INTRODUCTION

These notes contain a summary of the disclosure requirements imposed on companies and their officers by the Companies Acts.

All company directors have a personal responsibility for making information about the capital structure, management and activities of their companies available both to the members of the company and to the Registrar of Companies. These notes summarise the key requirements.

PART I - THE ANNUAL RETURN

1. WHAT IS AN ANNUAL RETURN?

The annual return gives details about the company's directors and secretary, registered office address, shareholders and share capital.

2. HOW OFTEN IS AN ANNUAL RETURN REQUIRED?

Every company must deliver an annual return to the Registrar at least once in every twelve months. It has 28 days from the date to which the return is made up to do this.

3. WHEN SHOULD I SEND THE RETURN?

The return is a snapshot of the company's details at a particular date, (the "made up date"). The latest date to which it may be made up is the anniversary of the previous return or, in the case of a new company, the anniversary of its incorporation. You may choose an earlier date if you wish, but the return must be delivered to Companies House within 28 days of the made up date.

4. WHERE DO I GET A FORM?

Companies House will send a pre-printed Form 363s to the company's registered office a few weeks before the latest date to which it may be made up. This will show the information that has already been given to the Registrar. All you have to do is check whether these details are correct and amend any that are not. You should then complete the remainder of the form and send it, properly signed and dated, to the Registrar of Companies together with the appropriate filing fee (£15, made payable to Companies House).

If you want to make the return up to an earlier date, or if the form we sent you has been lost, please contact our Shuttle Liaison Section on fax 01222 380648 or by telephone 01222 380207 for companies registered in England and Wales. For companies registered in Scotland please telephone 0131 535 5869.

Companies who conduct their business through the medium of Welsh and whose memorandum states that their registered office is to be situated in Wales, have the choice of completing Form 363 Cym which is a bilingual annual return form.

PART II - THE ACCOUNTS

5. DO ALL COMPANIES HAVE TO KEEP ACCOUNTING RECORDS?

Yes. All limited and unlimited companies, whether or not they are trading, must keep accounting records.

6. DO ALL COMPANIES HAVE TO DELIVER THEIR ACCOUNTS TO THE REGISTRAR?

All limited companies must send their accounts to the Registrar of Companies. In the case of an unlimited company, accounts need only be delivered to the Registrar if, during the period covered by the accounts the company;

• was a subsidiary or a parent of a limited undertaking, or;
• operated a trading stamp scheme or;
• was a banking or insurance company (or the parent company of a banking or insurance company) or;
• was a "qualifying company" within the meaning of the Partnerships and Unlimited Companies (Accounts) Regulations 1993 (see Annex B of these notes).

7. WHAT PERIOD SHOULD THE ACCOUNTS COVER?

A company's first accounts cover the period starting on the date of incorporation and not the first day of trading if this is different. They end on the accounting reference date, or up to seven days either side of that date.

Subsequent accounts start on the day after the end of the period covered by the previous accounts. They end on the accounting reference date or up to 7 days either side of that date.

8. HOW IS THE ACCOUNTING REFERENCE DATE DETERMINED?

A new company's initial ARD is determined by the Companies Act and will be the last day of the month in which the anniversary of incorporation falls. If, for example, your company is incorporated on 2 July this year the ARD will be 31 July and the first accounting reference period will end on 31 July next year. A company's first accounts will then cover a period of more than six months, but not more than 18 months.

9. CAN THE ACCOUNTING REFERENCE DATE BE CHANGED?

Yes. To choose its own accounting reference date the company should deliver Form 225 to the Registrar of Companies. This must be done either during the accounting year in question or during the period allowed for delivering the accounts to the Registrar. See our notes on accounting reference dates (CHN20).

10. WHEN MUST I DELIVER MY ACCOUNTS?

Except in the circumstances described in the next paragraph, private companies normally have ten months from the end of the accounting reference period to deliver their accounts to the Registrar. Public companies have seven months.

