Companies Act 2006 update
The phased implementation of the Companies Act 2006 (the Act) continues and at the time of going to print six commencement orders, which bring the sections of the new Act into force, had been published.
The landmark implementation date of 6 April 2008 has now passed. This saw a number of important sections of the new Act that relate to accounts and reports and audit come into force. We have been busy deciphering the detail of the latest changes and there are a number of matters that may be of particular interest to you.
New size limits - is your company small or medium-sized?
Higher limits that determine whether a company can benefit from certain exemptions have been introduced. They apply to accounting periods beginning on or after 6 April 2008 and are as follows:
| Individual company limits |
Small company limits |
Medium-sized company limits |
| Turnover not more than |
£6.5m (£5.6m) |
£25.9m (£22.8m) |
| Balance sheet total not more than |
£3.26m (£2.8m) |
£12.9m (£11.4m) |
| Number of employees not more than |
50 (50) |
250 (250) |
| Group limits |
Small group limits |
Medium-sized group limits |
| Net turnover not more than |
£6.5m (£5.6m) |
£25.9m (£22.8m) |
| Gross turnover not more than |
£7.8m (£6.72m) |
£31.1m (£27.36m) |
| Net balance sheet total not more than |
£3.26m (£2.8m) |
£12.9m (£11.4m) |
| Gross balance sheet total not more than |
£3.9m (£3.36m) |
£15.5m (£13.68m) |
| Number of employees not more than |
50 (50) |
250 (250) |
These limits are important as they determine whether a company can benefit from the preparation of simpler accounts, file abbreviated accounts on the public record at Companies House and qualify for audit exemption.
Higher group limits - but will you need to prepare group accounts?
Importantly for medium-sized groups, the exemption from the preparation of group accounts has been abolished under the new Act, so those affected should pay particular attention to the new higher limits.
Don't be late!
Proposals to increase the penalties associated with late filing of accounts at Companies House have also been finalised. The increases will be introduced from 1 February 2009 and if accounts are filed late under the new Act in two successive years the penalties will be doubled.
| Length of delay, measured from the date the accounts are due: |
Private company |
Public company |
| Current |
New |
Current |
New |
| Up to 1 month |
£100 |
£150 |
£500 |
£750 |
| 1 to 3 months |
£100 |
£375 |
£500 |
£1,500 |
| 3 to 6 months |
£250 |
£750 |
£1,000 |
£3,000 |
| 6 to 12 months |
£500 |
£1,500 |
£2,000 |
£7,500 |
| More than 12 months |
£1,000 |
£1,500 |
£5,000 |
£7,500 |
Remember that the new Act also shortens the filing deadline to nine months from the year end for private companies and to six months for public limited companies, with effect for accounting periods beginning on or after 6 April 2008. That will be April 2009 year ends and onwards for most.
The demise of the company secretary?
The law no longer requires private companies to have a company secretary, although they may continue to have one if they wish. Many of the tasks that the company secretary performed remain and directors will have to ensure that these are still completed.
It is worth reiterating that because of the way that many of these sections of the Act are being implemented (for accounting periods beginning on or after 6 April 2008), you may not see the full effects of some of these changes until April 2009 year ends and onwards.
Please contact us if you would like to discuss any of these changes in more detail.
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C o m p l e t e
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