Companies (1986 Order) (Audit Exemption) (Amendment) Regulations (Northern Ireland) 2001

These Regulations may be cited as the Companies (1986 Order) (Audit Exemption) (Amendment) Regulations (Northern Ireland) 2001 and shall come into operation on 13th April 2001.

These Regulations apply to annual accounts and reports in respect of financial years ending on or after 13th June 2001.

In these Regulations, “1986 Order” means the Companies (Northern Ireland) Order 1986, and references to Articles or Schedules are to Articles of or Schedules to the 1986 Order.

Article 257A (exemptions from audit for certain categories of small company)^f1 is modified as follows.

In paragraph (3b) and (3A)(b), for “£350,000” substitute “£1 million”.

In paragraph (6A), for “Article 258(1)”, substitute “Article 257AA(1)”.

Article 257B (cases where exemption from audit not available)^f1 is modified as follows.

In paragraph (1A), for “Article 258” substitute “Article 257AA”.

In paragraph (1C)—

In paragraph (3), after “Article 257A” insert “or by paragraph (1) of Article 257AA”.

In paragraph (4)—

Schedule 4 (form and content of company accounts)^f1 is amended as follows.

After paragraph 58 insert—

“Dormant companies acting as agents

58A

Where the directors of a company take advantage of the exemption conferred by Article 257AA, and the company has during the financial year in question acted as an agent for any person, the fact that it has so acted must be stated.”.

Schedule 8 (form and content of accounts prepared by small companies)^f1 is amended as follows.

After paragraph 51 insert—

“Dormant companies acting as agents

51A

Where the directors of a company take advantage of the exemption conferred by Article 257AA, and the company has during the financial year in question acted as an agent for any person, the fact that it has so acted must be stated.”.

Schedule 8A (form and content of abbreviated accounts of small companies delivered to registrar)^f1 is amended as follows.

After paragraph 9 insert—

“Dormant companies acting as agents

9A

Where the directors of a company take advantage of the exemption conferred by Article 257AA, and the company has during the financial year in question acted as an agent for any person, the fact that it has so acted must be stated.”.

In paragraph (9) of Article 254 (special provisions for small companies)^f1, for the words from “the company” to the end, substitute “the directors of the company have taken advantage of the exemption from audit conferred by Article 257AA (dormant companies)”.

In paragraph (1) of Article 255B (special auditors' report)^f2—

In paragraph (3) of Article 257C (the report required for the purposes of Article 257A(2))^f3, omit from “(or, where the company is a charity,” to “that Article)”.

In paragraph (1) of Article 257E (effect of audit exemptions)^f4, after “Article 257A(1)” insert “or 257AA(1)”.

After paragraph (1) of Article 257E insert—

“(1A)

Where the directors of a company have taken advantage of the exemption conferred by Article 257AA, then for the purposes of that Article the company shall be treated as a company entitled to prepare accounts in accordance with Article 254 even though it is a member of an ineligible group.”.

Article 258 (resolution not to appoint auditors)^f5 is hereby repealed.

In paragraph 4(a) of Article 297 (particulars of directors to be registered under Article 296)^f6, for “Article 258(3)” substitute “Article 257AA(4)”.

In paragraph (2) of Article 394 (election by private company to dispense with annual appointment of auditors)^f7, for paragraph (a) substitute—

“(a)

the directors of the company have taken advantage of the exemption conferred by Article 257A or 257AA, or”.

In paragraph (1) of Article 396A (certain companies exempt from obligation to appoint auditors)^f8 for “Article 258” substitute “Article 257AA”.

In paragraph 2(2)(a) of Schedule 1 (particulars of directors etc to be contained in statement under Article 21)^f9, for “Article 258(3)” substitute “Article 257AA(4)”.

These Regulations amend provisions in Part VIII of the Companies (Northern Ireland) Order 1986 (“the 1986 Order”) concerning—

• the exemption of certain small companies from the requirement to have their annual accounts audited, and

• the conditions a company must satisfy in order to qualify as dormant

The amendments effected by the Regulations will apply to annual accounts and reports in respect of financial years ending on or after 13th June 2001 (regulation 1(2)).

Regulation 2 increases the turnover limit in Article 257A(3)(b) of the 1986 Order which a small company other than a small charitable company must not exceed in respect of a financial year if it is to be exempt from audit. The turnover limit is increased from £350,000 to £1 million (for small charitable companies the gross income limit remains at £90,000).

Regulation 4(3)(b) increases the turnover limit for a group to qualify as a small group for the purposes of Article 257B(1C) from £350,000 net (£420,000 gross) to £1 million net (£1.2 million gross) (the limit as it applies in relation to small charitable companies remains unchanged). A company which would otherwise be disqualified from claiming exemption from audit under Article 257A for a financial year because it was a parent company or subsidiary undertaking for any period in that year, may nevertheless claim the exemption if it is a member of a small group which satisfies the conditions specified in Article 257B(1C). Regulation 4(3)(a) amends Article 257B(1C)(a) to provide for the exemption from audit for small groups to apply to groups where not all the bodies in the group are companies within the meaning of Article 3 of the 1986 Order.

Regulation 3 inserts a new Article 257AA making provision for dormant companies to replace that in Article 258 (which is repealed by regulation 8(6)). Dormant companies as defined will no longer need to pass a special resolution in order to qualify for exemption from audit, but instead will so qualify automatically provided 10 per cent of members do not request an audit. The definition of dormancy has also been amended (see new Article 257AA(4) to (7)).

Regulations 5 to 7 impose new requirements for companies which are claiming dormancy status under Article 257AA for a financial year and which have during that year acted as agent for any person to disclose that fact in the notes to their accounts (the amendments are to Schedules 4, 8 and 8A).

Regulations 2(3), 4(2), (4) and (5) and 8 make minor and consequential amendments.

A Regulatory Impact Assessment of these Regulations is available from the Department of Enterprise, Trade and Investment, Companies Registry, IDB House, 64 Chichester Street, Belfast BT1 4JX. A copy has also been placed in the Assembly Library.