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The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

Type Statutory-Instrument

Publication 2008-02-19

Last updated 2026-01-01

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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Loans and advances to banks(Assets item 3.)Loans and advances to banks are to comprise all loans and advances to domestic or foreign credit institutions made by the company arising out of banking transactions. However loans and advances to credit institutions represented by debt securities or other fixed-income securities must be included under assets item 5 and not this item.

Loans and advances to customers(Assets item 4.)Loans and advances to customers are to comprise all types of assets in the form of claims on domestic and foreign customers other than credit institutions. However loans and advances represented by debt securities or other fixed-income securities must be included under assets item 5 and not this item.

Debt securities [and other fixed-income securities](Assets item 5.)This item is to comprise transferable debt securities and any other transferable fixed-income securities issued by credit institutions, other undertakings or public bodies. Debt securities and other fixed-income securities issued by public bodies are, however, only to be included in this item if they may not be shown under assets item 2.Where a company holds its own debt securities these must not be included under this item but must be deducted from liabilities item 3.(a) or (b), as appropriate.Securities bearing interest rates that vary in accordance with specific factors, for example the interest rate on the inter-bank market or on the Euromarket, are also to be regarded as fixed- income securities to be included under this item.

Intangible fixed assets(Assets item 9.)This item is to comprise—development costs,concessions, patents, licences, trade marks and similar rights and assets,goodwill, andpayments on account.Amounts are, however, to be included in respect of (b) only if the assets were acquired for valuable consideration or the assets in question were created by the company itself.Amounts representing goodwill are only to be included to the extent that the goodwill was acquired for valuable consideration.The amount of any goodwill included in this item must be disclosed in a note to the accounts.

Tangible fixed assets(Assets item 10.)This item is to comprise—land and buildings,plant and machinery,fixtures and fittings, tools and equipment, andpayments on account and assets in the course of construction.The amount included in this item with respect to land and buildings occupied by the company for its own activities must be disclosed in a note to the accounts.

Called up capital not paid(Assets items 11 and 14.)The two positions shown for this item are alternatives.

10.

Own shares(Assets item 12.)The nominal value of the shares held must be shown separately under this item.

11.

Deposits by banks(Liabilities item 1.)Deposits by banks are to comprise all amounts arising out of banking transactions owed to other domestic or foreign credit institutions by the company. However liabilities in the form of debt securities and any liabilities for which transferable certificates have been issued must be included under liabilities item 3 and not this item.

12.

Customer accounts(Liabilities item 2.)This item is to comprise all amounts owed to creditors that are not credit institutions. However liabilities in the form of debt securities and any liabilities for which transferable certificates have been issued must be shown under liabilities item 3 and not this item.

13.

Debt securities in issue(Liabilities item 3.)This item is to include both debt securities and debts for which transferable certificates have been issued, including liabilities arising out of own acceptances and promissory notes. (Only acceptances which a company has issued for its own refinancing and in respect of which it is the first party liable are to be treated as own acceptances.)

14.

Subordinated liabilities(Liabilities item 7.)This item is to comprise all liabilities in respect of which there is a contractual obligation that, in the event of winding up or bankruptcy, they are to be repaid only after the claims of other creditors have been met.This item must include all subordinated liabilities, whether or not a ranking has been agreed between the subordinated creditors concerned.

15.

Called up share capital(Liabilities item 8.)The amount of allotted share capital and the amount of called up share capital which has been paid up must be shown separately.

16.

Contingent liabilities(Memorandum item 1.)This item is to include all transactions whereby the company has underwritten the obligations of a third party.Liabilities arising out of the endorsement of rediscounted bills must be included in this item. Acceptances other than own acceptances must also be included.

17.

Contingent liabilities: Guarantees and assets pledged as collateral security(Memorandum item 1(2).)This item is to include all guarantee obligations incurred and assets pledged as collateral security on behalf of third parties, particularly in respect of sureties and irrevocable letters of credit.

18.

Commitments(Memorandum item 2.)This item is to include every irrevocable commitment which could give rise to a credit risk.

19.

Commitments: Commitments arising out of sale and option to resell transactions(Memorandum item 2(1).)This item is to comprise commitments entered into by the company in the context of sale and option to resell transactions.

20.

Claims on, and liabilities to, undertakings in which a participating interest is held or group undertakings(Assets items 2 to 5, liabilities items 1 to 3 and 7.)The following information must be given either by way of subdivision of the relevant items or by way of notes to the accounts.The amount of the following must be shown for each of assets items 2 to 5—claims on group undertakings included therein, andclaims on undertakings in which the company has a participating interest included therein.The amount of the following must be shown for each of liabilities items 1, 2, 3 and 7—liabilities to group undertakings included therein, andliabilities to undertakings in which the company has a participating interest included therein.

21A

The opening balance sheet for each financial year shall correspond to the closing balance sheet for the preceding financial year.

