Companies Act 2006

[F1 Transfer of papers to third countries U.K.

Textual Amendments

F1 Ss. 1253D-1253F and cross-heading inserted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 15(1) (with reg. 15(2) (as amended by S.I. 2008/499), reg. 2(4)))

[F2 1253D Restriction on transfer of audit working papers to third countries U.K.

(1) [F3 Audit working papers and investigation reports] must not be transferred to a third country competent authority except in accordance with—

(a) section 1253DA (transfer by Secretary of State),

(b) section 1253DB (transfer by statutory auditor with approval of Secretary of State), or

(c) section 1253DC (transfer by statutory auditor for purposes of investigation of auditor).

(2) The following are approved third country competent authorities for the purposes of this Part—

(a) the Australian Securities and Investments Commission;

(b) the Canadian Public Accountability Board;

(c) the Certified Public Accountants and Auditing Oversight Board of Japan;

(d) the Financial Services Agency of Japan;

(e) the Federal Audit Oversight Authority of Switzerland;

(f) the Public Company Accounting Oversight Board of the United States of America;

(g) the Securities and Exchange Commission of the United States of America;

[F4 (h) the Comissão de Valores Mobiliários of Brazil;

(i) the Dubai Financial Service Authority of Dubai International Financial Centre;

(j) the Registrar of Companies of Guernsey;

F5 (k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(l) the Isle of Man Financial Services Authority;

(m) the Jersey Financial Services Commission;

(n) the Audit Oversight Board of Malaysia;

F6 (o) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(p) the Financial Services Commission of South Korea;

(q) the Financial Supervisory Service of South Korea;

(r) the Financial Supervisory Commission of Taiwan;

(s) the Securities and Exchange Commission of Thailand;]

[F7 (t) the Ministry of Finance of the People’s Republic of China;

(u) the Securities Regulatory Commission of the People’s Republic of China.]

(3) Nothing in the sections referred to in subsection (1) authorises the making of a disclosure in contravention of [F8 the data protection legislation].]

Textual Amendments

F2 Ss. 1253D-1253DE substituted for s. 1253D (15.11.2010) by The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 (S.I. 2010/2537), regs. 1(2), 2

F3 Words in s. 1253D(1) substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 43(2) (with reg. 1(2)(b))

F4 S. 1253D(2)(h)-(s) inserted (1.5.2017) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 13(5)

F5 S. 1253D(2)(k) omitted (21.2.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/108), regs. 1(2)(b), 15(2)(a)

F6 S. 1253D(2)(o) omitted (21.2.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/108), regs. 1(2)(b), 15(2)(b)

F7 S. 1253D(2)(t)(u) inserted (21.2.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/108), regs. 1(2)(b), 15(2)(c)

F8 Words in s. 1253D(3) substituted (25.5.2018) by Data Protection Act 2018 (c. 12), s. 212(1), Sch. 19 para. 126 (with ss. 117, 209, 210); S.I. 2018/625, reg. 2(1)(g)

[F9 1253DA Transfer by Secretary of State U.K.

(1) The Secretary of State may transfer [F10 audit working papers and investigation reports] to an approved third country competent authority if the following conditions are met (but see also section 1253DD).

(2) The first condition is that the authority has made a request to the Secretary of State for the transfer of the [F10 audit working papers and investigation reports].

(3) The second condition is that the [F10 audit working papers and investigation reports] relate to audits of companies that—

(a) have issued securities in the third country in which the authority is established, or

(b) form part of a group issuing statutory consolidated accounts in that third country.

(4) The third condition is that the authority has entered into arrangements with the Secretary of State in accordance with section 1253E.

Textual Amendments

F9 Ss. 1253D-1253DE substituted for s. 1253D (15.11.2010) by The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 (S.I. 2010/2537), regs. 1(2), 2

F10 Words in s. 1253DA substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 44(2) (with reg. 1(2)(b))

1253DB Transfer by statutory auditor with approval of Secretary of State U.K.

