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Written question asked by Baroness Bowles of Berkhamsted (Liberal Democrat) on Wednesday, 31 January 2018, in the House of Lords. It was due for an answer on Wednesday, 14 February 2018. It was answered by Lord Henley (Conservative) on Monday, 12 February 2018 on behalf of the Department for Business, Energy and Industrial Strategy.

Company Accounts

Question

To ask Her Majesty's Government what immediate action, if any, was taken as a result of a letter from the Financial Reporting Council (FRC) to the Department of Trade and Industry of 8 April 2005 stating that (1) the FRC regarded the law relating to capital maintenance, which includes the net assets test of section 831 of the Companies Act 2006, then the Companies Act 1985, as outmoded, and (2) following the law did not form part of the FRC's thinking in setting and approving accounting standards; and if no action was taken, why not.

Answer

No immediate substantive action was possible as the legal framework discussed in the letter from the Financial Reporting Council transposes EU law.

The determination of the distributable profits and of a distribution by a public company must be based on the profits of the company as set out in the company’s accounts. These must be prepared in accordance with the accounting standards, with the overriding requirement that they must give a true and fair view of the company’s finances. However, the Government has stated previously that it does not consider that the Companies Act requires the accounts of the company to state the company’s distributable profits.

Secondary information

Type
Written question
Reference
HL5280
Session
2017-19
Related items
Company Accounts
Monday, 5 March 2018
Written questions
House of Lords
Company Accounts
Monday, 5 March 2018
Written questions
House of Lords
Subjects
Company accounts Standards Financial Reporting Council
Legislation
Companies Act 2006
Link
View this Written question on www.parliament.uk