Intangible assets

Treatment of fixed assets

Financial fixed assets

Current assets

Post balance sheet events

92A

The nature and financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account of balance sheet must be stated.

Appropriations

92B

Particulars must be given of the proposed appropriation of profit or treatment of loss or, where applicable, particulars of the actual appropriation of the profits or treatment of the losses.

8A

Where an asset or liability relates to more than one item in the balance sheet, the relationship of such asset or liability to the relevant items must be disclosed either under those items or in the notes to the accounts.

20A

The opening balance sheet for each financial year shall correspond to the closing balance sheet for the preceding financial year.

Intangible assets

Post balance sheet events

90A

The nature and financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account of balance sheet must be stated.

Appropriations

90B

Particulars must be given of the proposed appropriation of profit or treatment of loss or, where applicable, particulars of the actual appropriation of the profits or treatment of the losses.

16A

Where an acquisition has taken place in the financial year and the merger method of accounting has been adopted, the notes to the accounts must also disclose—

(a) the address of the registered office of the undertaking acquired (whether in or outside the United Kingdom),

(b) the name of the party referred to in paragraph 10(a),

(d) the information referred to in paragraph 11(6).

Non-controlling interests

Total amount of directors' remuneration etc

22A

Paragraph 1 of Schedule 5 to these Regulations applies to group accounts with the modification that only the amounts and values referred to in that paragraph received or receivable by the directors of the parent company from the parent company and any of its subsidiary undertakings must be disclosed in the notes to the accounts.

Deferred tax balances

22B

Deferred tax balances must be recognised on consolidation where it is probable that a charge to tax will arise within the foreseeable future for one of the undertakings included in the consolidation.

24A

In paragraph 9 of this Schedule, the reference in sub-paragraph (6) to Schedule 1 is to these Regulations is to be construed as a reference to Schedule 2.

Non-controlling interests and associated undertakings

35A

In paragraph 9 of this Schedule, the reference in sub-paragraph (6) to Schedule 1 to these Regulations is to be construed as a reference to Schedule 3 to these Regulations.

Non-controlling interests

2A

At the balance sheet date, a provision must represent the best estimate of the expenses likely to be incurred or, in the case of a liability, of the amount required to meet that liability.

2B

Provisions must not be used to adjust the value of assets.

PART 6 — REVIEW

Review

14

(1) The Secretary of State must from time to time—

(a) carry out a review, respectively, of the provisions of these Regulations to which amendments have been made by—

(i) Part 6 of the Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (“the 2016 Regulations”), ...

(ii) Part 3 of the Companies (Miscellaneous Reporting) Regulations 2018, ...

(iii) Part 2 of the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, and

(iv) the Companies (Directors’ Report) (Payment Reporting) Regulations 2025, and

(b) set out the conclusions of each review in a separate report, and

(2) The report must, in particular—

(a) set out the objectives intended to be achieved by those provisions,

(b) assess the extent to which those objectives are achieved,

(d) if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) The first report under paragraph (1)(a)(i) must be published before the end of the period of 5 years beginning with the date on which the 2016 Regulations come into force.

(4A) The first report under paragraph (1)(a)(ii) must be published before the end of the period of 5 years beginning with the date on which Part 3 of the Companies (Miscellaneous Reporting) Regulations 2018 comes into force.

(4B) The first report under paragraph (1)(a)(iii) must be published before the end of the period of 5 years beginning with the date on which the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 come into force.

(4C) The first report under paragraph (1)(a)(iv) must be published on or before the 6th April 2029.

(5) Subsequent reports under paragraph (1)(a)(i) to (iv) respectively must be published at intervals not exceeding 5 years.

(6) In this regulation, “regulatory provision” has the meaning given by section 32(4) of the Small Business, Enterprise and Employment Act 2015.

Engagement with employees

11A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Engagement with suppliers, customers and others in a business relationship with the company

11B

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 8 — STATEMENT OF CORPORATE GOVERNANCE ARRANGEMENTS

21

This Part of this Schedule applies to the directors’ report for a financial year unless the company is exempted under paragraph 22.

22

A company is exempted under this paragraph if—

(a) it is required to provide a corporate governance statement,

(b) it is a community interest company within the meaning of section 26 of the Companies (Audit, Investigations and Community Enterprise) Act 2004, or

23

(1) The directors’ report for a company’s first financial year must include a statement of its corporate governance arrangements in accordance with paragraph 26 if the qualifying conditions are met in that year.

(2) In relation to any subsequent financial year, the directors’ report must include a statement of the company’s corporate governance arrangements—

(a) if the qualifying conditions are met in that year and were also met in relation to the preceding financial year;

(b) if—

(i) the qualifying conditions are met in that year, and

(ii) the directors’ report was required to provide a statement of the company’s corporate governance arrangements in relation to the preceding financial year, or

(i) the qualifying conditions were met in the preceding financial year, and

(ii) the directors’ report was required to provide a statement of the company’s corporate governance arrangements in relation to the preceding financial year.

