Companies Act 2006 – Sections 465

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Sections 465 to 467: Companies qualifying as medium-sized

710. Medium-sized companies benefit from certain limited accounting and reporting
exemptions. For example, section 417(7) exempts medium-sized companies from disclosing
certain non-financial information in their directors’ reports.

711. Sections 465 to 467 set out which companies or parent companies qualify as mediumsized.
The conditions for qualification as a medium sized company have been separated from
those relating to small companies to make them easier to follow but are otherwise unchanged
from the current regime (sections 247, 247A and 249 of the 1985 Act), save that, as in the
case of the definition of small companies, the definition of balance sheet total in section
465(5) has been generalised.

Section 468: General power to make further provision about accounts and reports

712. This section gives the Secretary of State a general power to amend Part 15 by
regulations in the areas specified in subsection (1)(a) to (d). This power, together with a
number of specific powers in Part 15 to enable the form and contents of accounts and reports
to be prescribed by regulations, replaces the wider general power in section 257 of the 1985
Act. Subsection (3) provides that the general power may not be used to amend the provisions
of section 393 (accounts to give true and fair view) or Chapter 11 (revision of defective
accounts and reports) other than consequentially. Subsections (4) and (5) enable regulations
under the section to create criminal offences or provide for civil penalties in circumstances
corresponding to those in Part 15. The regulations are subject to the Parliamentary procedure
in section 473.

Section 469: Preparation and filing of accounts in euros

713. This section re-enacts section 242B of the 1985 Act, replacing references to ECUs
with references to euros. It enables companies to show the amounts in their annual accounts
additionally in euros, and to deliver to the registrar an additional copy of their accounts
translated into euros.

Section 470: Power to apply provisions to banking partnerships

714. This section re-enacts section 255D of the 1985 Act. It gives the Secretary of State the
power to apply the accounting and reporting provisions of this Act that apply to banking
companies to banking partnerships. As under the current law, the regulations are subject to
the affirmative resolution procedure.

Section 471: Meaning of “annual accounts” and related expressions

715. This section provides definitions of the terms “annual accounts” and “annual accounts
and reports” for the purpose of this Part, the meaning being different for unquoted and quoted

Section 472: Notes to the accounts

716. This section re-enacts section 261 of the 1985 Act. It concerns the notes to a
company’s accounts.

Section 473: Parliamentary procedure for certain regulations under this Part

717. This section specifies the Parliamentary procedure that must be followed in
connection with regulations made under the various provisions of this Part which replace the
requirements as to the form and content of accounts and reports currently contained in
Schedules to Part 7 of the 1985 Act, and in relation to the general regulation-making power in
section 468. This section follows section 257 of the 1985 Act in requiring affirmative
resolution procedure for regulations which add to the documents required to be prepared by
companies, restrict the exemptions available to particular classes or types of company, add to
the information to be included in any particular document or otherwise make the
requirements more onerous. Other regulations are subject to negative resolution procedure.

Section 474: Minor definitions

718. This section contains other definitions for the purposes of this Part.


719. This Part brings together various provisions on the audit of companies from the 1985
Act. It also introduces a number of significant changes to the law on auditing. Much of the
law in this area reflects EU Company Law Directives, including parts of the Fourth
(78/660/EEC), Seventh (83/349/EEC) and Eighth (84/253/EEC) Company Law Directives,
and of the new Audit Directive (2006/43/EC), which will replace the Eighth.


720. This Chapter restates the existing requirement for company accounts to be audited,
currently in section 235 of the 1985 Act, and the existing exemptions (except for the special
provisions about charities).

721. The only changes from the existing law in this Chapter are the removal of special
rules for the audit of the accounts of small charitable companies (see note on section 1175),
and new provisions disapplying the requirement for audit in relation to certain companies in
the public sector audited by public sector auditors.

Section 475: Requirement for audited accounts

722. This section restates the basic requirement for accounts to be audited, unless they are
exempt. The obligation is now expressed as a duty on the company to have its accounts
audited, whereas section 235 of the 1985 Act expressed it as a duty on the auditor to audit the

723. Directors must state in the balance sheet if they are taking advantage of an exemption.
Unless the company is subject to a public sector audit, the statement must say that the
members have not required an audit, and that the directors take responsibility for producing
compliant accounts.

Section 476: Right of members to require audit

724. This section restates the right of members to require an audit, even if the company
qualifies for one of the audit exemptions.

Sections 477 to 479: Exemption from audit: small companies

725. These sections restate the exemption from audit for small companies. Section 477
provides that a company must not only meet the general small company criteria in
section 382, but its turnover and balance sheet totals must also fall below £5.6 million and
£2.8 million respectively.

726. Section 478 excludes from the exemption various categories of company including
public companies and some financial services companies. Section 479 sets out the conditions
for qualification for the small company exemption of a company which is in a group.

Sections 480 and 481: Exemption from audit: dormant companies

727. These two sections restate the exemption from audit available to dormant companies.
“Dormant” is defined in section 1169. Certain financial services companies are excluded
from using the exemption even if they are dormant.

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