The Companies Act 2006 (Accounts, Reports and Audit) Regulations 2009

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations implement in part Directive 2006/46 of the European Parliament and the Council of 14th June 2006 amending Council Directives 78/660/EEC on the annual accounts of certain types of companies, 83/349/EEC on consolidated accounts, 86/635/EEC on the annual accounts and consolidated accounts of banks and other financial institutions and 91/674/EEC on the annual accounts and consolidated accounts of insurance undertakings (OJ L 224, 16.8.2006, page 1). The Directive is also implemented by the Companies Act 2006 (Amendment) (Accounts and Reports) Regulations 2008 (S.I. 2008/393), the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (S.I. 2008/409), the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410), and by the Financial Services Authority using powers under the Financial Services and Markets Act 2000 (c.8).

Annex C of the Disclosure Rules and Transparency Rules Sourcebook (Corporate Governance Rules) Instrument 2008 made by the Financial Services Authority on 26th June 2008 (FSA 2008/32) requires certain publicly traded companies to prepare a corporate governance statement in implementation of articles 1.7 and 2.2 of Directive 2006/46.

Part 2 of the Regulations implements the Directive’s requirements that where the corporate governance statement is a separate statement and not part of the directors’ report, it must be filed with the registrar of companies and the auditor must give an opinion as to whether the information required to be shown in the statement as to internal control and risk management systems in relation to the financial reporting process and certain disclosures required by the Takeovers Directive (Directive 2004/25/EEC) is consistent with the annual accounts for the year in question. For the remaining information in the corporate governance statement, the auditor must check that the statement has been produced.

Part 3 of the Regulations amends Part 15 of the Companies Act 2006 (accounts and reports) and regulations made under that Part.

Regulation 10 amends section 444A of the Companies Act 2006 by revoking a provision requiring signature of the auditor’s report that will become spent on 1st October 2009.

Regulation 11 amends regulation 12 of, and Schedule 7 to, the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (S.I. 2008/409) to specify provisions for the purposes of section 841(2)(a) of the Companies Act 2006 (treatment of provisions as realised losses). Regulation 12(1), (2) and (4) makes the corresponding amendments to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410).

Regulation 12(3) updates a cross-reference in paragraph 13 of Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (quoted companies: directors’ remuneration report).

A transposition note has been prepared which sets out how Directive 2006/46 is transposed into UK law. An Impact Assessment of the effect that the implementation of Directive 2006/46 will have on the costs of business, charities or voluntary bodies has also been prepared. Both are available from the Department for Business, Enterprise and Regulatory Reform, Corporate Law and Governance Directorate, 1 Victoria Street, London SW1. They are also available electronically at www.berr.gov.uk. Copies have also been placed in the libraries of both Houses of Parliament. Otherwise, an Impact Assessment has not been produced for these Regulations as they have only a negligible impact on the costs of business, charities or voluntary bodies.