(3) The qualifying conditions are met by a company in a year in which it satisfies either or both of the following requirements—

(a) it has more than 2000 employees;

(b) it has—

(i) a turnover of more than £200 million, and

(ii) a balance sheet total of more than £2 billion.

24

In paragraph 23(3)—

(a) for a period that is a company’s financial year but is not in fact a year, the figure for turnover must be proportionately adjusted,

(b) the balance sheet total means the aggregate of the amounts shown as assets in the company’s balance sheet, and

(c) the number of employees means the average number of persons employed by the company in the year, determined as follows—

(i) find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),

(ii) add together the monthly totals, and

(iii) divide by the number of months in the financial year.

25

In this Part—

“corporate governance”, in relation to a company, means—the nature, constitution or functions of the organs of the company,the manner in which organs of the company conduct themselves,the requirements imposed on organs of the company,the relationship between different organs of the company, andthe relationship between the organs of the company and the members of the company, and

“corporate governance code” means a code of practice on corporate governance.

26

(1) The directors’ report must include a statement (a “statement of corporate governance arrangements”) which states—

(a) which corporate governance code, if any, the company applied in the financial year,

(b) how the company applied any corporate governance code reported under sub-paragraph (a), and

(c) if the company departed from any corporate governance code reported under sub-paragraph (a), the respects in which it did so, and its reasons for so departing.

(2) If the company has not applied any corporate governance code for the financial year, the statement of corporate governance arrangements must explain the reasons for that decision, and explain what arrangements for corporate governance were applied for that year.

27

(1) This paragraph applies if—

(a) a company is required by this Part to include a statement of corporate governance arrangements in its directors’ report for a financial year, and

(b) the company is an unquoted company in relation to that financial year.

(2) The company must ensure that the statement of corporate governance arrangements—

(a) is made available on a website, and

(b) remains so available until—

(i) the statement of corporate governance arrangements for the company’s next financial year is made available in accordance with this paragraph, or

(ii) if the obligation under this paragraph to make a statement of corporate governance arrangements available does not arise in relation to the company’s next financial year, the end of the company’s next financial year.

(3) Sub-paragraph (2) applies whether a company’s statement of corporate governance arrangements is located in the directors’ report, or in the strategic report as permitted by section 414C(11) of the 2006 Act.

(4) The statement of corporate governance arrangements must be made available on a website that—

(a) is maintained by or on behalf of the company, and

(b) identifies the company in question.

(5) Access to the statement of corporate governance arrangements made available on the website under sub-paragraph (2), and the ability to obtain a hard copy of the statement from the website, must not be—

(a) conditional on the payment of a fee, or

(b) otherwise restricted, except so far as necessary to comply with any enactment or regulatory requirement (in the United Kingdom or elsewhere).

(6) The statement of corporate governance arrangements—

(a) must be made available on a website as soon as reasonably practicable, and

(b) must be kept available throughout the period specified in sub-paragraph (2)(b)(i) or (as the case may be) (ii).

(7) A failure to make the statement of corporate governance arrangements available on a website throughout the period specified in sub-paragraph (2)(b)(i) or (as the case may be) (ii) is disregarded if—

(a) the statement is made available on the website for part of that period, and

(b) the failure is wholly attributable to circumstances that it would not be reasonable to have expected the company to prevent or avoid.

(8) In the event of default in complying with this paragraph, an offence is committed by every officer of the company who is in default.

(9) A person guilty of an offence under sub-paragraph (8) is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Pay ratio information in relation to the total remuneration of the director undertaking the role of chief executive officer

19A

(1) If paragraph 19B applies to the company for the relevant financial year the directors’ remuneration report must contain pay ratio information specified in paragraphs 19C to 19G.

(2) Where the company is a parent company, the pay ratio information must relate to the group and not the company, and references in paragraphs 19C, 19D and 19G to the company’s UK employees should be read as references to the UK employees of all the companies within the group.

Requirement to provide pay ratio information

19B

(1) This paragraph applies to a company—

(a) in relation to its first financial year if the qualifying condition is met in that year;

(b) in relation to a subsequent financial year—

(i) if the qualifying condition is met in that year and was also met in relation to the preceding financial year,

(ii) if—

(aa) the qualifying condition is met in that year, and

(bb) the paragraph applied to the company in the preceding financial year, or

(iii) if—

(aa) the qualifying condition was met in the preceding financial year, and

(bb) the paragraph applied to the company in the preceding financial year.

(2) The qualifying condition is met by a company in a year in which the average number of UK employees of the company is more than 250.

(3) The average number of UK employees of the company is determined as follows—

(a) find for each month in the financial year the number of UK employees in that month (whether employed throughout the month or not),

(b) add together the monthly totals, and

(4) Where the company is a parent company the average number of UK employees refers to the number of UK employees within the group.

