Moore Kingston Smith
2 Experts
12 Contributions by Moore Kingston Smith Experts
PRACTICE NOTES
This Practice Note explains the accounting for business combinations, along with key financial reporting issues that may emerge from how M&A transactions are structured, and the ways in which these matters can influence negotiation of the acquisition agreement...
Corporate
PRACTICE NOTES
Accounting treatment of joint arrangements, including joint ventures and associates
This Practice Note sets out how to account for joint arrangements, encompassing joint ventures and associates. Although the relevant standards may appear straightforward, applying them in real life can be challenging, so what seems simple at first glance often proves complex in practice. IFRS and FRS 102 largely align, whereas old UK GAAP diverged markedly in several respects. Accordingly, this Practice Note touches on old UK GAAP only incidentally, because FRS 102 applies to accounting periods commencing on or after 1 January 2015 and will govern the overwhelming majority of present and forthcoming transactions that involve joint ventures and associates. Given the close similarity between FRS 102 and IFRS, we spotlight the principal differences instead of analysing each framework in depth. In practice, the main difficulties arise when determining the substance of an
Corporate
PRACTICE NOTES
STOP PRESS
The Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) obtained Royal Assent on 26 October 2023. It is designed to improve corporate transparency in the UK, mainly through Companies House reform and changes to provisions of the Companies Act 2006. It also seeks to modernise the regime for limited partnerships and grant stronger powers to tackle economic crime. ECCTA 2023 will be brought in gradually. Some provisions commenced on 4 March 2024 and may affect this content. For more information, see Practice Notes: Implementation of the Economic Crime and Corporate Transparency Act 2023 and The Economic Crime and Corporate Transparency Act 2023—tracker, notably the legislation and consultation tracker. This Practice Note focuses on the requirement for a company to produce individual accounts and for a parent company to prepare group accounts. The Companies Act 2006 (CA 2006) sets out detailed rules on the
Corporate
PRACTICE NOTES
STOP PRESS:
On 26 October 2023, the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) obtained Royal Assent. Its purpose is to bolster corporate openness in the UK, primarily through Companies House reforms and amendments to provisions within the Companies Act 2006. It further aims to modernise the regulatory framework for limited partnerships and confer stronger powers to combat economic crime. Implementation of ECCTA 2023 will be phased, with commencement dates staggered. Several measures commenced on 4 March 2024 and could affect this content. For more detail, refer to Practice Notes: Implementation of the Economic Crime and Corporate Transparency Act 2023 and The Economic Crime and Corporate Transparency Act 2023—tracker, especially the legislation and consultation tracker. This Practice Note summarises the Companies Act 2006 (CA 2006) provisions concerning a company’s annual accounts and associated reports. The CA 2006 contains detailed rules and
Corporate
PRACTICE NOTES
Key information
EU Accounting Directive
Official title Directive 2013/34/EU of the European Parliament and the Council, dated 26 June 2013, concerning the preparation of annual financial statements, consolidated financial statements and associated reports for specified types of undertakings; it amends Directive 2006/43/EC and repeals Directives 78/660/EEC and 83/349/EEC (commonly known as the EU Accounting Directive)
Entry into force 19 July 2013
Transposition deadline 20 July 2015
National transposition measures See the Eur-Lex information on national transposition measures, as formally provided by the Member States
Amendments include
Directive 2014/95/EU (EU Non-Financial Reporting Directive, NFRD) (Effective from 5 December 2014, with a transposition deadline of 6 December 2016. Applicable to financial years beginning on or after 1 January 2017)
Council Directive 2014/102/EU on annual and consolidated financial statements and associated reports for certain undertakings, on account of the Republic of Croatia’s accession (Effective 11 December 2014, with a
EU Law
PRACTICE NOTES
STOP PRESS:
A major overhaul of the UK listing framework took effect on 29 July 2024, involving the abolition of the premium and standard listing segments and the introduction of a single listing category for equity shares in commercial companies. The commercial companies category is strongly disclosure‑led and sits alongside other categories, including those for shell companies, secondary listings and closed ended investment fund categories, among others. A new UK Listing Rules sourcebook took effect to deliver these reforms, and the former Listing Rules sourcebook was also withdrawn concurrently. For further information and background, see Practice Note: Reform of the UK listing regime—fundamentals. This Practice Note reflects the regime as it stood before 29 July 2024. It explains the requirements of the Disclosure Guidance and Transparency Rules concerning a company’s annual financial report and, in relation to that report, the associated statutory
Corporate
PRACTICE NOTES
STOP PRESS:
A major overhaul of the UK listing framework took effect on 29 July 2024, abolishing the premium and standard segments and introducing a single listing category for equity shares of commercial companies. This single commercial companies category is strongly disclosure‑led and sits alongside other listing categories, namely shell companies, the secondary listing and closed ended investment fund categories. To implement the reforms, a new UK Listing Rules sourcebook came into force, and the earlier Listing Rules sourcebook was revoked and withdrawn. For further detail, see Practice Note: Reform of the UK listing regime—fundamentals. This Practice Note reflects the regime as it stood before 29 July 2024. It summarises the additional rules that govern how quoted companies must prepare their annual accounts and reports under Part 15 of the Companies Act 2006 and regulations made under that Part...
