Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government, further to the Written Answer by Lord Henley on 11 April 2018 (HL6619), why (1) they, and (2) the Financial Reporting Council, consider that the powers of section 464 do not include distributable profits GAAP for the audited annual accounts as relevant accounts, given that section 853(4) Companies Act 2006 states that “references to ‘realised profits’ and ‘realised losses’, in relation to a company's accounts, are to such profits or losses of the company as fall to be treated as realised in accordance with principles generally accepted at the time when the accounts are prepared, with respect to the determination for accounting purposes of realised profits or losses”.

The accounting standards in Section 464 of the Companies Act 2006 are relevant to the preparation of individual or group accounts in accordance with Part 15 of the Act. The Act does not establish a requirement for companies to disclose their distributable profits. Individual accounts are the starting point for calculating distributable profits under Part 23 of the Act. Proposals to give ARGA responsibility for issuing guidance on what should be treated as “realised” profits and losses for the purposes of section 853 of the Act were included in the Government’s response to Restoring trust in audit and corporate governance.