Companies Act 2006 (c. 46)

(The document as of February, 2008)

-- Back --

Page 63

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16 | P.17 | P.18 | P.19 | P.20 | P.21 | P.22 | P.23 | P.24 | P.25 | P.26 | P.27 | P.28 | P.29 | P.30 | P.31 | P.32 | P.33 | P.34 | P.35 | P.36 | P.37 | P.38 | P.39 | P.40 | P.41 | P.42 | P.43 | P.44 | P.45 | P.46 | P.47 | P.48 | P.49 | P.50 | P.51 | P.52 | P.53 | P.54 | P.55 | P.56 | P.57 | P.58 | P.59 | P.60 | P.61 | P.62 | P.63 | P.64 | P.65 | P.66

SCHEDULE 8 Index of defined expressions

abbreviated accounts (in Part 15)	sections 444(4) and 445(3)
accounting reference date and accounting reference period	section 391
accounting standards (in Part 15)	section 464
accounts meeting	section 437(3)
acquisition, in relation to a non-cash asset	section 1163(2)
address
  --  generally in the Companies Acts	section 1142
  --  in the company communications provisions	section 1148(1)
affirmative resolution procedure, in relation to regulations and orders	section 1290
allotment (time of)	section 558
allotment of equity securities (in Chapter 3 of Part 17)	section 560(2)
allotted share capital and allotted shares	section 546(1)(b) and (2)
annual accounts (in Part 15)	section 471
annual accounts and reports (in Part 15)	section 471
annual general meeting	section 336
annual return	section 854
appropriate audit authority (in sections 522, 523 and 524)	section 525(1)
appropriate rate of interest
  --  in Chapter 5 of Part 17	section 592
  --  in Chapter 6 of Part 17	section 609
approval after being made, in relation to regulations and orders	section 1291
arrangement
  --  in Part 26	section 616(1)
  --  in Chapter 7 of Part 17	section 895(2)
articles	section 18
associate (in Chapter 3 of Part 28)	section 988
associated bodies corporate and associated company (in Part 10)	section 256
authenticated, in relation to a document or information sent or supplied to a company	section 1146
authorised group, of members of a company (in Part 14)	section 370(3)
authorised insurance company	section 1165(2)
authorised minimum (in relation to share capital of public company)	section 763
available profits (in Chapter 5 of Part 18)	sections 711 and 712
banking company and banking group	section 1164
body corporate	section 1173(1)
called-up share capital	section 547
capital redemption reserve	section 733
capitalisation in relation to a company's profits (in Part 23)	section 853(3)
cash (in relation to paying up or allotting shares)	section 583
cause of action, in relation to derivative proceedings (in Chapter 2 of Part 11)	section 265(7)
certified translation (in Part 35)	section 1107
charge (in Chapter 1 of Part 25)	section 861(5)
circulation date, in relation to a written resolution (in Part 13)	section 290
class of shares	section 629
the Companies Acts	section 2
Companies Act accounts	sections 395(1)(a) and 403(2)(a)
Companies Act group accounts	section 403(2)(a)
Companies Act individual accounts	section 395(1)(a)
companies involved in the division (in Part 27)	section 919(2)
company
  --  generally in the Companies Acts	section 1
  --  in Chapter 7 of Part 17	section 616(1)
  --  in Chapter 1 of Part 2	sections 252 to 254
constitution, of a company
  --  generally in the Companies Acts	section 17
  --  in Part 10	section 257
controlling, of a body corporate by a director (in Part 10)	section 255
corporation	section 1173(1)
the court	section 1156
credit institution	section 1173(1)
credit transaction (in Chapter 4 of Part 10)	section 202
creditor (in Chapter 1 of Part 31)	section 1011
daily default fine	section 1125
date of the offer (in Chapter 3 of Part 28)	section 991(1)
debenture	section 738
derivative claim (in Chapter 1 of Part 11)	section 260
derivative proceedings (in Chapter 2 of Part 11)	section 265
Directive disclosure requirements	section 1078
director
  --  generally in the Companies Acts	section 250
  --  in Chapter 8 of Part 10	section 240(3)
  --  in Chapter 1 of Part 11	section 260(5)
  --  in Chapter 2 of Part 11	section 265(7)
  --  in Part 14	section 379(1)
directors' remuneration report	section 420
directors' report	section 415
distributable profits
  --  in Chapter 2 of Part 18	section 683(1)
--elsewhere in Part 18	section 736
distribution
  --  in Chapter 2 of Part 18	section 683(1)
  --  in Part 23	section 829
division (in Part 27)	section 919
document
  --  in Part 35	section 1114(1)
