Companies Act 2006, section 414

Approval and signing of accounts

Part 15 Accounts and reports

(1)A company's annual accounts must be approved by the board of directors and signed on behalf of the board by a director of the company.

(2)The signature must be on the company's balance sheet.

[F409 (3)If the accounts are prepared in accordance with the small companies regime, the balance sheet must contain, in a prominent position above the signature—

(a)in the case of individual accounts prepared in accordance with the micro-entity provisions, a statement to that effect, or

(b)in the case of accounts not prepared as mentioned in paragraph (a), a statement to the effect that the accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.F409]

(4)F410If annual accounts are approved that do not comply with the requirements of this Act ..., every director of the company who—

(a)knew that they did not comply, or was reckless as to whether they complied, and

(b)failed to take reasonable steps to secure compliance with those requirements or, as the case may be, to prevent the accounts from being approved,

commits an offence.

(5)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding the statutory maximum.

Read section 414 in the full Act → Definitions (4) Cases (5)

Definitions used in section 414

company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
annual accounts

(1) In this Part a company's “annual accounts”, in relation to a financial year, means—

(a)any individual accounts prepared by the company for that year (see section 394), and

(b)any group accounts prepared by the company for that year (see section 399).

Defined in s.471(1) · see it in the full Act
director

In the Companies Acts “director” includes any person occupying the position of director, by whatever name called.

Defined in s.250 · see it in the full Act
micro-entity provisions

“micro-entity provisions” means any provisions of this Part, Part 16 or regulations under this Part relating specifically to the individual accounts of a company which qualifies as a micro-entity;

Defined in s.474(1) · see it in the full Act

Cases considering section 414 (5)

Geoffrey Wayne Bouchier & Anor v Gary Booth & Anor

[2023] EWHC 3195 (Ch) · 13 December 2023Limits

Considers the criminal offence arising where accounts are approved without compliance and the director knew or was reckless as to that non-compliance. The criminal enforcement mechanism informed, but did not itself resolve, the private-remedy issue under section 393. (see paras [54]-[60]) Cites the penalty provision for the section 414 offence. It formed part of the statutory enforcement context but was not separately interpreted. (see para [54])

Queensgate Place Limited v Solid Start Limited & Ors

[2023] EWHC 2277 (Ch) · 20 September 2023

The court relied on the requirement that annual accounts be approved by the board and signed by a director, forming part of the basis for finding Minesh had failed to discharge his responsibilities. (see paras [32], [135]-[157])

In the matter of Simmonds Transport Limited: Andrew Simmonds v Jeremy Paul Wilson & Ors.

[2023] EWHC 289 (Ch) · 24 February 2023

Applies the statutory approval requirement for company accounts. Filing STA accounts as approved by the board, when Andrew remained a director and had not approved them, disregarded the requirements of the Act and contributed to unfair prejudice. (see paras [198]-[200])

What each judgment says about section 414 is in the case-law panel in the full Act.

Explanatory note

667.This section replaces section 233 of the 1985 Act. It provides that a company’s annual accounts (its individual accounts and any group accounts) must be approved by the board of directors and the balance sheet must be signed. Subsection ( 3) , which requires the balance sheet of accounts prepared in accordance with the small companies regime to carry a statement to that effect, re-enacts section 246(8) of the 1985 Act. Subsections ( 4) and ( 5) re-enact the criminal offence in section 233 of the 1985 Act for approval of accounts that do not comply with the requirements of the Companies Act or, where applicable, of Article 4 of the IAS Regulation. Section 233 (4) of the 1985 Act, which required that a director of the company should sign the copy of the balance sheet delivered to the registrar, has not been reproduced. This requirement would have hampered developments in the electronic delivery of accounts.

All the explanatory notes for the Act

Amendments and notes

7 notes from legislation.gov.uk

Amendments

  1. F409S. 414(3) substituted (with effect in accordance with reg. 2(2) of the amending S.I.) by The Small Companies (Micro-Entities' Accounts) Regulations 2013 (S.I. 2013/3008), regs. 2(1), 5(4) (with reg. 3)
  2. F410Words in s. 414(4) omitted (31.12.2020 with effect in relation to financial years beginning on or after IP completion day) by virtue of The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/685), reg. 1(2)(3), Sch. 1 para. 12 (with reg. 1(4)-(8), Sch. 1 para. 64) (as amended by S.I. 2020/335, regs. 1, 3, 4 and S.I. 2020/523, regs. 1(2), 22, 25(b)); 2020 c. 1, Sch. 5 para. 1(1)

Modifications

  1. C543Ss. 380-414 applied (with modifications) (1.10.2009) by S.I. 2009/2436, regs. 3-5, Sch 1 para. 10 (with reg. 7, Sch. 2) (and the said Sch. 1 para. 10 is amended (with application in accordance with reg. 1(3) of the amending S.I.) by The Unregistered Companies (Amendment) Regulations 2013 (S.I. 2013/1972), regs. 1(2), 2(2)(a))
  2. C617S. 414 applied (with modifications) (6.4.2008) by The Companies (Revision of Defective Accounts and Reports) Regulations 2008 (S.I. 2008/373), reg. 4
  3. C618S. 414 applied (with modifications) (1.10.2009) by The Overseas Companies Regulations 2009 (S.I. 2009/1801), reg. 39 (with Sch. 8)
  4. C619S. 414 applied (with modifications) (1.10.2009) by The Overseas Companies Regulations 2009 (S.I. 2009/1801), reg. 54 (with Sch. 8)
  5. C620S. 414 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 12 (as amended (with effect in accordance with reg. 2(2)-(5) of the amending S.I.) by The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (S.I. 2016/575), regs. 2(1), 11)