Companies Act 1985

[F1 227 Duty to prepare group accounts. U.K.

 

(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

(b) in accordance with international accounting standards (“IAS group accounts”).

This subsection is subject to the following provisions of this section.

(4) The group accounts of a parent company that is a charity must be Companies Act group accounts.

(5) After the first financial year in which the directors of a parent company prepare IAS group accounts (“the first IAS year”), all subsequent group accounts of the company must be prepared in accordance with international accounting standards unless there is a relevant change of circumstance.

(6) There is a relevant change of circumstance if, at any time during or after the first IAS year–

(a) the company becomes a subsidiary undertaking of another undertaking that does not prepare IAS group accounts,

(b) the company ceases to be a company with securities admitted to trading on a regulated market, or

(c) a parent undertaking of the company ceases to be an undertaking with securities admitted to trading on a regulated market.

• In this subsection “regulated market” has the same meaning as it has in [F2 Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments] .

(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).]

Textual Amendments

F1 Ss. 226-227C substituted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) for ss. 226, 227 by The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 2

F2 Words in s. 227(6) substituted (1.4.2007 for certain purposes and 1.11.2007 otherwise) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), reg. 3(6), Sch. 6 para. 7(6)

Modifications etc. (not altering text)

C1 Ss. 226-237 extended (with modifications) (19.12.1993) by S.I. 1993/3245, reg.3