Companies Act 2006 requirements
Preparation of accounts
The Companies Act 2006 (CA 2006) requires directors of a company to prepare accounts for each financial year. In addition, many companies are required to prepare a strategic report and a directors’ report. The largest companies are required to prepare a non-financial and sustainability information statement (NFSIS), which is presented within the strategic report (or for LLPs, the Energy and Carbon report if a strategic report is not prepared).
Collectively, this set of documents is known as the annual report and accounts. The strategic and directors’ report are commonly referred to as the ‘front half’, with the accounts – also known as the financial statements – being referred to as the ‘back-half’ of the annual report and accounts.
Part 15, CA 2006 includes requirements relating to the preparation of the company’s annual accounts, content requirements for the directors’ report and the strategic report, and the requirements and options for the circulation and filing of accounts.
The exact regulatory requirements for preparation and filing of the annual report and accounts depend on a company’s size. There are four sizes of company to consider when preparing and filing accounts and reports: micro-entity, small, medium-sized and large.
For more information on determining the size of company visit:
For more information on simplifications available to small companies and micro-entities visit:
Further rules and requirements relating to the form and content of company accounts are set out in secondary legislation.
For companies subject to the small companies and micro-entities regimes:
For large and medium-sized companies:
- The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, SI 2008/410
Accounting frameworks
The Companies Act 2006 (CA 2006) recognises two financial reporting frameworks for the preparation of accounts – IFRS Accounting Standards and UK GAAP. In this context IFRS Accounting Standards means international standards and interpretations that have been endorsed for use in the UK by the UK Endorsement Board (UKEB) (referred to by the UKEB as UK-adopted International Accounting Standards). The Corporate Reporting Faculty refers to these standards as UK-endorsed IFRS in its guidance, to avoid possible confusion between a standard being adopted for use in a jurisdiction and a standard being adopted for use by a specific entity.
UK listed companies and AIM companies are required to use UK-endorsed IFRS in their consolidated accounts but may choose between UK-endorsed IFRS and UK GAAP in their individual accounts. Almost all other companies have a choice between preparing their accounts under UK GAAP or UK-endorsed IFRS.
For more information on the applicable financial reporting requirements for UK entities preparing financial statements in accordance with legislation, regulations or financial reporting standards applicable in the UK and Republic of Ireland, visit:
A parent company may, as well as individual accounts, be required to prepare group accounts for the year. CA 2006 provides a number of exemptions from this requirement, for example, for certain small parent companies and intermediate parent companies.
For more information on the regulatory requirements affecting UK company accounts, including the requirements and exemptions from preparing group accounts, ICAEW members and Corporate Reporting Faculty subscribers can visit:
- Factsheet: UK Regulation for Company Accounts
True and fair view
CA 2006 includes an overarching requirement that the directors must not approve accounts unless they are satisfied that they give a true and fair view of the assets, liabilities, financial position and profit or loss of the company (or group). This requirement applies whether the accounts are prepared under UK-endorsed IFRS or UK GAAP. However, accounts prepared using the micro-entities regime are presumed to give a true and fair view if they include the very limited disclosures required by law.
Entities that do not report under CA 2006 but are required, or choose, to prepare accounts that are intended to give a true and fair view, must also prepare accounts in accordance with either UK-endorsed IFRS or UK GAAP. This is subject to any restrictions in the scope of the standards, for example, due to legal restrictions or the requirements applicable to regulated bodies (such as charities).
The strategic report
All companies, except small companies and micro-entities, must prepare a strategic report in accordance with section 414A, CA 2006.
For more information and guidance on the preparation of a strategic report visit:
UK sustainability reporting
In recent years there has been an increasing focus on sustainability and increased stakeholder expectations for relevant disclosures in the annual report and accounts.
Under UK law, these requirements include:
- For all companies that are not small, disclosure of sustainability-related principal risks and uncertainties in the strategic report;
- For large companies, a section 172(1) statement in the strategic report;
- For quoted companies and public interest entities (PIEs) with over 500 employees, specific requirements for reporting on environmental matters within the strategic report;
- For certain large companies and LLPs, mandatory climate-related financial disclosure requirements; and
- For large companies, quoted companies, and large LLPs, streamlined carbon and energy reporting disclosures.
Companies must also consider climate-related matters when applying accounting standards where their effect is material in the context of the financial statements as a whole. When climate-related matters are considered material, disclosures are required in accordance with those standards.
For more information about sustainability related disclosure requirements for UK companies, visit:
The directors’ report
The directors of all companies, excluding micro-entities, have a duty to prepare a directors’ report under s415 of the CA 2006.
For more information about the directors’ report, visit:
Filing requirements and defective accounts
CA 2006 sets out the filing requirements for annual accounts, including deadlines.
In some circumstances, the directors of a company may believe it appropriate to revise previously-published accounts, or they may have been encouraged to do so by a third party.
To find out more about filing requirements and revision of defective accounts visit: