The Oversea Companies and Credit and Financial Institutions (Branch Disclosure) Regulations 1992

Explanatory Note

(This note is not part of the Regulations)

These Regulations implement, through a number of amendments to the Companies Act 1985 (“the Act”), Council Directive 89/666/89 (the “Eleventh Company Law Directive”) on the disclosure requirements in respect of branches opened by certain companies in a Member State (OJ No. L395 30.12.89, pp.36–39) and Council Directive 89/117/EEC (the “Bank Branches Directive”) on publication of annual accounting documents by credit and financial institutions (OJ No. L44 16.2.89, pp.40–42).

The Eleventh Company Law Directive deals with disclosures (including disclosure of accounting documents) required to be made by branches established in a Member State of limited companies incorporated in another Member State or a non-EC country. The Bank Branches Directive complements this by establishing special rules on the disclosure of accounting documents of a branch of a credit or financial institution in a Member State which has its head office outside that state.

The branch registration regime created by these Regulations complements the existing place of business registration regime set out in Part XXIII of the Act. If a company within the scope of the Eleventh Directive establishes a place of business that is not a branch and has no other branch in the United Kingdom, it will be subject to the place of business registration regime. That regime will also remain applicable to companies not within the scope of the Eleventh Directive.

4.  Regulation 2 and Schedule 1 implement the Bank Branches Directive by inserting new sections 699A and 699B, together with a new Schedule 21C, into the Act. Section 699A applies the new accounts disclosure requirements of Schedule 21C to a branch (as defined), established in Great Britain, of a credit or financial institution (as defined) which is incorporated outside the United Kingdom or Gibraltar and also has its head office outside these places. Section 699B disapplies the accounting disclosure requirements of sections 700 to 703, applicable to companies subject to the place of business registration regime, to any institution to which section 699A applies. Schedule 21C sets out the requirements for delivery of reports and accounts of credit and financial institutions to which the Bank Branches Directive applies. Part I of the Schedule applies to an institution which is required by its parent law to prepare and have audited accounts for its financial period, and whose principal or only branch within the United Kingdom is in Great Britain. Such institutions are required to deliver to the registrar of companies all the accounting documents (with certified translations, if necessary), which it prepares in accordance with its parent law (modified where permitted). Where the parent law does not require registration of these documents, the institution may instead make the documents available for inspection at each branch of the institution in Great Britain and make copies available on request.Part II of the Schedule applies to incorporated institutions which are not required by the law of the country in which the head office resides to prepare and have audited accounts. Such an institution is required to prepare accounts and a directors' report as if it were a company to which section 700 applies (which sets out the accounting regime for companies subject to place of business registration).

5.  Regulation 3 and Schedule 2 implement the Eleventh Company Law Directive. Regulation 3 inserts new section 705A into the Act, which requires the establishment and maintenance of a register of branches of oversea companies. Schedule 2 makes a number of amendments to Part XXIII of the Act, the most important of which are:

(a) Paragraph 2 of Schedule 2 inserts new sections 690A and 690B into the Act. Section 690A imposes the branch registration requirements of the new Schedule 21A on any limited company which is incorporated outside the United Kingdom and Gibraltar and which has a branch in Great Britain. Section 690B provides that the requirements of section 691 (place of business registration regime) shall not apply to a limited company to which section 690A applies.

(b) Paragraph 3 of Schedule 2 inserts Schedule 21A into the Act, which sets out the particulars which must be disclosed by a company registering a branch. A return must also be made in respect of any alteration to any particulars registered.

(c) Paragraphs 4 and 5 of Schedule 2 insert section 692A and Schedule 21B into the Act which provide for certain transitional arrangements where a company moves from the place of business registration regime to the branch registration regime and vice versa.

(d) Paragraph 6 of Schedule 2 amends section 693 of the Act by setting out certain particulars which must be disclosed about a branch and the company on the letterheads etc. used in the business of the branch. Additional particulars must be disclosed where the company is not one incorporated in an EC Member State.

(e) Paragraph 8 of Schedule 2 inserts section 694A into the Act, which makes parallel provision for service of documents to that made by existing section 695 in respect of companies subject to the place of business registration regime.

(f) Paragraph 10 of Schedule 2 inserts section 695A into the Act, which provides that an oversea company shall deliver documents under the branch registration regime to the registrar for that part of Great Britain where the branch is situated. If a branch is closed notice must be given of that fact to the relevant registrar.

(g) Paragraph 13 of Schedule 2 amends Section 698 of the Act so as to provide for the interpretation of “branch” for the purposes of the branch registration regime and to provide a rule to determine in which part of the United Kingdom a branch is to be regarded as located where it comprises places of business in more than one such part.

(h) Paragraph 18 of Schedule 2 inserts Schedule 21D into the Act. It sets out the reports and accounts which must be delivered by a company subject to branch registration in respect of a branch, other than a branch which is subject to Schedule 21C. Part I of the Schedule applies to companies which are required by their parent law to prepare, have audited and disclose accounts. Such companies must deliver to the registrar all accounting documents (modified where permitted), and certified translations where necessary, disclosed in accordance with the parent law. Delivery is not required in respect of a branch where those documents have been delivered by the company in respect of another branch in the United Kingdom and where this fact has been disclosed by the branch in its return under Schedule 21A. Part II applies to companies that do not have such requirements under their parent law. Such companies are required to prepare accounts, a directors' report and an auditors' report as if they were a company to which section 700 applies. As with Part I, provision is made for these documents to be returned by a company in respect of more than one branch.

(i) Paragraph 19 of Schedule 2 inserts sections 703O to 703R into the Act. These sections require particulars to be delivered in respect of winding up or other insolvency proceedings against a company which is subject to the branch registration regime. Section 703P requires a return to be made where such a company is being wound up, where a liquidator is appointed, and upon the termination of the winding up. Returns are not required, however, where winding up proceedings under Part V of the Insolvency Act 1986 have been commenced (as that Act contains separate requirements to file returns with the registrar of companies). Section 703Q requires a return where insolvency proceedings, other than that for the winding up of the company, are commenced. If the company ceases to be subject to such proceedings a further return is required.

6.  Regulation 4 and Schedule 3 make a number of amendments consequential upon the implementation of the two Directives.

7.  Regulation 5 and Schedule 4 set out transitional arrangements.