  --  in the company communications provisions	section 1148(1)
dormant, in relation to a company or other body corporate	section 1169
EEA State and related expressions	section 1170
electronic form, electronic copy, electronic means
  --  generally in the Companies Acts	section 1168(3) and (4)
  --  in relation to communications to a company	Part 3 of Schedule 4
  --  in relation to communications by a company	Part 3 of Schedule 5
eligible members, in relation to a written resolution	section 289
e-money issuer
  --  in Part 15	section 474(1)
  --  in Part 16	section 539
employees' share scheme	section 1166
employer and employee (in Chapter 1 of Part 18)	section 676
enactment	section 1293
equity securities (in Chapter 3 of Part 17)	section 560(1)
equity share capital	section 548
equity shares (in Chapter 7 of Part 17)	section 616(1)
existing company (in Part 27)	section 902(2)
fellow subsidiary undertakings	section 1161(4)
financial assistance (in Chapter 2 of Part 18)	section 677
financial institution	section 1173(1)
financial year, of a company	section 390
firm	section 1173(1)
fixed assets (in Part 23)	section 853
the former Companies Acts	section 1171
the Gazette	section 1173(1)
group (in Part 15)	section 474(1)
group undertaking	section 1161(5)
see section 1160 and Schedule 6)
IAS accounts	sections 395(1)(b) and 403(1) and (2)(b)
IAS group accounts	section 403(1) and (2)(b)
IAS individual accounts	section 395(1)(b)
IAS Regulation (in Part 15)	section 474(1)
included in the consolidation, in relation to group accounts (in Part 15)	section 474(1)
individual accounts	section 394
information rights (in Part 9)	section 146(3)
insurance company	section 1165(3)
insurance group	section 1165(5)
insurance market activity	section 1165(7)
interest in shares (for the purposes of Part 22)	sections 820 to 825
international accounting standards (in Part 15)	section 474(1)
investment company (in Part 23)	section 833
ISD investment firm
  --  in Part 15	section 474(1)
  --  in Part 16	section 539
issued share capital and issued shares	section 546(1)(a) and (2)
the issuing company (in Chapter 7 of Part 17)	section 610(6)
the Joint Stock Companies Acts	section 1171
liabilities (in Part 27)	section 941
liability, references to incurring, reducing or discharging (in Chapter 2 of Part 18)	section 683(2)
limited by guarantee	section 3(3)
limited by shares	section 3(2)
limited company	section 3
the main register (of members) (in Chapter 3 of Part 8)	section 131(1)
major audit (in sections 522 and 525)	section 525(2)
market purchase, by a company of its own shares (in Chapter 4 of Part 18)	section 693(4)
member, of a company
  --  generally in the Companies Acts	section 112
  --  in Chapter 1 of Part 11	section 260(5)
  --  in Chapter 2 of Part 11	section 265(7)
memorandum of association	section 8
merger (in Part 27)	section 904
merging companies (in Part 27)	section 904(2)
merger by absorption (in Part 27)	section 904(1)(a)
merger by formation of a new company (in Part 27)	section 904(1)(b)
negative resolution procedure, in relation to regulations and orders	section 1289
net assets (in Part 7)	section 92
new company (in Part 27)	section 902(2)
non-cash asset	section 1163
non-voting shares (in Chapter 3 of Part 28)	section 991(1)
number, in relation to shares	section 540(4)(b)
off-market purchase, by a company of its own shares (in Chapter 4 of Part 18)	section 693(2)
offer period (in Chapter 2 of Part 28)	section 971(1)
offer to the public (in Chapter 1 of Part 20)	section 756
offeror
  --  in Chapter 2 of Part 28	section 971(1)
  --  in Chapter 3 of Part 28	section 991(1)
officer, in relation to a body corporate	section 1173(1)
officer in default	section 1121
official seal, of registrar	section 1062
opted-in company (in Chapter 2 of Part 28)	section 971(1)
opting-in resolution (in Chapter 2 of Part 28)	section 966(1)
opting-out resolution (in Chapter 2 of Part 28)	section 966(5)
ordinary resolution	section
parent undertaking	section 1162 (and see Schedule 7)
payment for loss of office (in Chapter 4 of Part 10)	section 215
pension scheme (in Chapter 1 of Part 18)	section 675
period for appointing auditors, in relation to a private company	section 485(2)
period for filing, in relation to accounts and reports for a financial year	section 442
permissible capital payment (in Chapter 5 of Part 18)	section 710
political donation (in Part 14)	section 364
political expenditure (in Part 14)	section 365
