Explanatory note

These Regulations, which come into force on 1st October 2005, are made under section 245 of the Companies Act 1986 (c. 6) (“the Act”). Section 245 concerns the voluntary revision by the directors of a company of defective accounts and reports prepared by the company. The Regulations further amend the Companies (Revision of Defective Accounts and Report) Regulations (S.I. 1990/2570).

Part 7 of the Act has previously been amended to require quoted companies (as defined in section 262) to prepare directors' remuneration reports (section 234B) and operating and financial reviews (section 234AA). The Regulations provide for the voluntary revision of such reports and reviews where they are defective (regulations 3 to 12).

Regulations 13 and 14 make amendments consequential on previous amendments to the provisions of the Act concerning abbreviated accounts delivered to the registrar of companies by small and medium-sized companies.

Regulation 15 amends the provisions in regulation 14 of the 1990 Regulations for revision of defective summary financial statements prepared under section 251 of the Act. The amendments provide for such a revised statement to be prepared whether or not the original accounts, reports or reviews on which they were based were defective. It also enables the revision to be by way of a supplementary note setting out the corrections made, as an alternative to the complete replacement of the original statement.

The Regulations also make certain amendments consequential on EC Regulation No. 1606/2002 of the European Parliament and of the Council of 19th July 2002 on the application of international accounting standards (O.J. No. L243/1 of 11th September 2002) and on amendments made to Part 7 of the Act on accounts and audit by the Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947) and by the Companies Act 1985 (Operating and Financial Review and Directors' Report etc.) Regulations 2005 (S.I. 2005/1011).

A full 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/cld). A copy has also been placed in the libraries of both Houses of Parliament.