Welcome to ASE : Sunday 2:15 PM

Search

Further Companies Act 2006 Reminder

13/08/2009

The Companies Act 2006 made a number of important changes which have an effect on private companies, and are now impacting. Companies may, unknowingly contravene Company Law, and suffer unexpected and increased levels of fines due to none compliance.

Increased thresholds for small and medium sized companies

A company qualifies as small or medium sized if it meets two out of three of the criteria for two consecutive years, or in its first year of trade.

The new thresholds apply from accounting periods starting on or after 6 April 2008 (therefore in practical terms, year ends from April 2009 onwards).

The new thresholds are:-

Medium Sized Groups

In the past, both small and medium sized groups have been exempt from preparing consolidated financial statements. The Companies Act 2006, however requires medium sized groups to prepare consolidated financial statements from 6 April 2008 (therefore, again in practical terms, year ends from April 2009 onwards).

This was a disappointing development, as the aim of the Companies Act 2006 was to simplify reporting requirements for smaller businesses. There will invariably be an increased cost for businesses in the preparation of the consolidated financial statements, and determining the historical information required to facilitate their preparation.

Directors Review of Business

Following changes in legislation in recent years relating to the requirement for a much more detailed and comprehensive review of the business to be included in the Report of the Directors, this has been criticised by relevant bodies as still not meeting the required expectations.

In general the issues would appear to revolve around the fact that the information contained within the director's report is too brief and does not cover all the necessary area's required by the legislation.

It is important that the report contains your assessment of the business, rather than standard template.