Companies Act 2006 (c. 46)

(The document as of February, 2008)

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Supplementary: arrangements to operate independently of body

25 (1) This paragraph applies for the purposes of--

(a) paragraph 21(b),

(b) paragraph 22(b),

(d) paragraph 24(1)(e).

(2) Arrangements are not to be regarded as appropriate for the purpose of ensuring that a thing is done independently of the body unless they are designed to ensure that the body--

(a) will have no involvement in the appointment or selection of any of the persons who are to be responsible for doing that thing, and

(b) will not otherwise be involved in the doing of that thing.

(3) Sub-paragraph (2) imposes a minimum requirement and does not preclude the possibility that additional criteria may need to be satisfied in order for the arrangements to be regarded as appropriate for the purpose in question.

Supplementary: funding of arrangements

26 The body must pay any of the costs of maintaining any arrangements within paragraph 21, 22, 23 or 24 which the arrangements provide are to be paid by it.

Supplementary: scope of arrangement

27 Arrangements may qualify as arrangements within any of paragraphs 21, 22, 23 and 24 even though the matters for which they provide are more extensive in any respect than those mentioned in the applicable paragraph.

Section 1220

SCHEDULE 11 Recognised professional qualifications

Part 1 Grant and revocation of recognition of a professional qualification

Application for recognition of professional qualification

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

(2) In this Part of this Act "a recognised qualifying body" means a qualifying body offering a recognised professional qualification.

(3) Any 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.

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

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

(6) 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.

(7) In the case of examination standards, the verification required may include independent moderation of the examinations over such a period as the Secretary of State considers necessary.

(8) 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.

(9) The reference in sub-paragraph (8)(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 persons holding or seeking to hold a qualification, or approved or seeking to be approved by the body for the purposes of giving practical training,

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

including any guidance or recommendation relating to a matter within sub-paragraph (10).

(10) The matters within this sub-paragraph are--

(a) admission to or expulsion from a course of study leading to a qualification,

(b) the award or deprivation of a qualification, and

so far as relevant for the purposes of this Part of this Act.

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 qualification in relation to which the application was made.

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

(3) Where the Secretary of State refuses an application for a recognition order he must give the applicant a written notice to that effect specifying which requirements, in his opinion, are not satisfied.

(4) 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 relation to the qualification to which the recognition order relates, or

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

(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 qualifying body,

(b) take such steps as he considers reasonably practicable for bringing the notice to the attention of persons holding the qualification or in the course of studying for it, 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 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 qualifying body on which a notice is served under sub-paragraph (3),

(b) any person holding the qualification or in the course of studying for it, and

(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 qualifying 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 the Secretary of State must--

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

(b) take such steps as he considers reasonably practicable for bringing the making of the order to the attention of persons holding the qualification or in the course of studying for it, 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 12 to the Companies Act 1989 (c. 40), or

(b) paragraph 2(1) of Schedule 12 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 professional qualification

Entry requirements

6 (1) The qualification must only be open to persons who--

(a) have attained university entrance level, or

(b) have a sufficient period of professional experience.

(2) In relation to a person who has not been admitted to a university or other similar establishment in the United Kingdom, "attaining university entrance level" means--

(a) being educated to such a standard as would entitle him to be considered for such admission on the basis of--

(i) academic or professional qualifications obtained in the United Kingdom and recognised by the Secretary of State to be of an appropriate standard, or

(ii) academic or professional qualifications obtained outside the United Kingdom which the Secretary of State considers to be of an equivalent standard, or

(b) being assessed, on the basis of written tests of a kind appearing to the Secretary of State to be adequate for the purpose (with or without oral examination), as of such a standard of ability as would entitle him to be considered for such admission.

(3) The assessment, tests and oral examination referred to in sub-paragraph (2)(b) may be conducted by--

(a) the qualifying body, or

(b) some other body approved by the Secretary of State.

(4) The reference in sub-paragraph (1)(b) to "a sufficient period of professional experience" is to not less than seven years' experience in a professional capacity in the fields of finance, law and accountancy.

