PART 1 Introductory

Citation, commencement and application _I1

1. —(1) These Regulations may be cited as the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020.

(2) These Regulations come into force—

(a) in the case of Part 2, immediately before IP completion day;

(b) otherwise on the 21st day after the day on which these Regulations are made.

(3) The amendments made by regulation 16 apply in relation to financial years beginning on or after 6th April 2020.

PART 2 Amendments to the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019

_I2

^M52.The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 are amended by this Part.

_I3

3. In Schedule 2 (approval of third country competent authorities), in Table 3—

(a) after the entry for “The Canadian Public Accountability Board” insert—

(b) omit the entry for “The Finance Professions Supervisory Centre of Indonesia”;

(c) in the entry for “The Independent Regulatory Board for Auditors of South Africa”, in column 2 for “31 July 2019” substitute “ [^F1 30 April 2026 ^F1] ” .

_I4

4. In Schedule 4 (transitional provision)—

(a) in paragraph 1, before sub-paragraph (a) insert—

“ (za) regulations 4 and 50(b); ” ;

^M6 (b) after paragraph 1 insert—

“ 1A. In its continuing application in relation to audits of accounts for financial years that begin before IP completion day, section 479A(1)(b) of the Companies Act 2006^M7 (including as modified by regulation 34A of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008^M8 ) must be treated as if the reference to a parent undertaking being established under the law of an EEA State included a reference to a parent undertaking being established under the law of any part of the United Kingdom. ” .

PART 3 Equivalent third countries and approved third country competent authorities

CHAPTER 1 Procedures relating to approvals for equivalent third countries and transitional third countries

Application and interpretation _I5

5. —(1) This Chapter applies in relation to the grant of—

(a) approval to a third country as an equivalent third country;

(b) provisional approval to a third country as an equivalent third country; or

(c) transitional approval to a third country as a transitional third country;

by relevant regulations.

(2) In this Chapter, “ relevant regulations ” means regulations under section 1240A(1) of the Companies Act 2006 made by the Secretary of State.

Definition of a comparable audit regulatory regime _I6

^M96. For the purposes of these Regulations, the audit regulatory regime of a third country is comparable to that of the United Kingdom if there are comparable requirements to those in regulations 3, 5, 6 and 9 of the Statutory Auditors and Third Country Auditors Regulations 2016 in that country's audit regulatory regime.

Power of Secretary of State to take into account a report from the competent authority _I7

^M107. —(1) Before granting approval, provisional approval or transitional approval to a third country by relevant regulations, the Secretary of State may take into account a report prepared by the competent authority that assesses the extent to which the third country's audit regulatory regime is comparable to that of the United Kingdom.

(2) The report of the competent authority may take account of any assessments of the third country's audit regulatory regime carried out by or on behalf of an equivalent third country or a transitional third country.

Conditions for grant of approval _I8

8. —(1) The Secretary of State may not grant to a third country—

(a) approval as an equivalent third country unless the Secretary of State is satisfied that condition A is met;

(b) provisional approval as an equivalent third country unless the Secretary of State is satisfied that condition B is met; or

(c) transitional approval as a transitional third country unless the Secretary of State is satisfied that condition C is met.

(2) Condition A is that the third country has an audit regulatory regime that is comparable to that of the United Kingdom.

(3) Condition B is that it is likely that—

(a) the third country has an audit regulatory regime that is comparable to that of the United Kingdom; and

(b) that comparability can reasonably be expected to have been established before the end of the period of provisional approval.

(4) Condition C is that it is likely that—

(a) the third country's audit regulatory regime will be comparable to that of the United Kingdom before the end of the period of transitional approval; or

(b) the third country will make acceptable progress towards its audit regulatory regime being so comparable before the end of the period of transitional approval.

Suspension of approval _I9

9. —(1) If, in relation to a third country which has been granted approval, provisional approval or transitional approval by relevant regulations, the Secretary of State is no longer satisfied that condition A, B or C is met, the Secretary of State may direct that the approval, provisional approval or transitional approval is suspended with effect—

(a) from a date specified in the direction; or

(b) for financial years beginning or ending on or after a date specified in the direction;

for a period of no longer than two years beginning on the date of the direction.

(2) A suspension under paragraph (1) may be extended so that the suspension is for a total period of no longer than three years beginning on the date of the direction.

