Companies Act 2006, section 837

Requirements where last annual accounts used

Part 23 Distributions

(1)The company's last annual accounts means the company's individual accounts—

(a)that were last circulated to members in accordance with section 423 (duty to circulate copies of annual accounts and reports), or

F1094(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)The accounts must have been properly prepared in accordance with this Act, or have been so prepared subject only to matters that are not material for determining (by reference to the items mentioned in section 836(1)) whether the distribution would contravene this Part.

(3)Unless the company is exempt from audit and the directors take advantage of that exemption, the auditor must have made his report on the accounts.

(4)If that report was qualified—

(a)the auditor must have stated in writing (either at the time of his report or subsequently) whether in his opinion the matters in respect of which his report is qualified are material for determining whether a distribution would contravene this Part, and

(b)a copy of that statement must—

(i)in the case of a private company, have been circulated to members in accordance with section 423, or

(ii)in the case of a public company, have been laid before the company in general meeting.

(5)An auditor's statement is sufficient for the purposes of a distribution if it relates to distributions of a description that includes the distribution in question, even if at the time of the statement it had not been proposed.

Read section 837 in the full Act → Definitions (4) Cases (8)

Definitions used in section 837

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
member

(2) In sub-paragraph (1) “member” has the same meaning as it has by virtue of section 7(1) of that Act .

Defined in Sch.2 Pt.1 · see it in the full Act
distribution

(1) In this Part “distribution” means every description of distribution of a company's assets to its members, whether in cash or otherwise, subject to the following exceptions.

Defined in s.829(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

Cases considering section 837 (8)

MANOLETE PARTNERS PLC v PAUL ANTHONY RUTTER & Anor

[2022] EWHC 2552 (Ch) · 7 October 2022

Applies the requirement that last annual accounts be those last circulated to members. The accounts approved and circulated on 29 July 2016 could therefore be relevant accounts. (see paras [80]-[81], [111])

Baker (Liquidator of TMG Brokers Limited) v Staines & Anor

[2021] EWHC 1006 (Ch) · 23 April 2021

Applies the statutory accounts requirements relevant to determining whether a distribution may be made. The filed dormant accounts were not properly prepared accounts on which a dividend could be based.

Solid Homes Ltd, Re

[2020] EWHC 2913 (Ch) · 3 November 2020

Applies the requirements governing reliance on the company’s last annual accounts. The directors were entitled to rely on the accounts after the liquidators failed to undermine their accuracy.

What each judgment says about section 837 is in the case-law panel in the full Act.

Amendments and notes

2 notes from legislation.gov.uk

Amendments

  1. F1094S. 837(1)(b) 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. 23

Commencement

  1. I296S. 837 wholly in force at 6.4.2008; s. 837 not in force at Royal Assent see s. 1300; s. 837 in force at 6.4.2008 by S.I. 2007/3495, art. 3(1)(k) (with savings in arts. 7, 12 and subject to transitional adaptations in Sch. 1 paras. 14-20 and with savings in Sch. 4 paras. 33-35) this amendment is subject to savings and/or transitional provisions, see the commentary.