political organisation (in Part 14)	section 363(2)
prescribed	section 1167
private company	section 4
profit and loss account (in Part 15)	section 474(1) and (2)
profits and losses (in Part 23)	section 853(2)
profits available for distribution (for the purposes of Part 23)	section 830(2)
property (in Part 27)	section 941
protected information (in Chapter 8 of Part 10)	section 240
provision for entrenchment, in relation to a company's articles	section 22
public company	section 4
publication, in relation to accounts and reports (in sections 433 to 435)	section 436
qualified, in relation to an auditor's report etc (in Part 16)	section 539
qualifying shares (in Chapter 6 of Part 18)	section 724(2)
qualifying third party indemnity provision (in Chapter 7 of Part 10)	section 234
qualifying pension scheme indemnity provision (in Chapter 7 of Part 10)	section 235
quasi-loan (in Chapter 4 of Part 10)	section 199
quoted company
  --  in Part 13	section 361
  --  in Part 15	section 385
  --  in Chapter 5 of Part 16	section 531 (and section 385)
realised profits and losses (in Part 23)	section 853(4)
redeemable shares	section 684(1)
redenominate	section 622(1)
redenomination reserve	section 628
the register	section 1080
register of charges, kept by registrar
  --  in England and Wales and Northern Ireland	section 869
  --  in Scotland	section 885
register of directors	section 162
register of directors' residential addresses	section 165
register of members	section 113
register of secretaries	section 275
registered number, of a branch of an overseas company	section 1067
registered number, of a company	section 1066
registered office, of a company	section 86
registrar and registrar of companies	section 1060
registrar's index of company names	section 1099
registrar's rules	section 1117
registration in a particular part of the United Kingdom	section 1060(4)
regulated activity
  --  generally in the Companies Acts	section 1173(1)
  --  in Part 15	section 474(1)
regulated market	section 1173(1)
relevant accounts (in Part 23)	section 836(2)
requirements for proper delivery (in Part 35)	section 1072 (and see section 1073)
requirements of this Act	section 1172
securities (and 251
share
  --  generally in the Companies Acts	section 540 (and see section 1161(2))
  --  in Part 22	section 792
  --  in section 1162 and Schedule 7	section 1162(7)
share capital, company having a	section 545
share exchange ratio
  --  in Chapter 2 of Part 27	section 905(2)
  --  in Chapter 3 of Part 27	section 920(2)
share premium account	section 610(1)
share warrant	section 779(1)
small companies regime, for accounts and reports	section 381
solvency statement (in sections 641 to 644)	section 643
special notice, in relation to a resolution	section 312
special resolution	section 283
statutory accounts	section 434(3)
subsidiary	section 1159 (and see section 1160 and Schedule 6)
subsidiary undertaking	section 1162 (and see Schedule 7)
summary financial statement	section 426
takeover bid (in Chapter 2 of Part 28)	section 971(1)
takeover offer (in Chapter 3 of Part 28)	section 974
the Takeovers Directive
  --  in Chapter 1 of Part 28	section 943(8)
  --  in Chapter 2 of Part 28	section 971(1)
trading certificate	section 761(1)
transfer, in relation to a non-cash asset	section 1163(2)
treasury shares	section 724(5)
turnover
  --  in Part 15	section 474(1)
  --  in Part 16	section 539
UCITS management company
  --  in Part 15	section 474(1)
  --  in Part 16	section 539
UK-registered company	section 1158
uncalled share capital	section 547
unconditional, in relation to a contract to acquire shares (in Chapter 3 of Part 28)	section 991(2)
undistributable reserves	section 831(4)
undertaking	section 1161(1)
unique identifier	section 1082
unlimited company	section 3
unquoted company (in Part 15)	section 385
voting rights
  --  in Chapter 2 of Part 28	section 971(1)
  --  in Chapter 3 of Part 28	section 991(1)
  --  in section 1159 and Schedule 6	paragraph 2 of Schedule 6
  --  in section 1162 and Schedule 7	paragraph 2 of Schedule 7
voting shares
  --  n Chapter 2 of Part 28	section 971(1)
  --  in Chapter 3 of Part 28	section 991(1)
website, communication by a company by means of	Part 4 of Schedule 5
Welsh company	section 88
wholly-owned subsidiary	section 1159(2) (and see section 1160 and Schedule 6)
working day, in relation to a company	section 1173(1)
written resolution	section 288

