Companies Act 2006 – Sections 374 to 378

Sections 374 to 378: Exemptions

630. These sections set out five exemptions from the requirement for prior shareholder
authorisation:

• section 374 creates a new exemption in relation to donations to trade unions (including
trade unions in countries other than the UK). The exemption covers donations such as
the provision of company rooms for trade union meetings, the use of company
vehicles by trade union officials and paid time off for trade union officials. However, a
donation to a trade union’s political fund is not covered by the exemption;

• section 375 restates the exemption in section 347B of the 1985 Act in respect of
subscriptions paid to a trade association for membership of the association, except that
it is not restricted to trade associations which carry out their activities mainly in the
EU;

• section 376 restates the exemption in section 347B of the 1985 Act in respect of
donations to all-party parliamentary groups;

• section 377 restates the exemption in section 347B of the 1985 Act for political
expenditure that is exempt by virtue of an order by the Secretary of State. An order
made by statutory instrument under this clause may confer an exemption on
companies or expenditure of any description or category specified in the order. The
parallel power in section 347B(8) to (11) of the 1985 Act was used in 2001 to exempt
business activities such as the publication of newspapers which, by their very nature,
involve the publication or dissemination of material which seeks to influence the
views of members of the public;

• section 378 restates the exemption in section 347B of the 1985 Act under which
authorisation for donations is not required unless the donation or aggregate amount of
the donations by the company exceeds £5,000 in a 12 month period. Donations by
other group companies (including subsidiaries) must be taken into account in
calculating whether the £5,000 threshold has been exceeded.

Section 379: Minor definitions

631. This section contains minor definitions for this Part.

PART 15: ACCOUNTS AND REPORTS

632. The provisions of this Part replace the provisions of Part 7 of the 1985 Act relating to
accounts and reports. The provisions of Part 7 of the 1985 Act relating to audit are replaced
by provisions in Part 16 of the Act.

633. The provisions have been reordered and redrafted to make it easier for companies of
whatever size to find the requirements relevant to them. In Part 7 of the 1985 Act the
provisions applying to small companies are generally expressed as modifications of the
provisions applying to large companies. These sections proceed on the opposite basis: where
provisions do not apply to all kinds of company, provisions applying to small companies
appear before the provisions applying to other companies.

634. A further change is to enable the Secretary of State to replace the detailed Schedules
to Part 7 of the 1985 Act by regulations. This will give more flexibility to arrange the
material currently in Schedules to make it easier to follow for different types of company. It
is unnecessary and undesirable to have parallel and duplicative regimes on the detail for
different types of company in primary legislation, but this could be done in parallel sets of
regulations for different sizes and types of company.

635. The main substantive changes in this Part are:

• a reduction in the time limit for private companies to file their accounts from ten
months to nine months after the year end (section 442);

• a reduction in the time limit for public companies to lay full financial statements
before the company in general meeting and file them from 7 months to 6 months after
the year end (section 442);

• new requirements for quoted companies to publish their annual accounts and reports
on a website (section 430); and

• replacement of the general power of the Secretary of State to alter accounting
requirements in section 257 of the 1985 Act by a general power of amendment by
regulations (section 468) and more specific powers in relation to specific sections.

CHAPTER 1: INTRODUCTION

Section 380: Scheme of this Part

636. This introductory section indicates the main way in which the structure of this Part
differs from that of Part 7 of the 1985 Act: provisions relating to small companies are set out
before provisions relating to larger companies; provisions applying to private companies
appear before those applying to public companies; and provisions applying to quoted
companies appear after those applying to other companies.

Companies subject to the small companies regime

Section 381: Companies subject to the small companies regime

Section 382: Companies qualifying as small: general

Section 383: Companies qualifying as small: parent companies

Section 384: Companies excluded from the small companies regime

637. These sections set out which companies, parent companies or groups fall within the
small companies regime – that is, those that qualify as small companies or groups and are not
excluded from the regime for one of the reasons set out in section 384. With two small
changes, the conditions for qualification as a small company are unchanged from the current
regime (sections 247, 247A and 249 of the 1985 Act). Firstly, section 382(5) now contains a
generalised definition of balance sheet total for both Companies Act and IAS individual
accounts. Secondly, whereas section 247A(2) of the 1985 Act provides that a group is
ineligible if any of its members is a body corporate having power to offer its shares or
debentures to the public, the reference in section 384(2)(b) is now to a body corporate whose
securities are admitted to trading on a regulated market in an EEA state. The definition of
“regulated market” is to be found in section 1173. This reflects changes made by the
Accounts Modernisation Directive (2003/51/EEC).

Section 385: Quoted and unquoted companies

638. The definitions of quoted and unquoted company in this section are equivalent to the
definition of “quoted company” in section 262 of the 1985 Act. A power is conferred to
amend the definition of “quoted company” by regulations. If the regulations extend the
application of this Part then they will be subject to affirmative resolution procedure.
Otherwise they are subject to negative resolution procedure.