Sections 374 to 378: Exemptions
630. These sections set out five exemptions from the requirement for prior shareholder authorisation:
• section 374 creates a new exemption in relation to donations to trade unions (including trade unions in countries other than the UK). The exemption covers donations such as the provision of company rooms for trade union meetings, the use of company vehicles by trade union officials and paid time off for trade union officials. However, a donation to a trade union’s political fund is not covered by the exemption;
• section 375 restates the exemption in section 347B of the 1985 Act in respect of subscriptions paid to a trade association for membership of the association, except that it is not restricted to trade associations which carry out their activities mainly in the EU;
• section 376 restates the exemption in section 347B of the 1985 Act in respect of donations to all-party parliamentary groups;
• section 377 restates the exemption in section 347B of the 1985 Act for political expenditure that is exempt by virtue of an order by the Secretary of State. An order made by statutory instrument under this clause may confer an exemption on companies or expenditure of any description or category specified in the order. The parallel power in section 347B(8) to (11) of the 1985 Act was used in 2001 to exempt business activities such as the publication of newspapers which, by their very nature, involve the publication or dissemination of material which seeks to influence the views of members of the public;
• section 378 restates the exemption in section 347B of the 1985 Act under which authorisation for donations is not required unless the donation or aggregate amount of the donations by the company exceeds £5,000 in a 12 month period. Donations by other group companies (including subsidiaries) must be taken into account in calculating whether the £5,000 threshold has been exceeded.
Section 379: Minor definitions
631. This section contains minor definitions for this Part.
632. The provisions of this Part replace the provisions of Part 7 of the 1985 Act relating to accounts and reports. The provisions of Part 7 of the 1985 Act relating to audit are replaced by provisions in Part 16 of the Act.
633. The provisions have been reordered and redrafted to make it easier for companies of whatever size to find the requirements relevant to them. In Part 7 of the 1985 Act the provisions applying to small companies are generally expressed as modifications of the provisions applying to large companies. These sections proceed on the opposite basis: where provisions do not apply to all kinds of company, provisions applying to small companies appear before the provisions applying to other companies.
634. A further change is to enable the Secretary of State to replace the detailed Schedules to Part 7 of the 1985 Act by regulations. This will give more flexibility to arrange the material currently in Schedules to make it easier to follow for different types of company. It is unnecessary and undesirable to have parallel and duplicative regimes on the detail for different types of company in primary legislation, but this could be done in parallel sets of regulations for different sizes and types of company.
635. The main substantive changes in this Part are:
• a reduction in the time limit for private companies to file their accounts from ten months to nine months after the year end (section 442);
• a reduction in the time limit for public companies to lay full financial statements before the company in general meeting and file them from 7 months to 6 months after the year end (section 442);
• new requirements for quoted companies to publish their annual accounts and reports on a website (section 430); and
• replacement of the general power of the Secretary of State to alter accounting requirements in section 257 of the 1985 Act by a general power of amendment by regulations (section 468) and more specific powers in relation to specific sections.
Section 380: Scheme of this Part
636. This introductory section indicates the main way in which the structure of this Part differs from that of Part 7 of the 1985 Act: provisions relating to small companies are set out before provisions relating to larger companies; provisions applying to private companies appear before those applying to public companies; and provisions applying to quoted companies appear after those applying to other companies.
Companies subject to the small companies regime
Section 381: Companies subject to the small companies regime
Section 382: Companies qualifying as small: general
Section 383: Companies qualifying as small: parent companies
Section 384: Companies excluded from the small companies regime
637. These sections set out which companies, parent companies or groups fall within the small companies regime – that is, those that qualify as small companies or groups and are not excluded from the regime for one of the reasons set out in section 384. With two small changes, the conditions for qualification as a small company are unchanged from the current regime (sections 247, 247A and 249 of the 1985 Act). Firstly, section 382(5) now contains a generalised definition of balance sheet total for both Companies Act and IAS individual accounts. Secondly, whereas section 247A(2) of the 1985 Act provides that a group is ineligible if any of its members is a body corporate having power to offer its shares or debentures to the public, the reference in section 384(2)(b) is now to a body corporate whose securities are admitted to trading on a regulated market in an EEA state. The definition of “regulated market” is to be found in section 1173. This reflects changes made by the Accounts Modernisation Directive (2003/51/EEC).
Section 385: Quoted and unquoted companies
638. The definitions of quoted and unquoted company in this section are equivalent to the definition of “quoted company” in section 262 of the 1985 Act. A power is conferred to amend the definition of “quoted company” by regulations. If the regulations extend the application of this Part then they will be subject to affirmative resolution procedure. Otherwise they are subject to negative resolution procedure.