Section 1175

SCHEDULE 9 Removal of special provisions about accounts and audit of charitable companies

Part 1 The Companies Act 1985 (c. 6)

1 In section 240 (requirements in connection with publication of accounts)--

(a) in subsection (1) omit from "or, as the case may be," to "section 249A(2)";

(b) in subsection (3)(c) omit from "and, if no such report" to "any financial year";

(c) after subsection (3)(c) insert ", and";

(d) omit subsection (3)(e) and the ", and" preceding it;

(e) in the closing words of subsection (3) omit from "or any report" to "section 249A(2)".

2 In section 245 (voluntary revision of annual accounts or directors' report), in subsection (4)(b) omit "or reporting accountant".

3 In section 249A (exemptions from audit)--

(a) omit subsections (2), (3A) and (4);

(b) in subsection (6) for "figures for turnover or gross income" substitute "figure for turnover";

(c) in subsection (6A) omit "or (2)";

(d) in subsection (7) omit the definition of "gross income" and the ", and" preceding it.

4 In section 249B (cases where exemptions not available)--

(a) in the opening words of subsection (1) omit "or (2)";

(b) in subsection (1C)(b) omit from "where the company referred to" to "is not a charity";

(c) in subsection (3) omit "or (2)";

(d) in subsection (4), in the opening words and in paragraph (a), omit "or (2)".

5 Omit section 249C (report required for purposes of section 249A(2)).

6 Omit section 249D (the reporting accountant).

7 In section 249E (effect of exemptions) omit subsection (2).

8 In section 262A (index of defined expressions) omit the entry for "reporting accountant".

Part 2 The Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)

9 In Article 248 (requirements in connection with publication of accounts)--

(a) in paragraph (1) omit from "or, as the case may be," to "Article 257A(2)";

(b) in paragraph (3)(c) omit from "and, if no such report" to "any such financial year";

(c) after paragraph (3)(c) insert ", and";

(d) omit paragraph (3)(e) and the word ", and" preceding it;

(e) in the closing words of paragraph (3) omit from "or any report" to "Article 257A(2)".

10 In Article 253 (voluntary revision of annual accounts or directors' report), in paragraph (4)(b) omit "or reporting accountant".

11 In Article 257A (exemptions from audit)--

(a) omit paragraphs (2), (3A) and (4);

(b) in paragraph (6) for "figures for turnover or gross income" substitute "figure for turnover";

(c) in paragraph (6A) omit "or (2)";

(d) in paragraph (7) omit the definition of "gross income" and the ", and" preceding it.

12 In Article 257B (cases where exemptions not available)--

(a) in the opening words of paragraph (1) omit "or (2)";

(b) in paragraph (1C)(b) omit from "where the company referred to" to "is not a charity";

(c) in paragraph (3) omit "or (2)";

(d) in paragraph (4), in the opening words and in sub-paragraph (a), omit "or (2)".