Pay ratios table

19C

(1) The directors’ remuneration report must set out in the form of the table in sub-paragraph (2) (“pay ratios table”) the following information for the relevant financial year—

(a) in the first column, the year in which that financial year ends,

(b) in the second column, the method set out in paragraph 19D used by the company to determine Y25, Y50 and Y75, and

(2) The form of the pay ratios table is—

Year	Method	25th percentile pay ratio	Median pay ratio	75th percentile pay ratio
[year]	[Option A, B or C]	(X/Y25):1	(X/Y50):1	(X/Y75):1

Where—

X is the remuneration of the director undertaking the role of chief executive officer (“CEO”), using the total for the CEO in the single total figure table. Where more than one person has undertaken the role of CEO in the relevant financial year, X means the total remuneration in the single total figure table paid to persons in relation to the period those persons were undertaking the role of CEO in the relevant financial year;

Y25 is the pay and benefits figure relating to P25;

Y50 is the pay and benefits figure relating to P50;

Y75 is the pay and benefits figure relating to P75.

(3) In this paragraph and paragraphs 19D to 19G—

“P25” is a UK employee whose pay and benefits are on the 25th percentile of pay and benefits of the company’s UK employees for the relevant financial year;

“P50” is a UK employee whose pay and benefits are on the 50th percentile of pay and benefits of the company’s UK employees for the relevant financial year;

“P75” is a UK employee whose pay and benefits are on the 75th percentile of pay and benefits of the company’s UK employees for the relevant financial year;

“pay and benefits” of a UK employee means the employee’s full-time equivalent pay and benefits, calculating the applicable components in paragraph 7(1)(a) to (e) by reference to paragraph 10, save that in paragraph 7(1)(a) “salary” means “wages and salary”.

(4) If the relevant financial year is not the first financial year in which the requirement in sub-paragraph (1) applied to the company, the pay ratios table must also show, in separate rows, information for earlier financial years in accordance with sub-paragraphs (5) and (6).

(5) The earlier financial years for which information must be shown under sub-paragraph (4) are—

(a) the first financial year in which the requirement in sub-paragraph (1) applied to the company and every subsequent financial year before the relevant financial year, or

(b) if the application of paragraph (a) would require the company to show information in respect of more than nine earlier financial years, the nine financial years immediately preceding the relevant financial year.

(6) The information required to be shown by sub-paragraph (4) is—

(a) for a financial year in which the requirement in sub-paragraph (1) applied to the company, the information that was required by that sub-paragraph to be included in the pay ratios table in respect of that financial year;

(b) for a financial year in which that requirement did not apply, the year of that financial year and the statement “The company was exempt from reporting pay ratios for this financial year”.

Pay ratios methods

19D

(1) The company must choose one of the methods set out in sub-paragraph (2) to determine the Y25, Y50 and Y75 figures to use in the pay ratios for the relevant financial year, but for a subsequent financial year may choose to use a different one of those methods.

(2) The methods for determining Y25, Y50 and Y75 are—

(a) “Option A” set out in sub-paragraph (3),

(b) “Option B” set out in sub-paragraph (4), or

(3) Under Option A the company must calculate the pay and benefits of all its UK employees for the relevant financial year in order to identify P25, P50 and P75, and use the pay and benefits figures for those UK employees as Y25, Y50 and Y75.

(4) Under Option B the company must determine Y25, Y50 and Y75 as follows—

(a) as a starting point, use the most recent hourly rate gender pay gap information for all UK employees of the company to identify three UK employees as the best equivalents of P25, P50 and P75,

(b) use available data for the relevant financial year for the best equivalents to calculate the pay and benefits figures for each for the relevant financial year, and

(c) make any necessary adjustment to the pay and benefit figures to ensure that the best equivalents are reasonably representative of P25, P50 and P75 for the relevant financial year.

(5) Under Option C the company may determine Y25, Y50 and Y75 as follows—

(a) as a starting point, use data other than, or in addition to, gender pay gap information to identify three UK employees as the best equivalents of P25, P50 and P75, and in so doing—

(i) the company must not use data that relates to any year prior to the preceding financial year, and

(ii) if the company has gender pay gap information available, it must not use data that is less up to date than the gender pay gap information,

(b) use available data for the relevant financial year for the best equivalents to calculate the pay and benefits for each in relation to the relevant financial year, and

(c) make any necessary adjustment to the pay and benefit figures to ensure that the best equivalents are reasonably representative of P25, P50 and P75 for the relevant financial year.

(6) When using any of the options, the company may—

(a) determine Y25, Y50 and Y75 with reference to a day no earlier than three months before the last day of the relevant financial year, using a projected calculation of the salary component of pay and benefits;

(b) omit any component other than salary from pay and benefits to determine Y25, Y50 and Y75, provided the company includes in its report a statement required by paragraph 19E(f);

(c) calculate any component of pay and benefits, other than salary, using a different methodology than that set out in paragraph 10 to determine Y25, Y50 and Y75, provided the company includes in its report a statement required by paragraph 19E(g).

