Due to changes in the 2006 Companies Act, there have been some amends to the requirements of Groups preparing company accounts for their subsidiary companies. Following is a brief breakdown of the changes and what they could mean for your company.
Following changes to company law, medium sized groups will now be required to prepare group accounts to be filed at Companies House – Small and medium sized groups were exempt from this previously.
If your company is the parent company of a mid sized group of companies, then you must prepare accounts that combine both your own financial performance and position AND the subsidiary companies.
Such accounts are known as “group accounts”.
Group accounts can be fairly complex depending on the size of the parent group and the number of companies within it.
How do I know if my company is affected?
The 2006 Companies Act had a phased implementation – with the exemption for mid sized group accounts being removed for accounting periods beginning on or after 6 April 2008.
This means that companies with a year end of 30 April 2009 were the first to be affected.
However, if your company has an unusual year end (or prepares accounts for less than one year) your company may have been affected slightly sooner.
For a group of companies to be qualified as medium sized (not small) two of the following three thresholds need to be exceeded for two consecutive years:-
Turnover – 6.5m net (7.8m gross)
Gross Assets – 3.26m net (3.9m gross)
Employees – 50
How do I know if my company is part of a group?
A group of companies is when one company has a controlling interest in one or more other companies – ordinarily the “parent” company will own more than 50% of the ordinary share capital of the “subsidiary” company.
Are there any exemptions?
Yes. Small groups of companies will remain exempt as they always have been from filing group accounts with companies house.
Parent companies which are also a subsidiary company are likely to be exempt. Provided that they form part of a larger group of companies for which group accounts are prepared.
Parent companies whose subsidiary interests can be considered immaterial are also exempt.
If you have any questions about the changes to preparing group accounts and how they will effect your company, contact your chartered accountants firm.