13 Omit Article 257C (report required for purposes of Article 257A(2).

14 Omit Article 257D (the reporting accountant).

15 In Article 257E (effect of exemptions) omit paragraph (2).

16 In Article 270A (index of defined expressions) omit the entry for "reporting accountant".

Section 1217

SCHEDULE 10 Recognised supervisory bodies

Part 1 Grant and revocation of recognition of a supervisory body

Application for recognition of supervisory body

1 (1) A supervisory body may apply to the Secretary of State for an order declaring it to be a recognised supervisory body for the purposes of this Part of this Act ("a recognition order").

(2) Any such application must be--

(a) made in such manner as the Secretary of State may direct, and

(b) accompanied by such information as the Secretary of State may reasonably require for the purpose of determining the application.

(3) At any time after receiving an application and before determining it the Secretary of State may require the applicant to furnish additional information.

(4) The directions and requirements given or imposed under sub-paragraphs (2) and (3) may differ as between different applications.

(5) The Secretary of State may require any information to be furnished under this paragraph to be in such form or verified in such manner as he may specify.

(6) Every application must be accompanied by--

(a) a copy of the applicant's rules, and

(b) a copy of any guidance issued by the applicant in writing.

(7) The reference in sub-paragraph (6)(b) to guidance issued by the applicant is a reference to any guidance or recommendation--

(a) issued or made by it to all or any class of its members or persons seeking to become members,

(b) relevant for the purposes of this Part, and

(c) intended to have continuing effect,

including any guidance or recommendation relating to the admission or expulsion of members of the body, so far as relevant for the purposes of this Part.

Grant and refusal of recognition

2 (1) The Secretary of State may, on an application duly made in accordance with paragraph 1 and after being furnished with all such information as he may require under that paragraph, make or refuse to make a recognition order in respect of the applicant.

(2) The Secretary of State may make a recognition order only if it appears to him, from the information furnished by the body and having regard to any other information in his possession, that the requirements of Part 2 of this Schedule are satisfied in the case of that body.

(3) The Secretary of State may refuse to make a recognition order in respect of a body if he considers that its recognition is unnecessary having regard to the existence of one or more other bodies which--

(a) maintain and enforce rules as to the appointment and conduct of statutory auditors, and

(b) have been or are likely to be recognised.

(4) Where the Secretary of State refuses an application for a recognition order he must give the applicant a written notice to that effect--

(a) specifying which requirements, in the opinion of the Secretary of State, are not satisfied, or

(b) stating that the application is refused on the ground mentioned in sub-paragraph (3).

(5) A recognition order must state the date on which it takes effect.

Revocation of recognition

3 (1) A recognition order may be revoked by a further order made by the Secretary of State if at any time it appears to him--

(a) that any requirement of Part 2 of this Schedule is not satisfied in the case of the body to which the recognition order relates ("the recognised body"),

(b) that the body has failed to comply with any obligation imposed on it by or by virtue of this Part of this Act, or

(c) that the continued recognition of the body is undesirable having regard to the existence of one or more other bodies which have been or are to be recognised.

(2) An order revoking a recognition order must state the date on which it takes effect, which must be after the period of three months beginning with the date on which the revocation order is made.

(3) Before revoking a recognition order the Secretary of State must--

(a) give written notice of his intention to do so to the recognised body,

(b) take such steps as he considers reasonably practicable for bringing the notice to the attention of the members of the body, and

(c) publish the notice in such manner as he thinks appropriate for bringing it to the attention of any other persons who are in his opinion likely to be affected.

(4) A notice under sub-paragraph (3) must--

(a) state the reasons for which the Secretary of State proposes to act, and

(b) give particulars of the rights conferred by sub-paragraph (5).

(5) A person within sub-paragraph (6) may, within the period of three months beginning with the date of service or publication of the notice under sub-paragraph (3) or such longer period as the Secretary of State may allow, make written representations to the Secretary of State and, if desired, oral representations to a person appointed for that purpose by the Secretary of State.

(6) The persons within this sub-paragraph are--

(a) the recognised body on which a notice is served under sub-paragraph (3),

(b) any member of the body, and

(c) any other person who appears to the Secretary of State to be affected.

(7) The Secretary of State must have regard to any representations made in accordance with sub-paragraph (5) in determining whether to revoke the recognition order.