(7) When using Option B or C, if the company does not have the data available for any component of pay and benefits corresponding to paragraph 7(1)(b) to (e), the company may use a reasonable estimate of that component to determine Y25, Y50 and Y75.

(8) In this paragraph gender pay gap information means the most recent data collected in accordance with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.

Additional requirements in respect of the pay ratios table

19E

The directors’ remuneration report must set out the following information after the pay ratios table—

(a) an explanation of why the company chose Option A, B or C as the preferred method for calculating the pay ratio for the relevant financial year,

(b) if the company was required to report pay ratio information in the preceding financial year, and the company then used a different option to determine Y25, Y50 and Y75, an explanation for the change,

(d) where the company has used Option B—

(i) a brief explanation of how the best equivalents are reasonably representative of P25, P50 and P75, and

(ii) whether, and if so how, it has relied on the use of estimates or adjustments,

(e) where the company has used Option C—

(i) the methodology used for estimating the best equivalents, describing any estimates, adjustments, or material assumptions, and

(ii) a brief explanation of how the best equivalents are reasonably representative of P25, P50 and P75,

(f) where the company has omitted any component from pay and benefits in reliance on paragraph 19D(6)(b), the component omitted and the reason for the omission, and if the company omitted any component in the previous financial year, whether the company has continued to omit that component,

(g) where the company has used a different methodology from that set out in paragraph 10 to calculate a component of pay and benefits, a description of the different methodology and why the methodology in paragraph 10 was not used,

(h) a brief explanation of any assumptions or statistical modelling used to determine full-time equivalent remuneration.

19F

The directors’ remuneration report must set out the following figures for each of Y25, Y50, and Y75 after the information required by paragraph 19E—

(a) total pay and benefits, and

(b) the salary component of total pay and benefits.

19G

The directors’ remuneration report must set out a summary for the relevant financial year after the information required by paragraph 19F, explaining—

(a) any reduction or increase in the relevant financial year’s pay ratios compared to the pay ratios of the preceding financial year (if the company recorded pay ratio information for that financial year),

(b) whether a reduction or an increase in a pay ratio is attributable to a change in—

(i) the remuneration of the CEO, or the pay and benefits of the company’s UK employees taken as a whole;

(ii) the company’s employment models (including any increase in the proportion of the company’s employees employed to work wholly or mainly outside the UK, and any increase in the proportion of the company’s workforce that is not employed by the company under contracts of service);

(iii) the use of a different option to calculate Y25, Y50 and Y75,

(d) whether, and if so why, the company believes the median pay ratio for the relevant financial year is consistent with the pay, reward and progression policies for the company’s UK employees taken as a whole.

Relative importance of spend on pay

Statement of implementation of remuneration policy in the following financial year

Consideration by the directors of matters relating to directors’ remuneration

Statement of voting at general meeting

35A

The directors’ remuneration report must, in respect of each person who is a director (other than a director who is not performing an executive function)—

(a) set out for performance targets or measures relating to more than one financial year, an indication of the maximum remuneration receivable assuming company share price appreciation of 50% during the relevant performance period, and

(b) provide a short description of the basis of the calculation reported under sub-paragraph (a).

15A

(1) If the report is a group directors’ report, subject to sub-paragraph (2), paragraph 15(2) to (3A), (3D) and (5)(a) and paragraph 17 have effect as if references to the company were references to the company and its subsidiary undertakings included in the consolidation that are quoted companies, unquoted companies or limited liability partnerships.

(2) The company may exclude from the report any information which relates to—

(a) a subsidiary undertaking that is a quoted company and which that quoted company would not be required to include in its directors’ report by this Part of this Schedule;

(b) a subsidiary undertaking that is an unquoted company and which that unquoted company would not be required to include in its directors’ report by Part 7A of this Schedule;

(c) a subsidiary undertaking that is a limited liability partnership and which that limited liability partnership would not be required to include in its energy and carbon report by section 416(2) of the 2006 Act as applied and modified by regulation 12B of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.

(3) For the purpose of this paragraph, “limited liability partnership” means a limited liability partnership registered under the Limited Liability Partnerships Act 2000.

18A

With the exception of the first year for which the directors’ report contains the information required by paragraph 15(3A) to (3D), the report must state not only the information required by paragraph 15(3A) to (3D) but that information as disclosed in the report for the preceding financial year.

19A

The period for which the directors’ report is reporting the information required by paragraph 15(3) and (3A) must be the same as the period for which it is reporting the information required by paragraph 15(2).

PART 7A — DISCLOSURES CONCERNING GREENHOUSE GAS EMISSIONS, ENERGY CONSUMPTION AND ENERGY EFFICIENCY ACTION BY UNQUOTED COMPANIES

20A

(1) Unless the company is exempted under paragraph 20B or 20C, and subject to sub-paragraph (2), this Part of this Schedule applies to the directors’ report for a financial year if the company is an unquoted company.

