Companies Act 2006

How will it affect your accounts?

As you may be aware, the final provisions of the Companies Act 2006 (the Act) came into effect from 1 October 2009, thus marking the end of the Companies Act 1985. The Act was passed as law in 2006 and has been introduced in stages between 2007 and October 2009. The Act contains approximately 1,300 sections and it is beyond the scope of this article to summarise all of the changes; please speak to your lawyer for this! Whilst the Act does not introduce any fundamental changes to the financial reporting regime in the UK, there are changes nevertheless. The Act impacts financial year ends ending on or after 30 April 2009 for companies and 30 September 2009 for limited liability partnerships. It may well be that you have seen some of the changes already. Changes to bring to your attention include:

Medium-sized groups now need to prepare consolidated financial statements (unless they are members of a larger group which prepare consolidated accounts anywhere else in the world). The sting in the tail here is the obligation to produce comparative information, which can be time consuming. Working your way through the criteria for consolidation is not always straightforward so call us if you have any queries. If the requirement to produce consolidated accounts is overlooked then this is a criminal offence.
Filing deadlines are now 9 months for private companies and 6 months for public companies. Filing penalties have also increased. A point worthy of note is if there was a failure to comply with filing requirements in the previous year (and the previous financial year end had begun on or after 6th April 2008) the new penalties are doubled; serial late filers beware. The filing deadlines become the natural month end, so accounts for a private company with a year end of 28 February are now due for filing by 30 November (not 28 November) thus removing a source of confusion and irritation.

As private companies are no longer required to hold an AGM they are not obliged to send financial statements to members until they are due to be filed at Companies House.

There is no requirement to disclose the authorised share capital of a company in the accounts, unless the accounts are prepared under International Financial Reporting Standards. In fact, companies formed under the new Act will not have authorised share capital.

The audit report included within the set of financial statements presented to the shareholders will be signed in the name of the Senior Statutory Auditor (typically the partner), for and on behalf of the practice in question. The set sent to Companies House will continue to be signed in the name of the practice but will include the name of the Senior Statutory Auditor.

All Companies House forms changed from 1 October.

From 1 October all directors will have a service address as well as their residential address. It is this service address that will now be publicly available from Companies House, not a director’s residential address as has been the case previously. The residential address will only be made available to credit reference agencies and public authorities. Existing residential addresses automatically became service addresses on 1 October 2009. As a director you are entitled to change your service address online.

If you have any queries about the practical implications of the Companies Act 2006 please speak to your usual CLB Coopers contact or call David Clift on 0161 245 1032 or email dclift@clbcoopers.co.uk