AIM subsidiaries will be able to access the small company reporting regime under draft Government regulations
Published on 2nd Mar 2015
The Government has published its response paper on the implementation of the EU Accounting Directive which is required to be implemented into UK law by July 2015, together with draft implementing regulations. The aims of the Accounting Directive are to:
- simplify accounting requirements and the associated administrative burden, in particular for smaller companies;
- increase clarity and comparability of financial statements across the EU; and
- protect user needs by retaining necessary accounting information.
The changes will apply to reporting periods commencing on or after 1 January 2016 – early adoption is possible to enable companies to access a less burdensome reporting regime more quickly.
Overall, where faced with a choice under the Accounting Directive, the Government has decided to opt for the most deregulatory approach, in line with its stated aim of reducing administrative burden on small businesses.
The key point in the response paper for listed companies is that private UK subsidiaries of AIM-quoted companies meeting the relevant size criteria will be able to report under the small company regime in respect of their individual company accounts. The small company regime allows companies to benefit from accounting and reporting exemptions, and from exemption from audit. Previously, a member of a group of companies one or more of which was a public company could not qualify as “small”. Under the new regulations, only those companies with a parent listed on a regulated market (e.g. the London Stock Exchange’s Main Market, but not AIM) are prohibited from accessing the small company regime. However, all public companies (listed or not) will continue to be excluded from the small company accounting regime.
The Regulations are expected to come into force on 6 April 2015.
