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(1)[F3In the case of Companies Act group accounts,] subject to the exceptions authorised F4. . . by this section, all the subsidiary undertakings of the parent company shall be included in the consolidation.
(2)A subsidiary undertaking may be excluded from consolidation [F5in Companies Act group accounts] if its inclusion is not material for the purpose of giving a true and fair view; but two or more undertakings may be excluded only if they are not material taken together.
(3)In addition, a subsidiary undertaking may be excluded from consolidation [F5in Companies Act group accounts] where—
(a)severe long-term restrictions substantially hinder the exercise of the rights of the parent company over the assets or management of that undertaking, or
(b)the information necessary for the preparation of group accounts cannot be obtained without disproportionate expense or undue delay, or
(c)the interest of the parent company is held exclusively with a view to subsequent resale F6. . .
The reference in paragraph (a) to the rights of the parent company and the reference in paragraph (c) to the interest of the parent company are, respectively, to rights and interests held by or attributed to the company for the purposes of section 258(definition of “parent undertaking”) in the absence of which it would not be the parent company.
(4)F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F8(5)A parent company is exempt from the requirement to prepare group accounts if under subsection (2) or (3) all of its subsidiary undertakings could be excluded from consolidation in Companies Act group accounts.]]
Textual Amendments
F1New ss. 228, 229 inserted (subject to the savings and transitional provisions in S.I. 1990/355, arts. 6–9, Sch. 2), by Companies Act 1989 (c. 40, SIF 27), ss. 1, 5(3), 213(2) as part of the text inserted in place of ss. 221–262 (as mentioned in s. 1(a) of the 1989 Act)
F2Ss. 226-237 extended (with modifications) (19.12.1993) by S.I. 1993/3245, reg.3
F3Words in s. 229(1) inserted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 3, Sch. 1 para. 7(a)(i)
F4Words in s. 229(1) omitted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by virtue of The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 3, Sch. 1 para. 7(a)(ii)
F5Words in s. 229(2)(3) inserted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 3, Sch. 1 para. 7(b)
F6Words in s. 229(3)(c) omitted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by virtue of The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 5(a)
F7S. 229(5) omitted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by virtue of The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 5(b)
F8S. 229(5) substituted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 3, Sch. 1 para. 7(c)
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