Requirement for theoretical instruction or professional experience

7 (1) The qualification must be restricted to persons who--

(a) have completed a course of theoretical instruction in the subjects prescribed for the purposes of paragraph 8, or

(b) have a sufficient period of professional experience.

(2) The reference in sub-paragraph (1)(b) to "a sufficient period of professional experience" is to not less than seven years' experience in a professional capacity in the fields of finance, law and accountancy.

Examination

8 (1) The qualification must be restricted to persons who have passed an examination (at least part of which is in writing) testing--

(a) theoretical knowledge of the subjects prescribed for the purposes of this paragraph by regulations made by the Secretary of State, and

(b) ability to apply that knowledge in practice,

and requiring a standard of attainment at least equivalent to that required to obtain a degree from a university or similar establishment in the United Kingdom.

(2) The qualification may be awarded to a person without his theoretical knowledge of a subject being tested by examination if he has passed a university or other examination of equivalent standard in that subject or holds a university degree or equivalent qualification in it.

(3) The qualification may be awarded to a person without his ability to apply his theoretical knowledge of a subject in practice being tested by examination if he has received practical training in that subject which is attested by an examination or diploma recognised by the Secretary of State for the purposes of this paragraph.

(4) Regulations under this paragraph are subject to negative resolution procedure.

Practical training

9 (1) The qualification must be restricted to persons who have completed at least three years' practical training of which--

(a) part was spent being trained in statutory audit work, and

(b) a substantial part was spent being trained in statutory audit work or other audit work of a description approved by the Secretary of State as being similar to statutory audit work.

(2) For the purpose of sub-paragraph (1) "statutory audit work" includes the work of a person appointed as the auditor of a person under the law of a country or territory outside the United Kingdom where it appears to the Secretary of State that the law and practice with respect to the audit of accounts is similar to that in the United Kingdom.

(3) The training must be given by persons approved by the body offering the qualification as persons whom the body is satisfied, in the light of undertakings given by them and the supervision to which they are subject (whether by the body itself or some other body or organisation), will provide adequate training.

(4) At least two-thirds of the training must be given by a person--

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

(b) 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.

Supplementary provision with respect to a sufficient period of professional experience

10 (1) Periods of theoretical instruction in the fields of finance, law and accountancy may be deducted from the required period of professional experience, provided the instruction--

(a) lasted at least one year, and

(b) is attested by an examination recognised by the Secretary of State for the purposes of this paragraph;

but the period of professional experience may not be so reduced by more than four years.

(2) The period of professional experience together with the practical training required in the case of persons satisfying the requirement in paragraph 7 by virtue of having a sufficient period of professional experience must not be shorter than the course of theoretical instruction referred to in that paragraph and the practical training required in the case of persons satisfying the requirement of that paragraph by virtue of having completed such a course.

The body offering the qualification

11 (1) The body offering the qualification must have--

(a) rules and arrangements adequate to ensure compliance with the requirements of paragraphs 6 to 10, and

(b) adequate arrangements for the effective monitoring of its continued compliance with those requirements.

(2) The arrangements must include arrangements for monitoring--

(a) the standard of the body's examinations, and

(b) the adequacy of the practical training given by the persons approved by it for that purpose.

Section 1242

SCHEDULE 12 Arrangements in which registered third country auditors are required to participate

Arrangements for independent monitoring of audits of traded non-Community companies

1 (1) The arrangements referred to in section 1242(1)(a) are appropriate arrangements--

(a) for enabling the performance by the registered third country auditor of third country audit functions 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 registered third country auditor.

(2) In this paragraph "third country audit function" means any function performed as a third country auditor.

Arrangements for independent investigations for disciplinary purposes

2 (1) The arrangements referred to in section 1242(1)(b) are appropriate arrangements--

(a) for the carrying out of investigations into matters arising in connection with the performance of third country audit functions by the registered third country auditor,

(b) for the holding of disciplinary hearings relating to the registered third country auditor which appear to be desirable following the conclusion of such investigations,

(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 registered third country auditor, 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 registered third country auditor.

(2) In this paragraph--

"disciplinary action" includes the imposition of a fine; and
"third country audit function" means any function performed as a third country auditor.

