Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015

Lord Young of Norwood Green Excerpts

Monday 23rd March 2015 Grand Committee

[Lord Young of Norwood Green (Lab)]

My Lords, once again I welcome the Minister’s full and comprehensive report. She mentioned the dreaded Companies Act 2006, in which I was not involved. I forget how many clauses it contains—something like 1,000.

These are sensible proposals which will help companies. I have only one concern. The Minister probably addressed it but there was a rather long list. It is a point about small companies being exempted from annual audits. If they do not have to submit an annual audit, when do they have to submit an audit? The information may be contained in the regulations, in which case I apologise, but that thought has crossed my mind. There was a safeguard for abridged accounts because, as the Minister has advised, they have to be supported by all the shareholders. I hope I did not mishear what she said about the exemption to annual audits but, in any event, it would be useful to have clarification on the record. With that question, I am happy to approve the regulations.

[Baroness Neville-Rolfe]

I thank the noble Lord, Lord Young, for his support for both this instrument and the previous one. We have worked together in these areas and, as he said, these are good changes. As to the question about exemptions, a small company audit is done at the request of shareholders or, as I explained, if it is a financial company. I hope that clarifies the point.

[Lord Young of Norwood Green]

If they do not submit an annual audit, when do they submit an audit? The Minister has said that it is at the request of shareholders, but I am still puzzled.

[Baroness Neville-Rolfe]

I hope this helps. A small company is exempt from audit unless the shareholders request it. If it is a financial company, there is an audit. I am not sure that that helps.

[Lord Young of Norwood Green]

I am not going to pursue the matter further today. Perhaps the Minister can write to me because at some point, small company or not, an audit has to be prepared. The Minister is shaking her head so I have clearly misunderstood.

[Baroness Neville-Rolfe]

There are companies which are exempt from audit because of their size and the simplicity of their affairs. I will write to the noble Lord setting out the circumstances in which companies are exempt from audit. Obviously directors’ duties and so on still apply, but some companies are exempt from audit.