(3) The Secretary of State may revoke a direction to suspend approval, provisional approval or transitional approval.

(4) The Secretary of State must inform the competent authority of—

(a) any suspension of approval, provisional approval or transitional approval;

(b) any extension of such a suspension; and

(c) any revocation of a direction to suspend approval, provisional approval or transitional approval.

(5) The Secretary of State must make arrangements for—

(a) publication on a publicly accessible website of details of—

(i) any suspension of approval, provisional approval or transitional approval;

(ii) any extension of such a suspension; and

(iii) any revocation of a direction to suspend approval, provisional approval or transitional approval; and

(b) informing any registered third country auditors of any UK-traded third country companies incorporated or formed under the law of a third country whose approval, provisional approval or transitional approval has been suspended—

(i) of that suspension;

(ii) of any extension of that suspension; and

(iii) where there is subsequently a revocation of the direction to suspend approval, provisional approval or transitional approval, of that revocation.

(6) For the purposes of this regulation—

(a) approval granted for an indefinite period under Schedule 1 to the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 is to be treated as if it were granted under relevant regulations on the basis that condition A were met;

(b) approval granted for a finite period of time under that Schedule is to be treated as if it were granted under relevant regulations on the basis that condition B were met;

(c) transitional approval granted under that Schedule is to be treated as if it were granted under relevant regulations on the basis that condition C were met.

CHAPTER 2 Procedures relating to approvals for third country competent authorities

Application and interpretation _I10

10. —(1) This Chapter applies in relation to the grant of—

(a) approval to a third country competent authority as an approved third country competent authority; or

(b) provisional approval to a third country competent authority as an approved third country competent authority;

by relevant regulations.

(2) In this Chapter, “ relevant regulations ” means regulations under section 1240B(1) of the Companies Act 2006 made by the Secretary of State.

Definition of when a third country competent authority is adequate in relation to exchange of papers and reports _I11

^{M11,M12,M13,M14}11. For the purposes of these Regulations, a third country competent authority is adequate, in relation to the authority's ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports, if provisions with content comparable to that of sections 1224A , 1224B and 1253A to 1253C of, and Schedule 11A to, the Companies Act 2006, or provisions which are expected to achieve comparable outcomes, apply in the country of that competent authority.

Power of Secretary of State to take into account a report from the competent authority _I12

12. —(1) Before granting approval or provisional approval to a third country competent authority by relevant regulations, the Secretary of State may take into account a report prepared by the competent authority that assesses the extent to which the third country competent authority is adequate in relation to that authority's ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports.

(2) The report of the competent authority may take account of any assessments of the third country competent authority carried out by or on behalf of an equivalent third country or a transitional third country.

Conditions for grant of approval _I13

13. —(1) The Secretary of State may not grant to a third country competent authority—

(a) approval as an approved third country competent authority unless the Secretary of State is satisfied that condition A is met; or

(b) provisional approval as an approved third country competent authority unless the Secretary of State is satisfied that condition B is met.

(2) Condition A is that the third country competent authority is adequate in relation to its ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports.

(3) Condition B is that it is likely that—

(a) the third country competent authority is adequate in relation to its ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports; and

(b) that adequacy can reasonably be expected to have been established before the end of the period of provisional approval.

Suspension of approval _I14

14. —(1) If, in relation to a third country competent authority which has been granted approval or provisional approval by relevant regulations, the Secretary of State is no longer satisfied that condition A or B is met, the Secretary of State may direct that the approval or provisional approval is suspended with effect—

(a) from a date specified in the direction; or

(b) for financial years beginning or ending on or after a date specified in the direction;

for a period of no longer than two years beginning on the date of the direction.

(2) A suspension under paragraph (1) may be extended so that the suspension is for a total period of no longer than three years beginning on the date of the direction.

(3) The Secretary of State may revoke a direction to suspend approval or provisional approval.

(4) The Secretary of State must inform the competent authority of—

(a) any suspension of approval or provisional approval;

(b) any extension of such a suspension; and

(c) any revocation of a direction to suspend approval or provisional approval.