Supplementary: arrangements to operate independently of third country auditor

3 (1) This paragraph applies for the purposes of--

(a) paragraph 1(1)(b), or

(b) paragraph 2(1)(e).

(2) Arrangements are not to be regarded as appropriate for the purpose of ensuring that a thing is done independently of the registered third country auditor unless they are designed to ensure that the registered third country auditor--

(a) will have no involvement in the appointment or selection of any of the persons who are to be responsible for doing that thing, and

(b) will not otherwise be involved in the doing of that thing.

Supplementary: funding of arrangements

4 (1) The registered third country auditor must pay any of the costs of maintaining any relevant arrangements which the arrangements provide are to be paid by it.

(2) For this purpose "relevant arrangements" are arrangements within paragraph 1 or 2 in which the registered third country auditor is obliged to participate.

Supplementary: scope of arrangements

5 Arrangements may qualify as arrangements within either of paragraphs 1 and 2 even though the matters for which they provide are more extensive in any respect than those mentioned in the applicable paragraph.

Specification of particular arrangements by the Secretary of State

6 (1) If there exist two or more sets of arrangements within paragraph 1 or within paragraph 2, the obligation of a registered third country auditor under section 1242(1)(a) or (b), as the case may be, is to participate in such set of arrangements as the Secretary of State may by order specify.

(2) An order under sub-paragraph (1) is subject to negative resolution procedure.

Section 1252

SCHEDULE 13 Supplementary provisions with respect to delegation order

Operation of this Schedule

1 (1) This Schedule has effect in relation to a body designated by a delegation order under section 1252 as follows--

(a) paragraphs 2 to 12 have effect in relation to the body where it is established by the order;

(b) paragraphs 2 and 6 to 11 have effect in relation to the body where it is an existing body;

(2) In their operation in accordance with sub-paragraph (1)(b), paragraphs 2 and 6 apply only in relation to--

(a) things done by or in relation to the body in or in connection with the exercise of functions transferred to it by the delegation order, and

(b) functions of the body which are functions so transferred.

(3) Any power conferred by this Schedule to make provision by order is a power to make provision by an order under section 1252.

Status

2 The body is not to be regarded as acting on behalf of the Crown and its members, officers and employees are not to be regarded as Crown servants.

Name, members and chairman

3 (1) The body is to be known by such name as may be specified in the delegation order.

(2) The body is to consist of such persons (not being less than eight) as the Secretary of State may appoint after such consultation as he thinks appropriate.

(3) The chairman of the body is to be such person as the Secretary of State may appoint from among its members.

(4) The Secretary of State may make provision by order as to--

(a) the terms on which the members of the body are to hold and vacate office;

(b) the terms on which a person appointed as chairman is to hold and vacate the office of chairman.

Financial provisions

4 (1) The body must pay to its chairman and members such remuneration, and such allowances in respect of expenses properly incurred by them in the performance of their duties, as the Secretary of State may determine.

(2) As regards any chairman or member in whose case the Secretary of State so determines, the body must pay or make provision for the payment of--

(a) such pension, allowance or gratuity to or in respect of that person on his retirement or death, or

(b) such contributions or other payment towards the provision of such a pension, allowance or gratuity,

as the Secretary of State may determine.

(3) Where--

(a) a person ceases to be a member of the body otherwise than on the expiry of his term of office, and

(b) it appears to the Secretary of State that there are special circumstances which make it right for that person to receive compensation,

the body must make a payment to him by way of compensation of such amount as the Secretary of State may determine.

Proceedings

5 (1) The delegation order may contain such provision as the Secretary of State considers appropriate with respect to the proceedings of the body.

(2) The delegation order may, in particular--

(a) authorise the body to discharge any functions by means of committees consisting wholly or partly of members of the body;

(b) provide that the validity of proceedings of the body, or of any such committee, is not affected by any vacancy among the members or any defect in the appointment of any member.

Fees

6 (1) The body may retain fees payable to it.

(2) The fees must be applied for--

(a) meeting the expenses of the body in discharging its functions, and

(b) any purposes incidental to those functions.

(3) Those expenses include any expenses incurred by the body on such staff, accommodation, services and other facilities as appear to it to be necessary or expedient for the proper performance of its functions.

