Companies Act 2006 (Accounts, Reports and Audit) Regulations 2009

The main purpose of this instrument is to complete the implementation of the company reporting directive, directive 2006/46, in relation to corporate governance statements that publicly traded companies publish separately from the directors’ report. The regulations before the Committee today amend the Companies Act 2006 to make provision for the filing of separate corporate governance statements at Companies House. They also implement the directive’s requirement for an auditor’s report on any separate corporate governance statement. Rules made last year by the Financial Services Authority implemented the requirement for a corporate governance statement and set out what it should contain. As permitted under the directive, the FSA rules give companies the option to prepare a separate corporate governance statement rather than including it in a specific section of the directors’ report. The auditor is required by these regulations to check that information in a separate corporate governance statement on internal control and risk management systems in relation to the financial reporting process and share capital is consistent with the audited financial statements. That is the same check that would be required to be carried out by the auditor if the information formed part of the directors’ report. We do not believe that these regulations should add to the costs of audit because the test for consistency should not be onerous, and in a number of companies, the audited financial statements may not contain information on internal control and risk management systems. The regulations also contain some technical accounting amendments. If the noble Lord wishes, I can give a brief description of each of the accounting amendments that remain in Part 3 of the regulations. As noble Lords will be aware, a version of this instrument was laid before Parliament earlier this year and then withdrawn. That earlier version contained an amendment to Section 413 of the Companies Act 2006 concerning disclosure of loans to directors of banking companies. We have decided to re-lay the draft regulations without that amendment. We want to consider further what form the amendment should take and to conduct a public consultation. I commend these regulations to the Committee. I beg to move.