Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government, further to the Written Answer by Lord Callanan on 16 September 2020 (HL7963) which stated that “calculation of the distributable profits and of a distribution by a public company must be based on the profits of the company as set out in the company’s accounts”, how and when did the discussions of UK Endorsement Board in its adoption of IFRS 17 take that function into account to ensure that accounts of insurance companies are reliable for that function.
The calculation of distributable profits must take the profits of the company as set out in the company’s accounts as its starting point. However, directors must also take into account additional factors set out in Part 23 of the Companies Act 2006. For example, for certain insurance companies that are authorised under the Solvency 2 Directive this includes the factors set out in s833A. The effect of these additional factors is to ensure that a company may only make distributions out of profits available for the purpose. The UK Endorsement Board is only required to assess international accounting standards against the criteria in Regulation 7(1) in SI 2019/685.