EXPLANATORY MEMORANDUM TO THE COMPANIES ACT 1985 (INVESTMENT COMPANIES AND ACCOUNTING AND AUDIT AMENDMENTS)

EXPLANATORY MEMORANDUM TO THE COMPANIES ACT 1985 (INVESTMENT COMPANIES AND ACCOUNTING AND AUDIT AMENDMENTS) REGULATIONS 2005 2005 No. 2280 1. This explanatory memorandum has been prepared by the Department of Trade and Industry and is laid before Parliament by Command of Her Majesty. 2. DESCRIPTION 2.1 This statutory instrument makes minor amendments to the accounting and distribution provisions of the Companies Act 1985 (“the 1985 Act”). It removes the requirement to adjust non-comparable prior year amounts in accounts and clarifies one aspect of the distribution provisions as they apply to investment companies. Both of these amendments are consequential on the introduction of International Accounting Standards (IAS). In addition, it restores certain accounting and audit exemptions for small companies. 3. MATTERS OF SPECIAL INTEREST TO THE JOINT COMMITTEE ON STATUTORY INSTRUMENTS 3.1 None. 4. LEGISLATIVE BACKGROUND Recent changes to Part 7 of the 1985 Act 4.1 The Companies Act 1985 (International Accounting Standards and Other Accounting 1Amendments) Regulations 2004 (“the 2004 Regulations”) amend the accounting requirements in the 1985 Act (Part 7 and the related schedules) to ensure the effective application in Great Britain of Regulation (EC) No 1606/2002 of the European Parliament 2and of the Council of 19 July 2002 on the application of international accounting standards (the “IAS Regulation”), and ...