The Companies Act 1985 (Accounts of Small and Medium-Sized Enterprises and Publication of Accounts in ECUs) Regulations 1992

Explanatory Note

(This note is not part of the Regulations)

1.  These Regulations implement Council Directive 90/604/EEC (OJ No L317, 16.11.1990, pages 57 to 59) which amends Directive 78/660/EEC on annual accounts (OJ No. L222, 14.8.1978, pages 11 to 31) (the Fourth EC Company Law Directive) and Directive 83/349/EEC on consolidated accounts (OJ No. L193, 18.7.1983, pages 1 to 17) (the Seventh EC Company Law Directive) as concerns the exemptions for small and medium-sized companies and the publication of accounts in ECUs. It also takes advantage of some existing Member State options in Directive 78/660/EEC on annual accounts and makes some minor amendments to Part VII of the Companies Act 1985 (Accounts and Audit).

2.  Regulation 3 permits delivery to the registrar of companies and publication of accounts translated into European Currency Units (ECUs).

3.  Regulation 4 and the Schedule to the Regulations modify the requirements of Part VII of the Companies Act 1985 and Schedule 8 to that Act (Exemptions for small and medium-sized companies) in respect of the content of the annual accounts and directors' reports of small companies. These exemptions apply not only to the individual accounts of such companies but also to the group accounts where a small company prepares them. After the application of all the exemptions conferred by paragraph 3 of the Schedule, the individual balance sheet, of a small company which adopts format 1 would be as follows:

Format 1

A.  Called up share capital not paid

B.  Fixed assets

I. Intangible assets

1. Goodwill

2. Other intangible assets

II. Tangible assets

1. Land and buildings

2. Plant and machinery etc

III. Investments

1. Shares in group undertakings and participating interests

2. Loans to group undertakings in which the company has a participating interest

3. Other investments other than loans

4. Others

C.  Current Assets

I. Stocks

1. Stocks

2. Payments on account

II. Debtors

1. Trade debtors

2. Amounts owed by group undertakings and undertakings in which the company has a participating interest

3. Others

III. Investments

1. Shares in group undertakings

2. Other investments

IV. Cash at bank and in hand

D.  Prepayments and accrued income

E.  Creditors: amounts falling due within one year

1. Bank loans and overdrafts

2. Trade creditors

3. Amounts owed to group undertakings and undertakings in which the company has a participating interest

4. Other creditors

F.  Net current assets (liabilities)

G.  Total assets less current liabilities

H.  Creditors: amounts falling due after more than one year

1. Bank loans and overdrafts

2. Trade creditors

3. Amounts owed to group undertakings and undertakings in which the company has a participating interest

4. Other creditors

I.  Provisions for liabilities and charges

J.  Accruals and deferred income

K.  Capital and reserves

I. Called up share capital

II. Share premium account

III. Revaluation reserve

IV. Other reserves

V. Profit and loss account

4.  Regulations 5 and 6 raise the thresholds contained in sections 247 and 249 of the Companies Act 1985 for the exemptions applicable to small and medium-sized companies and groups.

5.  Regulation 7 contains transitional provisions. Regulation 7(1) provides for the Regulations to apply to accounts for financial years ending on or after the date of coming into force of the Regulations. Regulation 7(2) makes transitional provision to enable companies to take early advantage of the new thresholds for small and medium-sized companies.

6.  The Regulations also correct two minor defects in the Companies Act 1985. Regulations 5(2) and 6(2) correct the position whereby certain small and medium-sized companies were technically precluded from filing abbreviated accounts with the registrar of companies. Paragraph 6(1)(b) of the Schedule to the Regulations restores the exemption for small companies from the requirement to disclose the auditors' remuneration in the abbreviated accounts they may deliver to the registrar of companies. This exemption was inadvertently removed by the Companies Act 1989.