The Companies Act 2014 (Commencement) Order 2015 has been signed and is available online here. The Commencement Order confirms that, as expected, the vast majority of the Act will come into operation on 1 June 2015.
However, there are a limited number of provisions mainly related to the preparation of financial statements that will not come into effect on that date, including:
- The obligation on certain companies to establish an audit committee (or explain why they have not done so)
- The requirement for certain companies to produce a directors’ compliance statement on an annual basis
- The requirement for the directors to state in the directors’ report that all relevant audit information has been supplied to the auditors
- The new rules concerning disclosure of gains made by directors on the exercise of share options
These new obligations will only come into effect for financial years commencing on or after 1 June 2015. However, even with this delayed commencement, companies are advised to take preparatory steps in advance of their next financial year to deal with certain of these new provisions. With regard to the directors’ compliance statement in particular, relevant companies should have in place, from the start of their next financial year, a compliance policy statement and ensure that arrangements or structures are in place to ensure compliance with the company’s relevant obligations under company and tax law. We at William Fry can assist in this process.
Aside from the limited exceptions set out above, all other provisions dealing with the preparation and auditing of financial statements will come into effect on 1 June 2015. The Department of Jobs, Enterprise and Innovation has confirmed that all financial statements approved on or after 1 June 2015 must be approved in accordance with the new Act. This is the case even where the financial year of the company ends prior to 1 June 2015. Therefore, companies with a financial year end of, for example, 31 December 2014 who have not approved their accounts prior to 1 June 2015 will need to ensure that their accounts comply with the new Companies Act after that date.
It should be noted that the Commencement Order states that where financial statements for small and medium sized companies have been signed before 1 June 2015 but abridged financial statements have not been prepared prior to that date, those abridged financial statements can be prepared in accordance with the old Companies Acts.