apply if the company is at the end of the financial year the wholly-owned subsidiary of another body corporate incorporated in Great Britain.

(3) Group accounts need not deal with a subsidiary if the company's directors are of opinion that—

(a) it is impracticable, or would be of no real value to the company's members, in view of the insignificant amounts involved, or

(b) it would involve expense or delay out of proportion to the value to members, or

(c) the result would be misleading, or harmful to the business of the company or any of its subsidiaries, or

(d) the business of the holding company and that of the subsidiary are so different that they cannot reasonably be treated as a single undertaking;

and, if the directors are of that opinion about each of the company's subsidiaries, group accounts are not required.

(4) However, the approval of the Secretary of State is required for not dealing in group accounts with a subsidiary on the ground that the result would be harmful or on the ground of difference between the business of the holding company and that of the subsidiary.

(5) A holding company's group accounts shall be consolidated accounts comprising—

(a) a consolidated balance sheet dealing with the state of affairs of the company and all the subsidiaries to be dealt with in group accounts, and

(b) a consolidated profit and loss account dealing with the profit or loss of the company and those subsidiaries.

(6) However, if the directors are of opinion that it is better for the purpose of presenting the same or equivalent information about the state of affairs and profit or loss of the company and those subsidiaries, and of so presenting it that it may be readily appreciated by the company's members, the group accounts may be prepared in other than consolidated form, and in particular may consist—

(a) of more than one set of consolidated accounts dealing respectively with the company and one group of subsidiaries and with other groups of subsidiaries, or

(b) of separate accounts dealing with each of the subsidiaries, or

(c) of statements expanding the information about the subsidiaries in the company's individual accounts,

or of any combination of those forms.

(7) The group accounts may be wholly or partly incorporated in the holding company's individual balance sheet and profit and loss account

230 Form and content of group accounts

(1) A holding company's group accounts shall comply with the requirements of Schedule 4 (so far as applicable to group accounts in the form in which those accounts are prepared) with respect to the form and content of those accounts and any additional information to be provided by way of notes to those accounts.

(2) Group accounts (together with any notes to them) shall give a true and fair view of the state of affairs and profit or loss of the company and the subsidiaries dealt with by those accounts as a whole, so far as concerns members of the company.

(3) Subsection (2) overrides—

(a) the requirements of Schedule 4, and

(b) all other requirements of this Act as to the matters to be included in group accounts or in notes to those accounts,

and accordingly the following two subsections have effect.

(4) If group accounts drawn up in accordance with those requirements would not provide sufficient information to comply with subsection (2), any necessary additional information must be provided in, or in a note to, the group accounts.

(5) If, owing to special circumstances in the case of any company, compliance with any such requirement in relation to its group accounts would prevent those accounts from complying with subsection (2) (even if additional information were provided in accordance with subsection (4)), the directors shall depart from that requirement in preparing the group accounts (so far as necessary to comply with subsection (2)).

(6) If the directors depart from any such requirement, particulars of that departure, the reason for it and its effect shall be given in a note to the group accounts.

(7) If the financial year of a subsidiary does not coincide with that of the holding company, the group accounts shall (unless the Secretary of State, on the application or with the consent of the holding company's directors, otherwise directs) deal with the subsidiary's state of affairs as at the end of its relevant financial year, that is—

(a) if its financial year ends with that of the holding company, that financial year, and

(b) if not, the subsidiary's financial year ending last before the end of the financial year of the holding company dealt with in the group accounts,

and with the subsidiary's profit or loss for its relevant financial year.

(8) The Secretary of State may, on the application or with the consent of a company's directors, modify the requirements of Schedule 4 as they have effect in relation to that company by virtue of subsection (1), for the purpose of adapting them to the company's circumstances; and references above in this section to the requirements of Schedule 4 are then to be read in relation to that company as references to those requirements as modified.