(4) In prescribing the amount of fees in the exercise of the functions transferred to it the body must prescribe such fees as appear to it sufficient to defray those expenses, taking one year with another.

(5) Any exercise by the body of the power to prescribe fees requires the approval of the Secretary of State.

(6) The Secretary of State may, after consultation with the body, by order vary or revoke any regulations prescribing fees made by the body.

Legislative functions

7 (1) Regulations or an order made by the body in the exercise of the functions transferred to it must be made by instrument in writing, but not by statutory instrument.

(2) The instrument must specify the provision of this Part of this Act under which it is made.

(3) The Secretary of State may by order impose such requirements as he thinks necessary or expedient as to the circumstances and manner in which the body must consult on any regulations or order it proposes to make.

(4) Nothing in this Part applies to make regulations or an order made by the body subject to negative resolution procedure or affirmative resolution procedure.

8 (1) Immediately after an instrument is made it must be printed and made available to the public with or without payment.

(2) A person is not to be taken to have contravened any regulation or order if he shows that at the time of the alleged contravention the instrument containing the regulation or order had not been made available as required by this paragraph.

9 (1) The production of a printed copy of an instrument purporting to be made by the body on which is endorsed a certificate signed by an officer of the body authorised by it for the purpose and stating--

(a) that the instrument was made by the body,

(b) that the copy is a true copy of the instrument, and

is evidence (or, in Scotland, sufficient evidence) of the facts stated in the certificate.

(2) A certificate purporting to be signed as mentioned in sub-paragraph (1) is to be deemed to have been duly signed unless the contrary is shown.

(3) Any person wishing in any legal proceedings to cite an instrument made by the body may require the body to cause a copy of it to be endorsed with such a certificate as is mentioned in this paragraph.

Report and accounts

10 (1) The body must, at least once in each calendar year for which the delegation order is in force, make a report to the Secretary of State on--

(a) the discharge of the functions transferred to it, and

(b) such other matters as the Secretary of State may by order require.

(2) The delegation order may modify sub-paragraph (1) as it has effect in relation to the calendar year in which the order comes into force or is revoked.

(3) The Secretary of State must lay before Parliament copies of each report received by him under this paragraph.

(4) The following provisions of this paragraph apply as follows--

(a) sub-paragraphs (5) and (6) apply only where the body is established by the order, and

(b) sub-paragraphs (7) and (8) apply only where the body is an existing body.

(5) The Secretary of State may, with the consent of the Treasury, give directions to the body with respect to its accounts and the audit of its accounts.

(6) A person may only be appointed as auditor of the body if he is eligible for appointment as a statutory auditor.

(7) Unless the body is a company to which section 394 (duty to prepare individual company accounts) applies, the Secretary of State may, with the consent of the Treasury, give directions to the body with respect to its accounts and the audit of its accounts.

(8) Whether or not the body is a company to which section 394 applies, the Secretary of State may direct that any provisions of this Act specified in the directions are to apply to the body, with or without any modifications so specified.

Other supplementary provisions

11 (1) The transfer of a function to a body designated by a delegation order does not affect anything previously done in the exercise of the function transferred; and the resumption of a function so transferred does not affect anything previously done in exercise of the function resumed.

(2) The Secretary of State may by order make such transitional and other supplementary provision as he thinks necessary or expedient in relation to the transfer or resumption of a function.

(3) The provision that may be made in connection with the transfer of a function includes, in particular, provision--

(a) for modifying or excluding any provision of this Part of this Act in its application to the function transferred;

(b) for applying to the body designated by the delegation order, in connection with the function transferred, any provision applying to the Secretary of State which is contained in or made under any other enactment;

(d) for the carrying on and completion by that body of anything in the process of being done by the Secretary of State when the order takes effect;

(e) for the substitution of that body for the Secretary of State in any instrument, contract or legal proceedings.

(4) The provision that may be made in connection with the resumption of a function includes, in particular, provision--

(a) for the transfer of any property, rights or liabilities from that body to the Secretary of State;

(b) for the carrying on and completion by the Secretary of State of anything in the process of being done by that body when the order takes effect;

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