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Companies Act 2006 – Update
The new Companies Act, passed in 2006, is being implemented on a phased basis. Two points to note, which came into effect on 6th April 2008, are the new rules applying to a change of auditor and the removal of the legal requirement for a company to have a company secretary.
One of the main changes to the new auditor rules is that if the auditor is removed before the expiration of his appointment, a statement of circumstances (or a statement that there are no circumstances) should now be sent by the company to the ICAEW (Institute of Chartered Accountants in England and Wales) as well as to the company's registered office.
If the statement explains that there are no circumstances that need to be brought to the attention of members and creditors, then the auditors and also the company are required to explain to the Institute the reasons for the cessation of their appointment.
For companies with accounting periods starting from 6th April 2008 onwards, other measures introduced by the Companies Act 2006 are relevant:
- The filing period has been reduced to 9 months for a private limited company and 6 months for a public limited company.
- The audit thresholds have increased as follows:
- Small Companies
- Turnover – £6.5m
- Balance Sheet Total – £3.26m
- Medium Sized Companies
- Turnover – £25.9m
- Balance Sheet Total – £12.9m
- Medium sized companies will no longer be exempt from preparing consolidated accounts. They will be required to disclose turnover in accounts filed at Companies House, but will be exempt from making disclosures about related party transactions.
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