A Closer look — The requirement to include a full listing of related undertakings within annual financial statements
The Companies Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980) which implement the EU Accounting Directive in the UK remove the concession under s410 Companies Act 2006 (“the Act”) which allowed companies to list only their ‘principal’ subsidiaries and other significant holdings in their annual financial statements and file a complete list with their annual return.
This move has been driven by demands for greater transparency and concern, that over several years, a significant proportion of FTSE 350 companies included neither a full list in their annual financial statements nor filed a complete list with the annual return. This issue has been the subject of significant NGO activism. In practice, this change would most likely have been made in any case when the requirement for an annual return is removed in 2016.
This change does not alter which entities need to provide such disclosures, nor their content. The only change is that the full list must now be included within the annual financial statements.
For those companies that fully complied with the Act’s previous requirement to append a full listing of subsidiaries and other significant holdings to their annual return, this requirement will not be a significant issue. For those that did not fully comply, this will be a little more burdensome particularly if the complete list had been omitted from the annual return.
This 'Closer look' publication answers the following questions that are frequently being asked in relation to this requirement.