(5) The Secretary of State must make arrangements for—

(a) publication on a publicly accessible website of details of—

(i) any suspension of approval or provisional approval;

(ii) any extension of such a suspension; and

(iii) any revocation of a direction to suspend approval or provisional approval; and

(b) informing any statutory auditor whose audit working papers and investigation reports are due to be transferred to a third country competent authority whose approval or provisional approval has been suspended, or whose audit working papers and investigation reports have been transferred to such a third country competent authority in the three years preceding the suspension of approval or provisional approval—

(i) of the suspension of approval or provisional approval of that third country competent authority;

(ii) of any extension of that approval; and

(iii) where there is subsequently a revocation of the direction to suspend approval or provisional approval, of that revocation.

(6) For the purposes of this regulation—

(a) approval granted for an indefinite period under Schedule 2 to the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 is to be treated as if it were granted under relevant regulations on the basis that condition A were met;

(b) approval granted for a finite period of time under that Schedule is to be treated as if it were granted under relevant regulations on the basis that condition B were met.

PART 4 Amendments made under section 2(2) of the European Communities Act 1972

Amendments to the Companies Act 2006_I15

15. —(1)The Companies Act 2006 is amended as follows.

^M15 (2) In section 1253D —

(a) omit subsection (2)(k);

(b) omit subsection (2)(o);

(c) after subsection (2)(s) insert—

“ (t) the Ministry of Finance of the People's Republic of China;

(u) the Securities Regulatory Commission of the People's Republic of China. ” .

^M16 (3) In paragraph 20A of Schedule 10, for the definition of “key audit partner” substitute—

“ “ key audit partner ” means—

(a) an individual who is eligible for appointment as a statutory auditor and who is designated by an audit firm for a particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm;

(b) in the case of a group audit, any of the following—

(i) an individual who is eligible for appointment as a statutory auditor and who is designated by an audit firm as being primarily responsible for carrying out the statutory audit of the consolidated accounts of the group on behalf of the audit firm;

(ii) an individual who is eligible to conduct the audit of the accounts of any material subsidiary undertaking and who is designated as being primarily responsible for that audit; or

(c) an individual who is eligible for appointment as a statutory auditor and who signs the audit report. ” .

Amendments to the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008_I16

^M1716.Schedule 2 to the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008 is amended as follows—

(a) in paragraph 2(6), for “paragraph 3(j)” substitute “ paragraph 3(1)(h) ” ;

(b) for paragraph 3(1) substitute—

“ (1) The types of service in respect of which disclosure is required are—

(a) either—

(i) the auditing of accounts of associates of the managing agent responsible for managing the syndicate, in the case of the syndicate's annual accounts; or

(ii) the auditing of accounts of associates of the Society of Lloyd's, in the case of the aggregate accounts;

(b) audit-related assurance services;

(c) taxation compliance services;

(d) all taxation advisory services not falling within paragraph (c);

(e) internal audit services;

(f) all assurance services not falling within paragraphs (a) to (e);

(g) all services relating to corporate finance transactions entered into, or proposed to be entered into, by or on behalf of the managing agent or any of its associates, or the Society of Lloyd's or any of its associates not falling within paragraphs (a) to (f);

(h) all non-audit services not falling within paragraphs (b) to (g). ” .

Amendments to the Statutory Auditors and Third Country Auditors Regulations 2016_I17

17. —(1)Schedule 1 to the Statutory Auditors and Third Country Auditors Regulations 2016 is amended as follows.

(2) In paragraph 1, for the definition of “key audit partner” substitute—

“ “ key audit partner ” means—

(a) an individual who is eligible for appointment as a statutory auditor and who is designated by an audit firm for a particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm;

(b) in the case of a group audit, any of the following—

(i) an individual who is eligible for appointment as a statutory auditor and who is designated by an audit firm as being primarily responsible for carrying out the statutory audit of the consolidated accounts of the group on behalf of the audit firm;

(ii) an individual who is eligible to conduct the audit of the accounts of any material subsidiary undertaking and who is designated as being primarily responsible for that audit; or

(c) an individual who is eligible for appointment as a statutory auditor and who signs the audit report. ” .

(3) In paragraph 2(4)(a), for “period covered by the financial statements” substitute “ financial year of the accounts ” .

(4) In paragraph 6, for “period covered by the financial statements” substitute “ financial year of the accounts ” .

(5) In paragraph 15(1)(e)(i) and (2), for “financial statements” substitute “ accounts ” .