(8) If in any case the Secretary of State considers it essential to do so in the public interest he may revoke a recognition order without regard to the restriction imposed by sub-paragraph (2), even if--

(a) no notice has been given or published under sub-paragraph (3), or

(b) the period of time for making representations in pursuance of such a notice has not expired.

(9) An order revoking a recognition order may contain such transitional provision as the Secretary of State thinks necessary or expedient.

(10) A recognition order may be revoked at the request or with the consent of the recognised body and any such revocation is not subject to--

(a) the restrictions imposed by sub-paragraphs (1) and (2), or

(b) the requirements of sub-paragraphs (3) to (5) and (7).

(11) On making an order revoking a recognition order in respect of a body the Secretary of State must--

(a) give written notice of the making of the order to the body,

(b) take such steps as he considers reasonably practicable for bringing the making of the order to the attention of the members of the body, and

(c) publish a notice of the making of the order in such manner as he thinks appropriate for bringing it to the attention of any other persons who are in his opinion likely to be affected.

Transitional provision

4 A recognition order made and not revoked under--

(a) paragraph 2(1) of Schedule 11 to the Companies Act 1989 (c. 40), or

(b) paragraph 2(1) of Schedule 11 to the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I. 5)),

before the commencement of this Chapter of this Part of this Act is to have effect after the commencement of this Chapter as a recognition order made under paragraph 2(1) of this Schedule.

Orders not statutory instruments

5 Orders under this Part of this Schedule shall not be made by statutory instrument.

Part 2 Requirements for recognition of a supervisory body

Holding of appropriate qualification

6 (1) The body must have rules to the effect that a person is not eligible for appointment as a statutory auditor unless--

(a) in the case of an individual, he holds an appropriate qualification,

(b) in the case of a firm--

(i) each individual responsible for statutory audit work on behalf of the firm is eligible for appointment as a statutory auditor, and

(ii) the firm is controlled by qualified persons (see paragraph 7 below).

(2) Sub-paragraph (1) does not prevent the body from imposing more stringent requirements.

(3) A firm which has ceased to comply with the conditions mentioned in sub-paragraph (1)(b) may be permitted to remain eligible for appointment as a statutory auditor for a period of not more than three months.

7 (1) This paragraph explains what is meant in paragraph 6(1)(b) by a firm being "controlled by qualified persons".

(2) In this paragraph references to a person being qualified are--

(a) in relation to an individual, to his holding--

(i) an appropriate qualification, or

(ii) a corresponding qualification to audit accounts under the law of a member State, or part of a member State, other than the United Kingdom;

(b) in relation to a firm, to its--

(i) being eligible for appointment as a statutory auditor, or

(ii) being eligible for a corresponding appointment as an auditor under the law of a member State, or part of a member State, other than the United Kingdom.

(3) A firm is to be treated as controlled by qualified persons if, and only if--

(a) a majority of the members of the firm are qualified persons, and

(b) where the firm's affairs are managed by a board of directors, committee or other management body, a majority of that body are qualified persons or, if the body consists of two persons only, at least one of them is a qualified person.

(4) A majority of the members of a firm means--

(a) where under the firm's constitution matters are decided upon by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters;

(b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution.

(5) A majority of the members of the management body of a firm means--

(a) where matters are decided at meetings of the management body by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters at such meetings;

(b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution.

(6) Paragraphs 5 to 11 of Schedule 7 to this Act (rights to be taken into account and attribution of rights) apply for the purposes of this paragraph.

Auditors to be fit and proper persons

8 (1) The body must have adequate rules and practices designed to ensure that the persons eligible under its rules for appointment as a statutory auditor are fit and proper persons to be so appointed.

(2) The matters which the body may take into account for this purpose in relation to a person must include--

(a) any matter relating to any person who is or will be employed by or associated with him for the purposes of or in connection with statutory audit work;

(b) in the case of a body corporate, any matter relating to--

(i) any director or controller of the body,

(ii) any other body corporate in the same group, or

(iii) any director or controller of any such other body; and

(c) in the case of a partnership, any matter relating to--

(i) any of the partners,

(ii) any director or controller of any of the partners,

(iii) any body corporate in the same group as any of the partners, or

(iv) any director or controller of any such other body.

