The Companies Act 1985 (Miscellaneous Accounting Amendments) Regulations 1996

Explanatory Note

(This note does not form part of the Regulations)

These Regulations make a number of miscellaneous amendments to the provisions of the Companies Act 1985(c. 6) (“the 1985 Act”) concerning accounts and audit. The principal changes are as follows:

a) Regulation 2 amends section 224 of the 1985 Act (accounting reference periods and accounting reference date) to alter the method by which the accounting reference date of companies incorporated on or after 1st April 1996 is calculated.

b) Regulation 3 amends section 225 of the 1985 Act (alteration of accounting reference date) to widen the circumstances in which the accounting reference date of a company may be changed.

c) Regulation 5(3) amends section 234 of the 1985 Act (duty to prepare directors' report) by inserting in subsection (4) a reference to new Part VI of Schedule 7 to the 1985 Act. Regulation 14(5) amends Schedule 7 to the 1985 Act by the insertion of a new Part VI. Part VI provides that the directors' report of public companies and large private companies which are subsidiaries of a public company must contain a statement of the company’s policy on payment of its suppliers. Companies which follow any code or standard on payment practice must state what code or standard is followed and where information about it can be found; companies which do not follow such codes or standards must give a fuller statement on their payment practices.

d) Regulation 10 amends section 249B of the 1985 Act (cases where exemption from audit not available). The amendment enables a company which would otherwise be disqualified from claiming exemption from audit under section 249A of the 1985 Act for a financial year because it was a subsidiary undertaking for any period in that year, to claim that exemption provided it was dormant throughout that period.

e) Regulation 13 and paragraphs 3, 4, 6, 10 and 18 of Schedule 5 to the Regulations make certain amendments to the provisions of the 1985 Act concerning the accounts of insurance companies and groups so as to align those provisions more closely with the provisions of the Insurance Accounts Directive (Council Directive 91/674/EEC Official Journal No. L374 of 31.12.91, pages 7 to 31). Regulation 14(8) and Schedule 6 to the Regulations contain amendments to Schedule 11 to the 1985 Act (modifications of Part VIII where company’s accounts prepared in accordance with special provisions for banking or insurance companies) consequential on those amendments.

f) Regulation 14(1) and Schedule 1 to the Regulations contain amendments to Schedule 4 to the 1985 Act (form and content of company accounts).

g) Regulation 14(2) and Schedule 2 to the Regulations contain amendments to Schedule 4A to the 1985 Act (form and content of group accounts).

h) Regulation 14(3) and Schedule 3 to the Regulations contain amendments to Schedule 5 to the 1985 Act (disclosure of information : related undertakings).

i) Regulation 14(4) repeals certain provisions in Schedule 7 to the 1985 Act concerning the matters to be dealt with in the directors' report.

j) Regulation 14(6) and Schedule 4 to the Regulations contain amendments to Schedule 9 to the 1985 Act (form and content of accounts of banking companies and groups).

k) Regulation 14(7) and Schedule 5 to the Regulations contain amendments to Schedule 9A to the 1985 Act (form and content of accounts of insurance companies and groups) in addition to those mentioned in paragraph e) above.

l) Regulation 15 makes certain minor and consequential amendments to sections 231 and 255A of, and Schedules 7 and 8 to, the 1985 Act, and regulation 16 makes provision concerning the application of the Regulations and contains transitional provisions.