Corporate
PRACTICE NOTES
Share buybacks (purchase of own shares)
A limited company can repurchase its own shares, provided the conditions in the Companies Act 2006 (CA 2006) are satisfied. This is commonly described as a share buyback or a purchase of own shares. Alongside CA 2006, other regimes are relevant where the company is listed or on AIM. In particular, a listed company must consider the Listing Rules (LRs) and the Disclosure Guidance and Transparency Rules (DTRs). An AIM company must consider the AIM Rules for Companies (AIM Rules); however, those rules do not expressly address share buybacks, and AIM Regulation has confirmed that, in most situations, an AIM company following the LRs for buybacks would be regarded as best practice. An AIM company is also subject to DTR 5. In addition, both listed and AIM companies may follow guidance issued by
Corporate
PRACTICE NOTES
Capital maintenance rule
Under English company law, a limited company with share capital is required to preserve that capital. The capital maintenance principle exists to safeguard a company’s creditors by making sure that the assets which represent the company’s capital remain available to them for future recourse. A company’s share capital can be affected by certain events that occur from time to time over the course of its life, in accordance with the provisions of the Companies Act 2006 (CA 2006). These include:
the issue of shares, on incorporation and thereafter, including bonus issues
the redenomination of share capital
the sub-division and consolidation of shares
reductions of capital
share buybacks
the issue of redeemable shares and their eventual redemption
This Practice Note sets out, in brief, the accounting treatment for each of these possible events in turn. It also considers matters relating to distributable reserves, including the payment of
Corporate
PRACTICE NOTES
Practice Note
This Practice Note outlines what a complete set of company financial statements should contain for entities reporting under FRS 102 (UK GAAP) or International Financial Reporting Standards (IFRS). It concentrates on the key financial content required in the accounts (the ‘primary statements’), and, save for incidental mentions, does not deal in depth with the accompanying notes. It also considers the various reserves a company may show on its balance sheet, together with a high-level explanation of their permitted purposes. The fundamental principle guiding the preparation of financial statements is that they must present a true and fair view of the company’s income and expenditure, financial position, and cash flows for the relevant reporting period. This does not require precision to the last penny, but it does require that the figures are materially correct. In broad terms, an item is material to the
Corporate
CHECKLISTS
ARCHIVED :
This archived Checklist outlines the principal reporting obligations for quoted companies with accounting periods commencing before 1 January 2019, under the Companies Act 2006, the Listing Rules, the Disclosure Guidance and Transparency Rules, and the 2016 edition of the UK Corporate Governance Code...
It references rules, provisions and definitions that may have been repealed or altered, including legislation and regulation that applied before the UK left the European Union...
For a maintained Checklist summarising the reporting requirements for quoted companies with accounting periods beginning on or after 1 January 2019, see Checklist: Annual report and accounts (quoted companies)—checklist—accounting periods on or after 1 January 2019...
For periods beginning before 1 January 2019, this Checklist draws on the following sources:
Companies Act 2006 (CA 2006) and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, SI 2008/410 (Large and
Corporate
CHECKLISTS
STOP PRESS:
A major overhaul of the UK listing framework took effect on 29 July 2024, featuring the abolition of the premium and standard segments and the introduction of a single listing category for equity shares in commercial companies. The commercial companies category is strongly disclosure-led and sits beside other categories, including shell companies, secondary listing and closed ended investment fund categories. A new UK Listing Rules sourcebook commenced to deliver these reforms and the former Listing Rules sourcebook was withdrawn. For more information, see Practice Note: Reform of the UK listing regime—fundamentals. This fundamentals note describes the listing framework as it existed before 29 July 2024. The UK corporate reporting landscape has been influenced by Brexit. For further details see Brexit—accounts and reports. There have been certain amendments to the requirements of the Companies Act, the DTR and the Listing Rules for
Corporate
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