(2) This Part does not apply if—

(a) the company is a subsidiary undertaking at the end of the financial year;

(b) the company is included in the group report of a parent undertaking; and

(c) the group report is prepared for a financial year of the parent undertaking that ends at the same time as, or before the end of, the company’s financial year; and—

(i) if the group report is a group directors’ report—

(aa) of a quoted company, it complies with Part 7 of this Schedule other than in reliance on paragraph 15(5)(b); or

(bb) of an unquoted company, it complies with this Part of this Schedule other than in reliance on paragraph 20D(7)(b); or

(ii) if the group report is a group energy and carbon report, it complies with this Part of this Schedule as applied and modified by regulation 12B of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 other than in reliance on paragraph 20D(7)(b).

(3) For the purpose of sub-paragraph (2), “group energy and carbon report” means a report prepared in accordance with section 415(2) of the 2006 Act as applied and modified by regulation 12B of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.

20B

(1) Unless the company is a parent company, the company is exempted under this paragraph—

(a) in relation to its first financial year if the qualifying conditions in sub-paragraph (2) are met in that year;

(b) in relation to a subsequent financial year—

(i) if the qualifying conditions are met in that year and were also met in relation to the preceding financial year;

(ii) if—

(aa) the qualifying conditions are met in that year, and

(bb) the company was exempted in relation to the preceding financial year; or

(iii) if—

(aa) the qualifying conditions were met in the preceding financial year, and

(bb) the company was exempted in relation to the preceding financial year.

(2) The qualifying conditions referred to in sub-paragraph (1) are met by a company in a year in which it satisfies two or more of the following requirements—

1	Turnover	not more than £36 million
2	Balance sheet total	not more than £18 million
3	Number of employees	not more than 250

(3) For the purposes of sub-paragraph (2)—

(a) for a period that is a company’s financial year but is not in fact a year the figure for turnover must be proportionately adjusted;

(b) the balance sheet total means the aggregate of the amounts shown as assets in the company’s balance sheet;

(c) the number of employees means the average number of persons employed by the company in the year, determined as follows—

(i) find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),

(ii) add together the monthly totals, and

(iii) divide by the number of months in the financial year.

20C

(1) A parent company is exempted under this paragraph—

(a) in relation to the parent company’s first financial year if the qualifying conditions in sub-paragraph (2) are met in that year by the group headed by it;

(b) in relation to a subsequent financial year of the parent company—

(i) if the qualifying conditions are met in that year and the preceding financial year by the group headed by the parent company;

(ii) if—

(aa) the qualifying conditions are met in that year by the group, and

(bb) the parent company was exempted in relation to the preceding financial year; or

(iii) if—

(aa) the qualifying conditions were met in the preceding financial year by the group, and

(bb) the parent company was exempted in relation to the preceding financial year.

(2) The qualifying conditions referred to in sub-paragraph (1) are met by a group in a year in which it satisfies two or more of the following requirements—

1	Aggregate turnover	not more than £36 million net (or £43.2 million gross)
2	Aggregate balance sheet total	not more than £18 million net (or £21.6 million gross)
3	Aggregate number of employees	not more than 250

(3) For the purposes of sub-paragraph (2), the aggregate figures are to be ascertained by aggregating the relevant figures determined in accordance with paragraph 20B for each member of the group.

(4) In relation to the aggregate figures for turnover and balance sheet total—

(a) “net” means after any set-offs and other adjustments made to eliminate group transactions—

(i) in the case of Companies Act accounts, in accordance with regulations under section 404 of the 2006 Act,

(ii) in the case of IAS accounts, in accordance with international accounting standards;

(b) “gross” means without those set-offs and other adjustments; and

(5) For the purposes of sub-paragraph (2)—

(a) the figures for each subsidiary undertaking must be those included in its individual accounts for the relevant financial year, that is—

(i) if its financial year ends with that of the parent company, that financial year, and

(ii) if not, its financial year ending last before the end of the financial year of the parent company; or

(b) if those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures may be taken.

20D

(1) The directors’ report must state the annual quantity of emissions in tonnes of carbon dioxide equivalent resulting from activities for which the company is responsible involving—

(a) the combustion of gas; or

(b) the consumption of fuel for the purposes of transport.

(2) The report must state the annual quantity of emissions in tonnes of carbon dioxide equivalent resulting from the purchase of electricity by the company for its own use, including for the purposes of transport.

(3) The report must state a figure, in kWh, which is the aggregate of—

(a) the annual quantity of energy consumed from activities for which the company is responsible involving—

(i) the combustion of gas; or

(ii) the consumption of fuel for the purposes of transport; and

(b) the annual quantity of energy consumed resulting from the purchase of electricity by the company for its own use, including for the purposes of transport.