(3) Where the person is a limited liability partnership, in sub-paragraph (2)(b) "director" is to be read as "member".

(4) In sub-paragraph (2)(b) and (c) "controller", in relation to a body corporate, means a person who either alone or with an associate or associates is entitled to exercise or control the exercise of 15% or more of the rights to vote on all, or substantially all, matters at general meetings of the body or another body corporate of which it is a subsidiary.

Professional integrity and independence

9 (1) The body must have adequate rules and practices designed to ensure that--

(a) statutory audit work is conducted properly and with integrity, and

(b) persons are not appointed as statutory auditors in circumstances in which they have an interest likely to conflict with the proper conduct of the audit.

(2) The body must participate in arrangements within paragraph 21, and the rules and practices mentioned in sub-paragraph (1) must include provision requiring compliance with any standards for the time being determined under such arrangements.

(3) The body must also have adequate rules and practices designed to ensure that no firm is eligible under its rules for appointment as a statutory auditor unless the firm has arrangements to prevent a person to whom sub-paragraph (4) applies from being able to exert any influence over the way in which a statutory audit is conducted in circumstances in which that influence would be likely to affect the independence or integrity of the audit.

(4) This sub-paragraph applies to--

(a) any individual who is not a qualified person within the meaning of paragraph 7, and

(b) any person who is not a member of the firm.

Technical standards

10 (1) The body must have rules and practices as to--

(a) the technical standards to be applied in statutory audit work, and

(b) the manner in which those standards are to be applied in practice.

(2) The body must participate in arrangements within paragraph 22, and the rules and practices mentioned in sub-paragraph (1) must include provision requiring compliance with any standards for the time being determined under such arrangements.

Procedures for maintaining competence

11 The body must have rules and practices designed to ensure that persons eligible under its rules for appointment as a statutory auditor continue to maintain an appropriate level of competence in the conduct of statutory audits.

Monitoring and enforcement

12 (1) The body must have adequate arrangements and resources for the effective monitoring and enforcement of compliance with its rules.

(2) The arrangements for monitoring may make provision for that function to be performed on behalf of the body (and without affecting its responsibility) by any other body or person who is able and willing to perform it.

Independent monitoring of audits of listed companies and other major bodies

13 (1) The body must--

(a) participate in arrangements within paragraph 23(1), and

(b) have rules designed to ensure that members of the body who perform any statutory audit functions in respect of major audits take such steps as may be reasonably required of them to enable their performance of any such functions to be monitored by means of inspections carried out under the arrangements.

(2) Any monitoring of such persons under the arrangements is to be regarded (so far as their performance of statutory audit functions in respect of major audits is concerned) as monitoring of compliance with the body's rules for the purposes of paragraph 12(1).

(3) In this paragraph--

• "major audit" means a statutory audit conducted in respect of--

  (a)

  a company any of whose securities have been admitted to the official list (within the meaning of Part 6 of the Financial Services and Markets Act 2000 (c. 8)), or

  (b)

  any other person in whose financial condition there is a major public interest;

• "statutory audit function" means any function performed as a statutory auditor.

Membership, eligibility and discipline

14 The rules and practices of the body relating to--

(a) the admission and expulsion of members,

(b) the grant and withdrawal of eligibility for appointment as a statutory auditor, and

(c) the discipline it exercises over its members,

must be fair and reasonable and include adequate provision for appeals.

Investigation of complaints

15 (1) The body must have effective arrangements for the investigation of complaints against--

(a) persons who are eligible under its rules for appointment as a statutory auditor, and

(b) the body in respect of matters arising out of its functions as a supervisory body.

(2) The arrangements mentioned in sub-paragraph (1) may make provision for the whole or part of that function to be performed by and to be the responsibility of a body or person independent of the body itself.

Independent investigation for disciplinary purposes of public interest cases

16 (1) The body must--

(a) participate in arrangements within paragraph 24(1), and

(b) have rules and practices designed to ensure that, where the designated persons have decided that any particular disciplinary action should be taken against a member of the body following the conclusion of an investigation under such arrangements, that decision is to be treated as if it were a decision made by the body in disciplinary proceedings against the member.