(1) A statutory auditor may transfer [F11 audit working papers and investigation reports] to an approved third country competent authority if the transfer is made—

(a) with the prior approval of the Secretary of State, and

(b) in accordance with rules of a recognised supervisory body meeting the requirements of paragraph 16AA of Schedule 10.

(2) The Secretary of State must not approve a transfer of [F11 audit working papers and investigation reports] to an approved third country competent authority for the purposes of this section unless the following conditions are met (see also section 1253DD).

(3) The first condition is that the authority has made a request to the Secretary of State for the transfer of the [F11 audit working papers and investigation reports].

(4) The second condition is that the [F11 audit working papers and investigation reports] relate to audits of companies that—

(a) have issued securities in the third country in which the authority is established, or

(b) form part of a group issuing statutory consolidated accounts in that third country.

(5) The third condition is that the authority has entered into arrangements with the Secretary of State in accordance with section 1253E.

Textual Amendments

F9 Ss. 1253D-1253DE substituted for s. 1253D (15.11.2010) by The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 (S.I. 2010/2537), regs. 1(2), 2

F11 Words in s. 1253DB substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 45(2) (with reg. 1(2)(b))

1253DC Transfer by statutory auditor for purposes of investigation of auditor U.K.

A statutory auditor may transfer [F12 audit working papers and investigation reports] to a third country competent authority if the transfer is made—

(a) for the purposes of an investigation of an auditor or audit firm, and

(b) in accordance with rules of a recognised supervisory body meeting the requirements of paragraph 16AB of Schedule 10.

Textual Amendments

F9 Ss. 1253D-1253DE substituted for s. 1253D (15.11.2010) by The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 (S.I. 2010/2537), regs. 1(2), 2

F12 Words in s. 1253DC substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 46 (with reg. 1(2)(b))

1253DD Agreement of EEA competent authority U.K.

(1) This section applies where—

(a) an approved third country competent authority makes a request to the Secretary of State for the transfer of [F13 audit working papers and investigation reports] which relate to the audit of the consolidated accounts of a group, and

(b) the [F13 audit working papers and investigation reports] that are the subject of the request—

(i) have been created by the auditor of a subsidiary that is located in another EEA State in relation to the audit of that subsidiary, and

(ii) are in the possession of a statutory auditor.

(2) In the case of a transfer by the Secretary of State under section 1253DA, the transfer must not take place unless the EEA competent authority responsible for the auditor of the subsidiary has given its express agreement to the transfer.

(3) In the case of a transfer by a statutory auditor under section 1253DB, the Secretary of State must not approve the transfer unless the EEA competent authority responsible for the auditor of the subsidiary has given its express agreement to the transfer.

Textual Amendments

F9 Ss. 1253D-1253DE substituted for s. 1253D (15.11.2010) by The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 (S.I. 2010/2537), regs. 1(2), 2

F13 Words in s. 1253DD substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 47(1) (with reg. 1(2)(b))

1253DE Transfer by means of inspection U.K.

(1) This section applies in the case of a transfer of [F14 audit working papers and investigation reports] if—

(a) it is a transfer to an approved third country competent authority listed in section 1253D(2)(a), (f) or (g),

(b) it is a transfer under section 1253DA or 1253DB, and

(c) it is to take place by means of an inspection in the United Kingdom by the authority.

(2) The Secretary of State must participate in the inspection.

(3) The inspection must be under the leadership of the Secretary of State unless the Secretary of State otherwise permits.]

Textual Amendments

F9 Ss. 1253D-1253DE substituted for s. 1253D (15.11.2010) by The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 (S.I. 2010/2537), regs. 1(2), 2

F14 Words in s. 1253DE(1) substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 48(2) (with reg. 1(2)(b))

[F15 1253E Working arrangements for transfer of papers U.K.

(1) The Secretary of State may enter into arrangements with a third country competent authority relating to the transfer of [F16 audit working papers and investigation reports]—

(a) from the third country competent authority or a third country auditor regulated by that authority to the Secretary of State, and

(b) from the Secretary of State or a statutory auditor to the third country competent authority.