(4) If the company has in the financial year to which the report relates taken any measures for the purpose of increasing the company’s energy efficiency, the report must contain a description of the principal measures taken for that purpose.

(5) The figures reported in accordance with sub-paragraphs (1) to (3)—

(a) if the company is an offshore undertaking, may exclude emissions and energy consumed outside of the United Kingdom and offshore area;

(b) in any other case, may exclude emissions and energy consumed outside of the United Kingdom.

(6) Sub-paragraphs (1) to (4) and paragraphs 20F and 20G apply only to the extent that it is practical for the company to obtain the information in question; but where it is not practical for the company to obtain some or all of that information, the report must state what information is not included and why.

(7) Nothing in sub-paragraphs (1) to (4) and paragraphs 20F and 20G requires the disclosure of information if—

(a) the company consumed 40,000 kWh of energy or less in the United Kingdom during the period in respect of which the directors’ report is prepared, and the report states that the information is not disclosed for that reason; or

(b) the disclosure would, in the opinion of the directors, be seriously prejudicial to the interests of the company, and the report states that the information is not disclosed for that reason.

20E

(1) If the report is a group directors’ report, subject to sub-paragraph (2) and (3), paragraph 20D(1) to (4) and (7)(a) and paragraph 20G have effect as if references to the company were references to the company and its subsidiary undertakings included in the consolidation that are quoted companies, unquoted companies or limited liability partnerships.

(2) If a subsidiary undertaking is a quoted company, paragraph 20D(1) to (4) have effect as if references to the disclosures required were references to the disclosures required for the purpose of paragraph 15(2) to (3D) of Part 7 of this Schedule.

(3) The company may exclude from the report any information which relates to—

(a) a subsidiary undertaking that is a quoted company and which that quoted company would not be required to include in its directors’ report by Part 7 of this Schedule;

(b) a subsidiary undertaking that is an unquoted company and which that unquoted company would not be required to include in its directors’ report by this Part of this Schedule;

(c) a subsidiary undertaking that is a limited liability partnership and which that limited liability partnership would not be required to include in its energy and carbon report by section 416(2) of the 2006 Act as applied and modified by regulation 12B of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.

(4) For the purpose of this paragraph, “limited liability partnership” means a limited liability partnership registered under the Limited Liability Partnerships Act 2000.

20F

The directors’ report must state the methodologies used to calculate the information disclosed under paragraph 20D(1), (2) and (3).

20G

The directors’ report must state at least one ratio which expresses the company’s annual emissions in relation to a quantifiable factor associated with the company’s activities.

20H

With the exception of the first year for which the directors’ report contains the information required by paragraphs 20D(1) to (4) and 20G, the report must state not only the information required by those paragraphs, but also that information as disclosed in the report for the preceding financial year.

20I

The directors’ report must state the period for which it is reporting the information required by paragraph 20D(1) if it is different to the period in respect of which the directors’ report is prepared.

20J

The period for which the directors’ report is reporting the information required by paragraph 20D(2) and (3) must be the same as the period for which it is reporting the information required by paragraph 20D(1).

20K

The following definitions apply for the purposes of this Part of this Schedule—

“aircraft” means a self-propelled machine that can move through the air other than against the earth’s surface;

“emissions”, “energy” and “energy efficiency” have the same meaning as in Part 7 of this Schedule;

“for the purposes of transport” means, in relation to the consumption of fuel or the purchase of electricity, for consumption by an aircraft, road-going vehicle, train or a vessel during the course of any journey which—starts,ends, orboth starts and endswithin the United Kingdom;

“gas” means, except in the definition of “offshore activity”, any combustible substance which is gaseous at a temperature of 15 degrees Celsius and a pressure of 101.325 kPa (1013.25 mb) and which consists wholly or mainly of methane, ethane, propane, butane, hydrogen or carbon monoxide, or a combination of those, or a combustible mixture of those and air;

“kWh” means kilowatt hours;

“offshore activity” means activity which includes—the exploitation of mineral resources in or under the shore or bed of waters in the offshore area,the conversion of a place under the shore or bed of such waters for the purpose of storing gas,the storage of gas in, under or over such waters or the recovery of gas so stored,the unloading of gas at a place in, under or over such waters, orthe provision of accommodation for persons who work on or from an offshore installation which is maintained for the production of petroleum or the storage or unloading of gaswhere storing gas includes storing gas with a view to its permanent disposal and where “gas” for this purpose means gas within the meaning of section 2(4) of the Energy Act 2008 or carbon dioxide;

“offshore area” has the same meaning as in Part 7 of this Schedule;

“offshore installation” means an installation or structure used for carrying on a relevant offshore activity, and which is situated in the waters of, or in the seabed in, the offshore area, but excluding a ship or a floating structure which is not being maintained on station during the course of a relevant offshore activity; and for this purpose “relevant offshore activity” means an activity falling within paragraphs (a) to (d) of the definition of “offshore activity”;

“offshore undertaking” means an undertaking whose activities consist wholly or mainly of offshore activities;

“road-going vehicle” means any vehicle—in respect of which a vehicle licence is required under the Vehicle Excise and Registration Act 1994; orwhich is an exempt vehicle under that Act;

“tonne of carbon dioxide equivalent” has the same meaning as in Part 7 of this Schedule;

“train” has the meaning given in section 83 of the Railways Act 1993;

“vessel” means any boat or ship which is self-propelled and operates in or under water.