In the case of a private company, if the first accounts cover a period of more than twelve months, they must be delivered to the Registrar within twenty-two months of the date of incorporation subject to there being a minimum of three months for delivery from the end of the period.

A public company's first accounts which cover more than twelve months must be delivered within nineteen months of incorporation - subject to there being a minimum of three months for delivery from the end of the period.

11. HOW IS THE DELIVERY PERIOD CALCULATED?

A period of `months' after a given date ends on the corresponding date in the appropriate month. Thus a private company with an accounting reference date of 30 September has until midnight on 30 July of the following year to deliver its accounts, not 31 July.

Where there is no corresponding date, the last day of the month will apply. Hence a private company with an accounting reference date of 30 April has until midnight on 28 February the following year to deliver its accounts.

12. WHO CAN APPROVE AND SIGN ACCOUNTS?

The accounts must be approved by the company's Board of Directors and signed by a director on behalf of the Board before sending them to the Registrar of Companies. The directors' report, if required, should be signed by a director or the secretary of the company. The auditor's report, if required, must state the name(s) of the registered auditor(s) and be signed by them, as should a report by a reporting accountant. To ensure that the accounts are clearly legible when microfilmed, it is important that they should be on white A4 paper with good size black print: - see our Notes for Guidance on Document Quality (CHN18).

You do not have to lay the accounts before a general meeting, or get them agreed by the Inland Revenue, before sending them to the Registrar.

13. CAN THE TIME ALLOWED FOR DELIVERING THE ACCOUNTS BE EXTENDED?

If a company has overseas interests, it may claim a three month extension by delivering Form 244 to the Registrar before the end of the normal period for delivering the accounts.

Where there is a special reason for doing so (for example, if there has been an unforeseen event which was outside the control of the company and its auditors), the Secretary of State for Trade and Industry may extend the time for laying and delivering the accounts. This cannot be done if the period normally allowed for the delivery of accounts has already passed.

14. WHAT IF THE ACCOUNTS ARE DELIVERED LATE?

There will be an automatic penalty as follows:-

15. WHAT DO THE ACCOUNTS INCLUDE?

Unless the company is small, medium sized or dormant, (see questions 16 and 25) the accounts will include:

• a profit and loss account (or income and expenditure account if the company is not trading for profit);
• a balance sheet signed by a director;
• an auditors' report signed by the auditor;
• a directors' report signed by a director or the secretary of the company;
• notes to the accounts;

and (if appropriate)

• group accounts.

16. WHAT IS A SMALL OR MEDIUM SIZED COMPANY?

The Companies Act defines "small" and "medium" companies as those which meet at least two out of three of the following conditions:

For a small sized company:

• annual turnover must not be more than £2,800,000;
• the balance sheet total must not be more than £1,400,000;
• the average number of employees must not be more than 50.

For a medium sized company:

• annual turnover must not be more than £11,200,000;
• the balance sheet total must not be more than £5,600,000;
• the average number of employees must not be more than 250.

The balance sheet total is the total of the fixed and current assets.

As a general rule a company could qualify as "small" or "medium" size in relation to a particular financial year if it fulfilled the criteria in that year and in the year before. However, if you think the company might qualify as small or medium-sized you should consult a professional accountant before you prepare abbreviated accounts, as he may need to prepare a special auditors report for filing with the Registrar confirming the company's eligibility to produce such accounts. This will not apply if the company accounts are subject to audit exemption.

The following table may be of assistance in determining whether a company is eligible to prepare and deliver small or medium accounts.

Certain small or medium sized companies may deliver abbreviated accounts to the Registrar, although a fuller set of accounts must still be provided for company members. PLC's and certain companies in the regulated sectors cannot qualify as a small or medium sized company.

The time allowed for delivery of abbreviated accounts is exactly the same as for full accounts.

18. WHAT DO SMALL OR MEDIUM SIZED COMPANIES HAVE TO DELIVER TO THE REGISTRAR OF COMPANIES?

As a minimum small companies can deliver the following:-

• Abbreviated balance sheet and notes
• Special auditor's report (if not exempt from audit requirements - see question 20).

