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Financial and accounting definitions

Definitions relating to financial and accounting duties of directors.

Contents

A

  • accounting reference date

    The accounting reference date of a company incorporated in Great Britain on or after 1st April 1996 and before the commencement of this Act, or after the commencement of this Act, is the last day of the month in which the anniversary of its incorporation falls ( CA 2006 , s.191).

  • accounting reference period

    Accounting reference periods are usually successive periods of twelve months beginning immediately after the end of the previous accounting reference period and ending with its accounting reference date ( CA 2006 , s.391).

  • accounts meeting

    The general meeting of the company before which the company's annual accounts for the financial year are to be laid.

  • AIM

    Alternative Investment Market of the London Stock Exchange

  • annual accounts

    Company's individual accounts for that year subject to the omission of the individual profit and loss account in certain cases ( CA 2006 , ss.394 and 408), and

    any group accounts prepared by the company for that year ( CA 2006 , ss.398 and 399)

    ( CA 2006 , s.471(1))

  • annual accounts and reports

    The annual accounts together with the directors' report, the auditor's report and, for quoted companies , the directors' remuneration report ( CA 2006 , s.471).

  • articles

    Articles of Association

  • ASB

    Accounting Standards Board

  • associated body corporate

    For the purposes of CA 2006 , Part 10:
    bodies corporate are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate, and
    companies are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate.
    ( CA 2006 , s.256) 

    Note that this is different from the definition of an associate (or associated undertaking) for accounting purposes.

B

  • BERR

    Department for Business, Enterprise & Regulatory Reform

C

  • CDDA86

    Company Director Disqualification Act 1986

  • combined code

    The Combined Code on Corporate Governance (June 2008).

  • Companies Act accounts

    Accounts prepared in accordance with the form and content requirements of regulations made under the 2006 Act , which includes compliance with accounting standards and related literature issued by the ASB (UK GAAP) by virtue of the analysis summarised at paragraph 85.

  • company associated with a public company

    A subsidiary or parent company of a public company, or a sister subsidiary of a public company (where both the company and the public company are subsidiaries of a third company).

    Note that this is different from the definition of an associate (or associated undertaking) for accounting purposes.

D

  • DTI

    Department of Trade and Industry (since June 2007, replaced by the Department for Business, Enterprise & Regulatory Reform).

  • DTRs

    Disclosure and Transparency Rules

E

  • entitled persons

    Shareholders, debenture holders and other persons entitled to receive notice of general meetings, including

    any person nominated by a member under a power in the Articles ( CA 2006 , s.145) and

    for traded companies , those persons that have been nominated

    by registered shareholders to enjoy information rights, such as indirect investors whose investments are held through intermediaries ( CA 2006 , s.146) 

    EU-adopted IFRS

     the international accounting standards, within the meaning of the IAS Regulation (including IFRS, IAS, IFRICs and SICs), adopted from time to time by the European Commission in accordance with that Regulation.

  • Exchange-regulated (or non-regulated) market

    A financial instruments market that is not a regulated market.

F

  • FRC

    Financial Reporting Council

  • FRRP

    Financial Reporting Review Panel

  • FSA

    Financial Services Authority

  • FSA Handbook

    A publication issued by the FSA , which sets out all the rules and guidance made by the FSA under FSMA2000.

  • FSMA2000

    Financial Services and Markets Act 2000

G

  • Group accounts

    Consolidated accounts comprising a consolidated balance sheet and a consolidated profit and loss account, in each case relating to the parent company and its subsidiary undertakings ( CA 2006 , s.404)

I

  • IA86

    Insolvency Act 1986

  • IAS accounts

    Accounts prepared in accordance with EU-adopted IFRS

  • IAS Regulation

    EC Regulation 1606/2002 of the European Parliament and of the Council on the application of international accounting standards

  • IFRS

    International Financial Reporting Standards

  • Individual accounts

    The accounts that directors of every company are required prepare for the company for each of its financial years ( CA 2006 , s.394)

L

M

  • Memorandum

    Memorandum of Association

  • Model Code

    The Model Code on directors' dealings in securities set out in LR 9 Annex 1 R

N

O

  • official List

    The Official List, maintained by the FSA , which comprises shares with a primary listing on the main market of the LSE , shares listed on the professional securities market and shares listed on the PLUS-listed market.