Annual percentage change in remuneration of directors and employees

30A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 9 — DISCLOSURES CONCERNING PAYMENT PRACTICES AND PERFORMANCE IN RESPECT TO SUPPLIERS

28

(1) Subject to paragraphs 29 and 30, the directors’ report for a financial year must contain the information specified by sub-paragraphs (2), (3) and (4).

(2) A statement describing—

(a) the payment period specified in the company’s standard payment terms in its qualifying contracts between it and its suppliers, expressed in days;

(b) where the company varied the standard payment terms in its qualifying contracts between it and its suppliers in the financial year—

(i) details of the variation; and

(ii) details of any notification or consultation conducted by the company with its suppliers before making the variation.

(3) In relation to the payments made under qualifying contracts within the financial year, a statement of—

(a) the average number of days taken to make such payments, where day 1 is the first day after the relevant day;

(b) the percentage of those payments which were made, where day 1 is the first day after the relevant day—

(i) within the period beginning with day 1 and ending with day 30;

(ii) within the period beginning with day 31 and ending with day 60;

(iii) on or after day 61;

(i) within the period beginning with day 1 and ending with day 30;

(ii) within the period beginning with day 31 and ending with day 60;

(iii) on or after day 61.

(4) In relation to the payments under qualifying contracts that fall due within the financial year—

(a) a statement of the percentage of these payments which were not made within the payment period; and

(b) a statement of the sum total of these payments which were not made within the payment period.

29

The directors’ report for a company is not required to contain the information specified by paragraph 28 where the report is for—

(a) the company’s first financial year, or

(b) a subsequent financial year in relation to which the company qualifies as medium-sized.

30

(1) Paragraph 28 does not apply if—

(a) the company is a subsidiary undertaking at the end of the financial year;

(b) the company is included in the group directors’ report of a parent undertaking; and

(c) the group directors’ report is prepared for a financial year of the parent undertaking that ends at the same time as, or before the end of, the company’s financial year.

(2) If the directors’ report is a group directors’ report, paragraph 28 has effect as if references to the company were references to the company and its subsidiary undertakings included in the consolidation.

(3) The company may exclude from the group directors’ report any information which relates to a subsidiary undertaking, if that undertaking would not be required to include the information in its directors’ report by virtue of paragraph 29.

31

For the purposes of this Part—

(a) a payment falls due on the last day of the payment period;

(b) subject to sub-paragraph (d), a payment is made—

(i) when it is received by the supplier, unless sub-paragraph (c) applies, or

(ii) where sub-paragraph (c) applies, when it is received by the finance provider from the company;

(i) the supplier receives part payment of an invoiced sum from a finance provider before the end of the payment period; and

(ii) the company pays the invoiced sum to the finance provider;

(d) where there is any delay in the payment or of any part of the payment being received for which the company is not responsible, the payment is deemed to have been made when it would have been received without that delay.

32

(1) For the purposes of this Part, a qualifying contract is a contract which satisfies sub-paragraphs (2) and (3).

(2) The first condition is that the relevant contract is not a contract for financial services, as defined in section 2 of the Small Business, Enterprise and Employment Act 2015.

(3) The second condition is that the relevant contract is—

(a) governed by the law of part of the United Kingdom otherwise than by the choice of the parties;

(b) governed by the law of part of the United Kingdom by choice of the parties, and—

(i) has a significant connection with that part of the United Kingdom; or

(ii) without that choice, its applicable law would still be the law of a part of the United Kingdom; or

(i) without that choice, its applicable law would be the law of a part of the United Kingdom; and

(ii) has no significant connection with any other country outside the United Kingdom.

(4) In this paragraph “foreign law” means the law of a country outside the United Kingdom.

33

For the purposes of this Part of this Schedule—

“average” means the arithmetic mean;

“finance provider” means a body corporate that—lends money or provides credit in the course of a business,arranges or facilitates the provision of debt or equity finance in the course of a business, orprovides, arranges or facilitates invoice discounting or factoring in the course of a business;

“invoiced sum” means a sum payable under an invoice;

“qualifying contract” has the meaning given in paragraph 32

“payment period” means the period in which a company is contractually required to pay a sum;

“relevant day” means the day on which a company receives an invoice or otherwise has notice of an amount for payment;

“standard payment terms” means, in relation to a qualifying contract—the standard terms relating to payment that the company uses, orwhere the company does not use standard terms, the company’s most frequently used payment terms.

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