Companies Act 2006 – Sections 449

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Sections 449 and 450: Requirements where abbreviated accounts delivered

696. Section 449 replaces the provision in section 247B of the 1985 Act. It requires a
special auditor’s report in place of the auditor’s report required by section 495 where a
company delivers abbreviated accounts to the registrar of companies. There is no requirement
for the special auditor’s report where the company is entitled to exemption from audit and has
taken advantage of that exemption.

697. Section 450 replaces sections 246(7) and (8) and 246A(4) of the 1985 Act concerning
the approval and signing of abbreviated accounts.

Sections 451 to 453: Failure to file accounts and reports

698. Sections 451 and 452 re-enact sanctions in section 242(2) to (5) of the 1985 Act for
failing to file accounts and reports within the required periods.
699. Section 453, which provides a civil penalty for failure to file accounts, restates section
242A of the 1985 Act with one change. Rather than setting out the table of penalties in the
legislation, subsection (2) provides for the Secretary of State to make regulations specifying
both the relevant periods and the amounts of the penalties. Regulations that have the effect of
increasing the penalty will be subject to the affirmative resolution procedure. Otherwise, they
will be subject to the negative resolution procedure.


Section 454: Voluntary revision of accounts etc

700. This section restates section 245 of the 1985 Act providing for the voluntary revision
of defective accounts and reports and summary financial statements. It replicates the existing
power for the Secretary of State to make provision in regulations as to the application of the
provisions of this Act to revised annual accounts and reports and summary financial
statements. Regulations under this section are subject to the negative resolution procedure,
which is consistent with the existing powers.

Section 455: Secretary of State’s notice in respect of accounts or reports

701. This section re-enacts section 245A of the 1985 Act. It concerns the Secretary of
State’s giving notice to the directors of a company if there is or may be a question as to
whether the annual accounts or directors’ report comply with the requirements of the Act or
the IAS Regulation (Regulation (EC) 1606/2002 on the application of international
accounting standards).

Sections 456 to 458: Application to court

702. Sections 456 and 457 concern applications to the court in respect of defective
accounts or reports. They re-enact sections 245B and 245C of the 1985 Act. Section 457
gives the Secretary of State the power to authorise a person for the purposes of section 456 to
apply to the courts to require the directors of companies to prepare revised accounts and
reports where the original accounts or reports were defective. Authorisation is subject to the
negative resolution procedure, which corresponds to the existing provision. The Financial
Reporting Review Panel (FRRP) is the only authorised person under this provision to date
(the Companies (Defective Accounts) (Authorised Person) Order 2005: SI 2005/699).

703. Section 458 re-enacts sections 245D and 245E of the 1985 Act. It provides for the
disclosure of information by the Commissioners for Her Majesty’s Revenue and Customs to a
person authorised under section 457 (currently the FRRP) to apply to the court in respect of
defective accounts and reports. The provision contains important limitations, including
criminal offences for use or disclosure of the information other than for permitted purposes.
Section 458(5)(b)(ii) increases the term of imprisonment from three months to six months for
a person convicted on summary conviction in Scotland or Northern Ireland for an offence of
unlawful disclosure. Subsection (2) provides that personal data may not be disclosed in
contravention of the Data Protection Act 1998.

Section 459: Power of authorised person to require documents, information and

704. This section re-enacts section 245F of the 1985 Act. Subsections (1) to (3) provide the
FRRP (as the person authorised under section 457) with a statutory power to require a
company and its officers, employees and auditors to provide documents and information.
Where a person refuses to provide information or documents to the FRRP, the FRRP may
apply to the court for an order. The court may make an order requiring disclosure. Failure to
comply with such an order would be contempt of court.

Section 460: Restrictions on disclosure of information obtained under compulsory powers

705. This section re-enacts section 245G of the 1985 Act. It ensures that information
obtained by the FRRP under the powers in section 459 is subject to restrictions on onward
disclosure. Information relating to the private affairs of an individual or to any particular
business may not be disclosed by the FRRP without the consent of the individual or business
in question, except for the purposes of carrying out the FRRP’s functions, or unless it is
disclosed to specified persons or for specified purposes set out in section 461.

Section 461: Permitted disclosure of information obtained under compulsory powers

706. This section restates section 245G(3) of, and Schedule 7B to, the 1985 Act with
modifications. It sets out the disclosures of information obtained by the authorised person
under section 459 that are permitted. Subsection (3) lists the specified persons to whom
disclosures are permitted and subsection (4) lists the specified purposes for which disclosure
may be made. Subsections (5) and (6) set out the circumstances in which a disclosure to an
overseas regulatory authority is permitted. Subsection (7) provides that nothing in the section
authorises a disclosure in contravention of the Data Protection Act 1998.

Section 462: Power to amend categories of permitted disclosure

707. This section re-enacts section 245G(4) to (6) of the 1985 Act. It gives the Secretary of
State power to amend the disclosure provisions relating to information obtained by the
authorised person. As under the current law, an order under the section is subject to the
negative resolution procedure.


Section 463: Liability for false or misleading statements in reports

708. This section is concerned with the extent of directors’ liability in relation to the
statutory narrative reporting requirements under this Part of the Act (accounts and reports).
Subsection (1) specifies that the liability provision applies to statements made in the
directors’ report (which includes the business review under section 417), the directors’
remuneration report (under section 420) or summary financial statements derived from them.
Subsection (2) limits the directors’ liability to the company only in respect of loss suffered by
it as a result of any untrue or misleading statement in a report, or the omission from a report
of anything required to be included. Subsection (3) specifies that a director will only be liable
in certain circumstances – that is, if an untrue or misleading statement is made deliberately or
recklessly, or an omission amounts to dishonest concealment of a material fact. Subsection
(4) ensures that third parties, such as auditors, will remain liable only to the company for
negligence in preparing their own report. Subsection (6) ensures that these liability provisions
do not affect any liability for a civil penalty or for a criminal offence.

Section 464: Accounting standards

709. This section re-enacts section 256 of the 1985 Act.

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