P

  • Parent company (or parent undertaking)

    An undertaking that, in relation to another undertaking (a 'subsidiary undertaking'):
    holds a majority of the voting rights in the undertaking, or
    is a member of the undertaking and has the right to appoint or remove a majority of its board of directors, or
    has the right to exercise a dominant influence over the undertaking
    by virtue of provisions contained in the undertaking's articles or
    by virtue of a control contract, or
    is a member of the undertaking and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the undertaking.
    For these purposes an undertaking is treated as a member of another undertaking:
    if any of its subsidiary undertakings is a member of that undertaking,

    or

    if any shares in that other undertaking are held by a person acting on behalf of the undertaking or any of its subsidiary undertakings.
    An undertaking is also a parent undertaking in relation to another undertaking (a 'subsidiary undertaking'), if:


    it has the power to exercise, or actually exercises, dominant influence or control over it, or
    it and the subsidiary undertaking are managed on a unified basis.
    A parent undertaking is treated as the parent undertaking of undertakings in relation to which any of its subsidiary undertakings are, or are to be treated as, parent undertakings; and references to its subsidiary undertakings are construed accordingly.

    ( CA 2006 , s.1162)
     

  • PLUS-listed market

    The regulated market operated by PLUS Markets plc

  • PLUS-quoted market

    The non-regulated market operated by PLUS Markets plc.

  • prospectus rules

    Rules issued by the FSA pursuant to FSMA2000

Q

  • quoted company

    A company whose 'equity share capital' has been included in the Official List in accordance with the provisions of Part 6 of FSMA2000 (ie a primary listing on the LSE or a listing on the PLUS-listed market ), or is officially listed in an EEA State, or is admitted to dealing on either the New York Stock Exchange or the exchange known as Nasdaq (Companies Act 2006, section 385(2)). For these purposes, 'equity share capital' is defined in section 548 of the Act and differs from the definition in accounting standards.

R

  • regulated market

    A multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments in the system and in accordance with its non-discretionary rules in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with Title III of the Markets in Financial Instruments Directive (MiFID) ( Article 4.1(14), MiFID , reproduced in the FSA Handbook ).

    A list of regulated markets within the EEA is maintained on the website of the European Commission. UK regulated markets are listed on the websites of the Takeover Panel and the FSA . At the time of writing, UK regulated markets include the LSE , SWX Europe Ltd, EDX, LIFFE, London Metal Exchange, ICE Futures Europe and the PLUS-listed market

  • Revised Accounts Regulations 2008

    The Companies (Revision of Defective Accounts and Reports) Regulations 2008, SI 2008/373.

S

  • SCR company

    A company subject to the small companies regime.

  • senior statutory auditor

    The individual identified by the firm as senior statutory auditor in relation to the audit in accordance with guidance issued by the FRC (see 'The Senior Statutory Auditor under the UK Companies Act 2006', APB Bulletin 2008/6).


    The person identified as senior statutory auditor must be eligible for appointment as auditor of the company in question (see Chapter 2 of Part 42 of the 2006 Act).

  • Small Companies Accounts Regulations 2008

    The Small Companies and Groups (Accounts and Directors' Report) Regulations 2008, SI 2008/409.

  • special notice

    Notice of a resolution that must be given by the proposer to the company at least 28 days before the meeting at which the resolution is to be moved. The company must then, where practicable, give its members notice of any such resolution in the same manner and at the same time as it gives notice of the meeting. ( CA 2006 , s.312).

  • subsidiary undertaking

    See parent company definition above.

  • Summary Financial Statement Regulations 2008

    The Companies (Summary Financial Statement) Regulations 2008, SI 2008/374.

T

  • Table A

    Table A as set out in the Companies (Tables A�F) Regulations 1985

  • Table E

    Table E as set out in the Companies (Tables A-F) Regulations 1985

  • takeover code

    The City Code on Takeovers and Mergers

  • takeover directive

    EC Directive on Takeover Bids (2004/25/EC).

  • the 1985 Act

    the Companies Act 1985

  • the 2004 Act

    The Companies (Audit, Investigation and Community Enterprise) Act 2004.

  • the 2006 Act, CA 2006 or the Act

    the Companies Act 2006

  • traded company

    A public company whose shares are admitted to trading on at least one regulated market

  • Transparency Obligations Directive

    Directive 2004/109/EC of The European Parliament And Of The Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC.

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