As a minimum medium sized companies can deliver the following:-

• Full balance sheet
• Abbreviated profit and loss account
• Special auditor's report
• Directors' report
• Notes to the accounts.

The special auditors' report should state that in the auditors opinion the company is entitled to deliver abbreviated accounts and that they have been properly prepared in accordance with the appropriate provision.

The balance sheet (and if appropriate, the directors' report) must contain a statement that they are prepared in accordance with the special provisions in Part VII of the Companies Act 1985 relating to small and/or medium sized companies.

19. ARE THERE ANY SPECIAL RULES FOR SMALL/MEDIUM SIZED GROUPS?

Certain parent companies need not prepare, or send to the Registrar, group accounts if the group is small or medium sized.

A small group must meet at least two of the following conditions:

• aggregate turnover must not be more than £2,800,000 net (£3,360,000 gross);
• the aggregate balance sheet total must not be more than £1,400,000 net (£1,680,000 gross);
• the aggregate average number of employees must not be more than 50.

To qualify as medium-sized the group must satisfy at least two of the following conditions:

• its aggregate turnover must not be more than £11,200,000 net (£13,440,000 gross);
• the aggregate balance sheet total must not be more than £5,600,000 net (£6,720,000 gross);
• the aggregate average number of employees must not be more than 250.

A small company which has prepared individual accounts for its shareholders using the formats in Schedule 8 rather than Schedule 4 may, if it decides to do so, prepare group accounts on the same basis. However, a small group cannot file abbreviated accounts (that is, those prepared under Schedule 8A) at Companies House.

If a medium sized company decides to prepare group accounts they must be full group accounts.

20. DO ALL ACCOUNTS HAVE TO BE AUDITED?

No. There are relaxed audit requirements for very small companies if they are eligible and wish to take advantage of them.

To qualify, the company's turnover for financial years ending on or after 15 June 1997 must not be more than £350,000 (£250,000 gross income for charitable companies) with a balance sheet total of not more than £1.4 million.

Charitable companies with a gross income of £90,000 or less (and companies with a financial year ending before 15 June 1997 whose turnover is £90,000 or less) do not have to have an audit or an accountants report.

Charitable companies which have a gross income between £90,000 and £250,000 and a balance sheet total of less than £1.4 million may deliver unaudited accounts but these must be accompanied by an accountants report. Companies with a financial year ending before 15 June 1997 having a turnover between £90,000 and £350,000 and a balance sheet total of £1.4 million or less may deliver unaudited accounts but these must be accompanied by an accountants report. Accountants reports are explained in Annex A of these notes.

However, audited accounts must be delivered to Companies House if the company falls into any of the folowing categories:

a) a parent company or subsidiary undertaking (unless dormant for the period during which it was a subsidiary) or a member of a group of companies whose combined turnover is greater than £350,000 net (£420,000 gross) and whose combined balance sheet total exceeds £1.4 million net (£1.68 million gross);

b) a member of a group of companies in which any member is:

• a public company or body corporate which (not being a company) has power under its constitution to offer shares or debentures to the public
• a banking or insurance company
• an authorised person under the Financial Services Act 1986

c) a subsidiary company incorporated under the Companies Act which is part of the group whose parent company is an overesea undertaking;

d) an insurance broker enrolled under the Insurance Brokers (Registration) Act 1977;

e) a banking or insurance company;

f) an authorised person or appointed representative under the Financial Services Act 1986;

g) a public limited company unless the company is dormant. See Notes for Guidance CHN21;

h) a special register body or employers association under the Trade Union and Labour Relations (Consolidation) Act 1992;

i) one where an audit is required by members or a member holding at least 10% of the nominal value of issued share capital or, holding 10% of any class of shares or, in the case of a company limited by guarantee, 10% of its members in numbers.

The demand for the accounts to be audited should be in the form of written notice to the company, deposited at the registered office at least one month before the end of the financial year in question.

Some flat management companies may have to prepare audited accounts to comply with the terms of their lease. If in doubt you should seek professional advice.