(2) In sub-paragraph (1) "the designated persons" means the persons who, under the arrangements, have the function of deciding whether (and if so, what) disciplinary action should be taken against a member of the body in the light of an investigation carried out under the arrangements.

Meeting of claims arising out of audit work

17 (1) The body must have adequate rules or arrangements designed to ensure that persons eligible under its rules for appointment as a statutory auditor take such steps as may reasonably be expected of them to secure that they are able to meet claims against them arising out of statutory audit work.

(2) This may be achieved by professional indemnity insurance or other appropriate arrangements.

Register of auditors and other information to be made available

18 The body must have rules requiring persons eligible under its rules for appointment as a statutory auditor to comply with any obligations imposed on them by--

(a) requirements under section 1224 (Secretary of State's power to call for information);

(b) regulations under section 1239 (the register of auditors);

(c) regulations under section 1240 (information to be made available to the public).

Taking account of costs of compliance

19 The body must have satisfactory arrangements for taking account, in framing its rules, of the cost to those to whom the rules would apply of complying with those rules and any other controls to which they are subject.

Promotion and maintenance of standards

20 The body must be able and willing--

(a) to promote and maintain high standards of integrity in the conduct of statutory audit work, and

(b) to co-operate, by the sharing of information and otherwise, with the Secretary of State and any other authority, body or person having responsibility in the United Kingdom for the qualification, supervision or regulation of auditors.

Part 3 Arrangements in which recognised supervisory bodies are required to participate

Arrangements for setting standards relating to professional integrity and independence

21 The arrangements referred to in paragraph 9(2) are appropriate arrangements--

(a) for the determining of standards for the purposes of the rules and practices mentioned in paragraph 9(1), and

(b) for ensuring that the determination of those standards is done independently of the body.

Arrangements for setting technical standards

22 The arrangements referred to in paragraph 10(2) are appropriate arrangements--

(a) for the determining of standards for the purposes of the rules and practices mentioned in paragraph 10(1), and

(b) for ensuring that the determination of those standards is done independently of the body.

Arrangements for independent monitoring of audits of listed companies and other major bodies

23 (1) The arrangements referred to in paragraph 13(1) are appropriate arrangements--

(a) for enabling the performance by members of the body of statutory audit functions in respect of major audits to be monitored by means of inspections carried out under the arrangements, and

(b) for ensuring that the carrying out of such monitoring and inspections is done independently of the body.

(2) In this paragraph "major audit" and "statutory audit function" have the same meaning as in paragraph 13.

Arrangements for independent investigation for disciplinary purposes of public interest cases

24 (1) The arrangements referred to in paragraph 16(1) are appropriate arrangements--

(a) for the carrying out of investigations into public interest cases arising in connection with the performance of statutory audit functions by members of the body,

(b) for the holding of disciplinary hearings relating to members of the body which appear to be desirable following the conclusion of such investigations,

(c) for requiring such hearings to be held in public except where the interests of justice otherwise require,

(d) for the persons before whom such hearings have taken place to decide whether (and, if so, what) disciplinary action should be taken against the members to whom the hearings related, and

(e) for ensuring that the carrying out of those investigations, the holding of those hearings and the taking of those decisions are done independently of the body.

(2) In this paragraph--

• "public interest cases" means matters which raise or appear to raise important issues affecting the public interest;

• "statutory audit function" means any function performed as a statutory auditor.

Supplementary: arrangements to operate independently of body

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16 | P.17 | P.18 | P.19 | P.20 | P.21 | P.22 | P.23 | P.24 | P.25 | P.26 | P.27 | P.28 | P.29 | P.30 | P.31 | P.32 | P.33 | P.34 | P.35 | P.36 | P.37 | P.38 | P.39 | P.40 | P.41 | P.42 | P.43 | P.44 | P.45 | P.46 | P.47 | P.48 | P.49 | P.50 | P.51 | P.52 | P.53 | P.54 | P.55 | P.56 | P.57 | P.58 | P.59 | P.60 | P.61 | P.62 | P.63 | P.64 | P.65 | P.66

-- Back --