(2) The arrangements must provide that a request by the Secretary of State or the third country competent authority for a transfer mentioned in subsection (1) must be accompanied by a statement explaining the reasons for the request.

(3) The arrangements must—

(a) provide that the Secretary of State may not use [F16 audit working papers and investigation reports] obtained from the third country competent authority or a third country auditor regulated by that authority except in connection with one or more of the functions mentioned in subsection (4), and

(b) include comparable provision in relation to [F16 audit working papers and investigation reports] obtained by the third country competent authority from the Secretary of State or a statutory auditor.

(4) Those functions are—

(a) quality assurance functions which meet requirements equivalent to those of Article 29 of the Audit Directive (quality assurance);

(b) investigation or disciplinary functions which meet requirements equivalent to those of Article 30 of the Audit Directive (investigations and penalties);

(c) public oversight functions which meet requirements equivalent to those of Article 32 of the Audit Directive (principles of public oversight).

(5) The arrangements must—

(a) provide that the Secretary of State, a person exercising the functions of the Secretary of State and persons employed or formerly employed in discharging those functions must be subject to obligations of confidentiality as to personal data, professional secrets and sensitive commercial information contained in [F16 audit working papers and investigation reports] transferred to the Secretary of State, F17 ...

(b) provide that the third country competent authority and persons involved in exercising its functions are subject to comparable obligations in relation to [F16 audit working papers and investigation reports] transferred to the authority [F18 and

(c) ensure that the protection of the commercial interests of any audited person, including its industrial and intellectual property, is not undermined.]

(6) The arrangements must—

(a) provide that the Secretary of State may refuse, or direct a statutory auditor to refuse, a request from the third country competent authority for a transfer of [F16 audit working papers and investigation reports] in a case mentioned in subsection (7)(a) or (b), and

(b) provide that the third country competent authority has comparable rights in relation to a request from the Secretary of State.

(7)  Those cases are—

(a) where the transfer of the papers would adversely affect the sovereignty, security or public order of the European Union or of the United Kingdom;

(b) where legal proceedings have been brought in the United Kingdom (whether continuing or not) in relation to the persons and matters to which the request relates.

[F19 (7A) The arrangements must—

(a) provide that the Secretary of State may only disclose confidential information received from the third country competent authority—

(i) with the agreement of that authority or for purposes for which that authority has given its agreement,

(ii) where disclosure is required by law, or

(iii) where disclosure is necessary in connection with legal proceedings, and

(b) provide that the third country competent authority may only disclose confidential information received from the Secretary of State—

(i) with the Secretary of State’s agreement or for purposes for which the Secretary of State has given agreement,

(ii) where disclosure is required by law, or

(iii) where disclosure is necessary in connection with legal proceedings.]

(8)  Arrangements with [F20 the Australian Securities and Investments Commission] must—

(a) provide that any contact between a statutory auditor and the authority relating to a relevant transfer of [F16 audit working papers and investigation reports] to the authority must take place via the Secretary of State, and

(b) include comparable provision in relation to transfers of [F16 audit working papers and investigation reports] to the Secretary of State.

(9) “ Relevant transfer ” means any transfer other than a transfer by a statutory auditor under section 1253DC. ]

Textual Amendments

F15 S. 1253E substituted (15.11.2010) by The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 (S.I. 2010/2537), regs. 1(2), 3

F16 Words in s. 1253E substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 49(2) (with reg. 1(2)(b))

F17 Word in s. 1253E(5)(a) omitted (17.6.2016) by virtue of The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 49(3)(a) (with reg. 1(2)(b))

F18 S. 1253E(5)(c) and word inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 49(3)(b) (with reg. 1(2)(b))

F19 S. 1253E(7A) inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 3 para. 49(4) (with reg. 1(2)(b))

F20 Words in s. 1253E(8) substituted (1.5.2017) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 13(6)

1253F Publication of working arrangements U.K.

If the Secretary of State enters into working arrangements in accordance with section 1253E, he must publish on a website without undue delay—

(a) the name of the third country competent authority with which he has entered into such arrangements, and

(b) the country or territory in which it is established.]