Explanatory note

These Regulations amend the accounting and auditing provisions in Part 7 of the Companies Act 1985 (“the 1985 Act”) as they apply to small companies. They extend to small companies which have permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity, the accounting and audit exemptions afforded to other small companies by Part 7, unless such companies are—

• authorised insurance companies (within the meaning of section 742C of the 1985 Act);

• banking companies (within the meaning of section 742B of the 1985 Act);

• e-money issuers (see regulation 6 amending section 262 of the 1985 Act);

• ISD investment firms (see regulation 6 amending section 262 of the 1985 Act);

• UCITS management companies (see regulation 6 amending section 262 of the 1985 Act).

Amendments consequential to the amendments made by regulations 2 to 6 are made to the Limited Liability Partnerships Regulations 2001 (S.I. 2001/1090) by regulation 7.

Regulation 4(2) makes a consequential amendment to section 249AA(2) of the 1985 Act (dormant companies) that was missed when section 247A of the 1985 Act was amended by regulation 6 of the Companies Act 1985 (Operating and Financial Review and Directors’ Report etc.) Regulations 2005 (S.I. 2005/1011).

For completeness, regulation 6(3)(b) adds the specific regulated activity of agreeing to carry on one of the excluded regulated activities listed in section 262.

The Regulations apply in respect of financial years ending on or after 31st December 2006.

A Regulatory Impact Assessment of the effect that this instrument will have on the costs of business is available from the Department of Trade and Industry, Corporate Law and Governance Directorate, 1 Victoria Street, London SW1H 0ET (it is also available electronically at www.dti.gov.uk/bbf). Copies have also been placed in the libraries of both Houses of Parliament.