Companies Act 1985

246 Exemptions for small and medium-sized companies. E+W+S

(1) A company which qualifies as a small or medium-sized company in relation to a financial year—

(a) is exempt from the requirements of paragraph 36A of Schedule 4 (disclosure with respect to compliance with accounting standards), and

(b) is entitled to the exemptions provided by [F1 Part III of] Schedule 8 with respect to the delivery to the registrar under section 242 of individual accounts and other documents for that financial year.

[F2 (1A) A company which qualifies as a small company in relation to a financial year is entitled to the exemptions provided by Part I of Schedule 8 with respect to the preparation of annual accounts for that year if its balance sheet contains, [F3 above the signature] required by section 233—

(a) a statement to the effect that advantage has been taken, in the preparation of the accounts, of special exemptions applicable to small companies, and

(b) a statement of the grounds on which, in the directors’ opinion, the company is entitled to those exemptions.

(1B) A company which qualifies as a small company in relation to a financial year is entitled to the exemptions provided by Part II of Schedule 8 with respect to the preparation of a directors’ report for that year if the report contains, [F3 above the signature] required by section 234A—

(a) a statement that advantage has been taken, in the preparation of the report, of special exemptions applicable to small companies, and

(b) where the company’s balance sheet for that year does not contain a statement under subsection (1A) (b), a statement of the grounds on which, in the directors’ opinion, the company is entitled to those exemptions.]

F4 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) A company is not entitled to the exemptions mentioned in [F5 subsections (1), (1A) and (1B)] if it is, or was at any time within the financial year to which the accounts relate—

(a) a public company,

(b) a banking or insurance company, or

(c) an authorised person under the Financial Services Act 1986,

or if it is or was at any time during that year a member of an ineligible group.

(4) A group is ineligible if any of its members is—

(a) a public company or a body corporate which (not being a company) has power under its constitution to offer its shares or debentures to the public and may lawfully exercise that power,

(b) an authorised institution under the Banking Act 1987,

(c) an insurance company to which Part II of the Insurance Companies Act 1982 applies, or

(d) an authorised person under the Financial Services Act 1986.

(5) A parent company shall not be treated as qualifying as a small company in relation to a financial year unless the group headed by it qualifies as a small group, and shall not be treated as qualifying as a medium-sized company in relation to a financial year unless that group qualifies as a medium-sized group (see section 249).

Textual Amendments

F1 Words in s. 246(1)(b) inserted (16.11.1992) by S.I. 1992/2452, reg. 4(2)(a).

F2 S. 246(1A)(1B) inserted (16.11.1992) by S.I. 1992/2452, reg. 4(1).

F3 Words in s. 246(1A)(1B) substituted (2.2.1996) by S.I. 1996/189, reg. 7(2)(a)

F4 S. 246(2) repealed (16.11.1992) by S.I. 1992/2452, reg. 4(2)(b).

F5 Words in s. 246(3) substituted (16.11.1992) by S.I. 1992/2452, reg. 4(2)(c).

Modifications etc. (not altering text)

C1 S. 246(4) amended (1.7.1994) by S.I. 1994/1696, reg. 68, Sch. 8 Pt. I para. 9(1)(a)