21. FORMAT OF ACCOUNTS

Whether or not accounts are audited, they must comply with the Companies Act. Their format must follow the relevant Schedules to the Companies Act 1985 (as amended by the Companies Act 1989 and other subsequent regulations). The provisions relating to small companies are in Schedules 5, 6, 8 and 8A.

22. IF AUDITED ACCOUNTS ARE NOT NEEDED WHAT DO I NEED TO PROVIDE FOR COMPANIES HOUSE?

If the company is eligible (see question 20), unaudited accounts may be delivered to the Registrar in the form of an abbreviated balance sheet containing the following statements above the directors signature:

i. for the year ended..... the company was entitled to the exemption under sub-section (1) of section 249A of the Companies Act 1985. (In the case of charitable companies with a gross income of more than £90,000 but not more than £250,000, and non charitable companies with a financial year ending before 15 June 1997 and turnover between £90,000 and £350,000 the reference will be to sub-section (2) )

ii. no notice from members requiring an audit, has been deposited under section 249B(2) of the Companies Act 1985, and

iii. the directors acknowledge their responsibility for

a) ensuring the company keeps accounting records which comply with section 221, and;

b) preparing accounts which give a true and fair view of the state of affairs of the company as at the end of the financial year, and of its profit or loss for the financial year, in accordance with the requirements of section 226, and which otherwise comply with the requirements of the Companies Act relating to accounts, so far as applicable to the company.

c) preparing the accounts in accordance with the special provisions in Part VII of the Companies Act 1985 relating to small companies.

23. DOES A COMPANY STILL HAVE TO SEND ACCOUNTS TO MEMBERS?

Yes. In accordance with the requirements of the Companies Act 1985, members have a right to receive or demand copies of accounts and the related reports.

24. POSSIBLE DRAWBACKS OF UNAUDITED ACCOUNTS

A company should decide whether unaudited accounts are appropriate if they are eligible to submit them. It should however recognise that banks and credit managers rely on information available from Companies House to assess the company's credit worthiness and currently look for the reassurance provided by an independent audit.

25. ARE ANNUAL ACCOUNTS REQUIRED IF A COMPANY IS NOT TRADING?

All limited companies, whether they trade or not, must deliver accounts to Companies House. However, limited companies that have not traded during a financial year, unless they are a banking or insurance company or an authorised person under the Financial Services Act 1986, may claim "dormant status".

Dormant companies do not need to appoint auditors and can deliver simpler annual accounts to Companies House. More information about dormant status is available in our notes for guidance "Dormant Companies" (CHN21).

26. REFERENCES TO AUDIT IN ARTICLES OF ASSOCIATION

Companies may conclude that it is appropriate to revise articles of association to ensure that these do not preclude them from taking advantage of the audit exemptions. Companies with articles based on the 1985 version of Table A are unlikely to have such problems. However, the 1948 version of Table A (and other similar earlier provisions) imposes an obligation to appoint auditors. Companies with such articles may wish to take legal advice regarding possible changes.

PART III - OTHER INFORMATION

27. WHAT OTHER INFORMATION MUST I SEND TO THE REGISTRAR?

You will need to inform the Registrar about appointments and resignations of the company's directors and secretary, changes in their particulars, changes to the registered office address, details of mortgages, charges and share capital. If the company passes a resolution to change any part of the memorandum and articles that too must be notified to the Registrar. You will also need to tell the Registrar if the company goes into liquidation, receivership, administration or voluntary arrangement.

28. WHAT HAPPENS IF I DON'T SEND THE INFORMATION TO THE REGISTRAR?

It is easy to lose confidence in a company that doesn't provide the Registrar with up to date information. It could cause trading problems or affect the company's credit rating. It could even stop a potential investor from putting his money into the company, or stop it from getting a loan at a time when it is needed.

In addition, directors may be prosecuted and could end up with a criminal record and be liable to a fine of up to £5,000 for some offences.

A company which is late in delivering its accounts to the Registrar will attract a late filing penalty. See question 14 and our notes for guidance "