Companies Act 2006, section 463

Liability for false or misleading statements in reports and statements

Part 15 Accounts and reports

(1)The reports [F649and statementsF649] to which this section applies are—

[F650 (za)the strategic report,F650]

(a)the directors' report,

(b)the directors' remuneration report, and

F651(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F652 (d)any separate corporate governance statement.F652]

(2)A director of a company is liable to compensate the company for any loss suffered by it as a result of—

(a)any untrue or misleading statement in a report [F653or statementF653] to which this section applies, or

(b)the omission from a report [F653or statementF653] to which this section applies of anything required to be included in it.

(3)He is so liable only if—

(a)he knew the statement to be untrue or misleading or was reckless as to whether it was untrue or misleading, or

(b)he knew the omission to be dishonest concealment of a material fact.

(4)No person shall be subject to any liability to a person other than the company resulting from reliance, by that person or another, on information in a report [F654or statementF654] to which this section applies.

(5)The reference in subsection (4) to a person being subject to a liability includes a reference to another person being entitled as against him to be granted any civil remedy or to rescind or repudiate an agreement.

(6)This section does not affect—

(a)liability for a civil penalty, or

(b)liability for a criminal offence.

Read section 463 in the full Act → Definitions (4) Cases (3)

Definitions used in section 463

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
separate

(3) A “separate” corporate governance statement means one that is not included in the directors' report.

Defined in s.472(2) · see it in the full Act
corporate governance statement

(1) In this Part “corporate governance statement” means the statement required by rules 7.2.1 to 7.2.11 in the Disclosure Rules and Transparency Rules sourcebook made by the Financial Conduct Authority .

Defined in s.472(2) · see it in the full Act

(3) A “separate” corporate governance statement means one that is not included in the directors' report.

Defined in s.472(2) · see it in the full Act
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

Cases considering section 463 (3)

Zahir Aziz v B & S Partnership Limited & Ors.

[2023] EWHC 648 (Ch) · 23 March 2023Limits

The court distinguished the definition of liability in this provision as belonging to a different statutory context concerning false and misleading statements, rather than rectification of the register. (see para [23])

Comberg v Vivopower International Services Ltd & Anor

[2020] EWHC 2438 (QB) · 11 September 2020Limits

A proposed claim based on omission from the directors’ remuneration report was not available because dishonest concealment and causative loss had neither been pleaded nor proved. (see para [332])

JSC VTB Bank v Skurikhin & Anor

[2012] EWHC 3116 (Comm) · 8 November 2012

The court applies the provision in assessing Pikeville’s apparent failure to comply with relevant financial reporting requirements concerning ultimate control and related-party transactions. That uncertainty supported targeted disclosure concerning Miccros and control of the debt. (see paras [31]-[33])

What each judgment says about section 463 is in the case-law panel in the full Act.

Explanatory note

708.This section is concerned with the extent of directors’ liability in relation to the statutory narrative reporting requirements under this Part of the Act (accounts and reports). Subsection ( 1) specifies that the liability provision applies to statements made in the directors’ report (which includes the business review under section 417), the directors’ remuneration report (under section 420) or summary financial statements derived from them. Subsection ( 2) limits the directors’ liability to the company only in respect of loss suffered by it as a result of any untrue or misleading statement in a report, or the omission from a report of anything required to be included. Subsection ( 3) specifies that a director will only be liable in certain circumstances – that is, if an untrue or misleading statement is made deliberately or recklessly, or an omission amounts to dishonest concealment of a material fact. Subsection ( 4) ensures that third parties, such as auditors, will remain liable only to the company for negligence in preparing their own report. Subsection ( 6) ensures that these liability provisions do not affect any liability for a civil penalty or for a criminal offence.

All the explanatory notes for the Act

Amendments and notes

11 notes from legislation.gov.uk

Amendments

  1. F648Words in s. 463 heading inserted (with effect in accordance with reg. 2(3) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 13(c) (with reg. 2(6)(7))
  2. F649Words in s. 463(1) inserted (with effect in accordance with reg. 2(3) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 13(a)(i) (with reg. 2(6)(7))
  3. F650S. 463(1)(za) inserted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (S.I. 2013/1970), reg. 1(2)(3), Sch. para. 17(a)
  4. F651S. 463(1)(c) omitted (with effect in accordance with reg. 1(4) of the amending S.I.) by virtue of The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (S.I. 2013/1970), reg. 1(2)(3), Sch. para. 17(b)
  5. F652S. 463(1)(d) inserted (with effect in accordance with reg. 2(3) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 13(a)(ii) (with reg. 2(6)(7))
  6. F653Words in s. 463(2) inserted (with effect in accordance with reg. 2(3) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 13(b) (with reg. 2(6)(7))
  7. F654Words in s. 463(4) inserted (with effect in accordance with reg. 2(3) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 13(b) (with reg. 2(6)(7))

Modifications

  1. C724Ss. 441-469 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 10 (with reg. 7, Sch. 2) (as 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. C798Ss. 418-469 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 10 (with transitional provisions and savings in regs. 7, 9, Sch. 2)
  3. C799S. 463 applied (with modifications) by S.I. 2008/1911, reg. 24A (as inserted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 9 (with reg. 2(6)(7)); as amended (1.4.2019) by The Companies (Directors Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (S.I. 2018/1155), regs. 2, 24)

Commencement

  1. I193S. 463 wholly in force at 20.1.2007, see s. 1300 and S.I. 2006/3428, art. 3(1)(c) (subject to art. 5, Sch. 1 and with arts. 6, 8, Sch. 5 para. 3)