231 Additional disclosure required in notes to accounts

(1) Schedule 5 has effect with respect to additional matters which must be disclosed in company accounts for a financial year; and in that Schedule, where a thing is required to be stated or shown, or information is required to be given, it means that the thing is to be stated or shown, or the information is to be given, in a note to those accounts.

(2) In Schedule 5—

(a) Parts I and II are concerned, respectively, with the disclosure of particulars of the company's subsidiaries and of its other shareholdings,

(b) Part III is concerned with the disclosure of financial information relating to subsidiaries,

(c) Part IV requires a company which is itself a subsidiary to disclose its ultimate holding company,

(d) Part V is concerned with the emoluments of directors (including emoluments waived), pensions of directors and past directors and compensation for loss of office to directors and past directors, and

(e) Part VI is concerned with disclosure of the number of the company's employees who are remunerated at higher rates.

(3) Whenever it is stated in Schedule 5 that this subsection applies to certain particulars or information, it means that the particulars or information shall be annexed to the annual return first made by the company after copies of its accounts have been laid before it in general meeting; and if a company fails to satisfy an obligation thus imposed, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.

(4) It is the duty of any director of a company to give notice to the company of such matters relating to himself as may be necessary for purposes of Part V of Schedule 5 ; and this applies to persons who are or have at any time in the preceding 5 years been officers, as it applies to directors.

A person who makes default in complying with this subsection is liable to a fine.

232 Loans in favour of directors and connected persons

(1) A holding company's group accounts for a financial year shall comply with Part I of Schedule 6 (so far as applicable) as regards the disclosure of transactions, arrangements and agreements there mentioned (loans, quasi-loans and other dealings in favour of directors).

(2) In the case of a company other than a holding company, its individual accounts shall comply with Part I of Schedule 6 (so far as applicable) as regards disclosure of those matters.

(3) Particulars which are required by Part I of Schedule 6 to be contained in any accounts shall be given by way of notes to the accounts, and are required in respect of shadow directors as well as directors.

(4) Where by virtue of section 229(2) or (3) a company does not prepare group accounts for a financial year, subsection (1) of this section requires disclosure of such matters in its individual accounts as would have been disclosed in group accounts.

(5) The requirements of this section apply with such exceptions as are mentioned in Part I of Schedule 6 (including in particular exceptions for and in respect of recognised banks).

233 Loans etc. to company's officers; statement of amounts outstanding

(1) A holding company's group accounts for a financial year shall comply with Part II of Schedule 6 (so far as applicable) as regards transactions, arrangements and agreements made by the company or a subsidiary of it for persons who at any time during that financial year were officers of the company (but not directors).

(2) In the case of a company other than a holding company, its individual accounts shall comply with Part II of Schedule 6 (so far as applicable) as regards those matters.

(3) Subsections (1) and (2) do not apply in relation to any transaction, arrangement or agreement made by a recognised bank for any of its officers or for any of the officers of its holding company.

(4) Particulars required by Part II of Schedule 6 to be contained in any accounts shall be given by way of notes to the accounts.

(5) Where by virtue of section 229(2) or (3) a company does not prepare group accounts for a financial year, subsection (1) of this section requires such matters to be stated in its individual accounts as would have been stated in group accounts.

234 Recognised banks: disclosure of dealings with and for directors

(1) The group accounts of a company which is, or is the holding company of, a recognised bank, and the individual accounts of any other company which is a recognised bank, shall comply with Part III of Schedule 6 (so far as applicable) as regards transactions, arrangements and agreements made by the company preparing the accounts (if it is a recognised bank) and, in the case of a holding company, by any of its subsidiaries which is a recognised bank, for persons who at any time during the financial year were directors of the company or connected with a director of it.

(2) Particulars required by Part III of Schedule 6 to be contained in any accounts shall be given by way of notes to those accounts, and are required in respect of shadow directors as well as directors.

(3) Where by virtue of section 229(2) or (3) a company does not prepare group accounts for a financial year, subsection (1) of this section requires such matters to be stated in its individual accounts as would have been stated in group accounts.