The Companies Act 1985 (Bank Accounts) Regulations 1991

• Citation: S.I. 1991/2705
• Sections: 190

Section 1 Citation and interpretation

These Regulations may be cited as the Companies Act 1985 (Bank Accounts) Regulations 1991 and shall come into force on the day after the day on which they are made. 2. In these Regulations “the 1985 Act ” means the Companies Act 1985 and “the 1989 Act ” means the Companies Act 1989.

Section 3 Amendments of sections

The following sections are inserted into Part VII of the 1985 Act in place of sections 255 to 255B –

Banking and insurance companies and groups

Special provisions for banking and insurance companies.

(255)

(1) A banking company shall prepare its individual accounts in accordance with Part I of Schedule 9 rather than Schedule 4.

(2) An insurance company may prepare its individual accounts in accordance with Part I of Schedule 9A rather than Schedule 4.

(3) Accounts so prepared shall contain a statement that they are prepared in accordance with the special provisions of this Part relating to banking companies or to insurance companies, as the case may be.

(4) In relation to the preparation of individual accounts in accordance with the special provisions of this Part, the references to Schedule 4 in section 226(4) and (5) (relationship between specific requirements and duty to give true and fair view) shall be read as references to the provisions of Part I of Schedule 9, in the case of the accounts of banking companies, or to the provisions of Part I of Schedule 9A, in the case of the accounts of insurance companies.

(5) The Secretary of State may, on the application or with the consent of the directors of an insurance company which prepares individual accounts in accor dance with the special provisions of this Part relating to insurance companies, modify in relation to the company any of the requirements of this Part, other than the duty to give a true and fair view, for the purpose of adapting them to the circumstances of the company.

Special provisions for banking and insurance groups.

(255A)

(1) The parent company of a banking group shall prepare group accounts in accordance with the provisions of this Part as modified by Part II of Schedule 9.

(2) The parent company of an insurance group may prepare group accounts in accordance with the provisions of this Part as modified by Part II of Schedule 9A.

(3) Accounts so prepared shall contain a statement that they are prepared in accordance with the special provisions of this Part relating to banking groups or to insurance groups, as the case may be.

(4) References in this Part to a banking group are to a group where –

(a) the parent company is a banking company, or

(b) the parent company:

(i) does not itself carry on any material business apart from the acquisition, management and disposal of interests in subsidiary undertakings; and

(ii) its principal subsidiary undertakings are wholly or mainly banking companies. For the purposes of (b) the management of interests in subsidiary undertakings includes the provision of services to such undertakings, and a parent company’s principal subsidiary undertakings are those subsidiary undertakings of the company whose results or financial position would principally affect the figures shown in the group accounts.

(5) References in this Part to an insurance group are to a group where–

(a) the parent company is an insurance company, or

(b) the predominant activity of the group is insurance business and activities which are a direct extension of or ancillary to insurance business.

(6) In relation to the preparation of group accounts in accordance with the special provisions of this Part:

(a) the references to the provisions of Schedule 4A in section 227(5) and (6) (relationship between specific requirements and duty to give true and fair view) shall be read as references to those provisions as modified by Part II of Schedule 9, in the case of the group accounts of a banking group, or Part II of Schedule 9A, in the case of the group accounts of an insurance group; and

(b) the reference to paragraphs 52 to 57 of Schedule 4 in section 230(2) (relief from obligation to comply with those paragraphs where group accounts prepared) shall be read as a reference to paragraphs 74 to 77, 80 and 81 of Part I of Schedule 9, in the case of the group accounts of a banking group.

(7) The Secretary of State may, on the application or with the consent of the directors of a company which prepares group accounts in accordance with the special provisions of this Part relating to insurance groups, modify in relation to the company any of the requirements of this Part for the purpose of adapting them to the circumstances of the company.

Modification of disclosure requirements in relation to banking company or group.

(255B)

(1) In relation to a banking company, or the parent company of a banking company, the provisions of Schedule 5 (Disclosure of information: related undertakings) have effect subject to Part III of Schedule 9.

(2) In relation to a banking company, or the parent company of a banking company, the provisions of Schedule 6 (Disclosure of information: emoluments and other benefits of directors and others) have effect subject to Part IV of Schedule 9.

Section 4 Amendments of sections

Section 255C of the 1985 Act is amended:

(a) by the addition of the following words at the end of the sidenote to the section: “relating to insurance companies or groups”;

(b) by the deletion of the words “banking or” where they appear in sub-section (1);

(c) by the substitution of the words “Schedule 9A” for the words “Schedule 9” wherever they appear in the section; and

(d) by the deletion of the words “27 or” where they appear in sub-section (4).

Section 5 Insertion of new Schedule

(1) Parts I and II of Schedule 9 to the 1985 Act shall form a new Schedule to that Act numbered “Schedule 9A” and entitled “Special Provisions For Insurance Companies And Groups”, which shall be inserted after Schedule 9.

(2) Part III of Schedule 9 to the 1985 Act is repealed.

(3) The following is substituted for the heading of Schedule 9 to the 1985 Act: “Special Provisions For Banking Companies And Groups”.

(4) Parts I to III of Schedule 1 to these Regulations (Form and content of accounts of banking companies and groups) are inserted into the 1985 Act as Parts I to III of Schedule 9 to that Act.

Section 6 Other amendments

Part VII of the 1985 Act shall be further amended in accordance with the provisions of Schedule 2 to these Regulations.

Section 7 Other amendments

The 1985 Act shall be further amended in accordance with the provisions of Schedule 3 to these Regulations, which are consequential on the amendments made by the foregoing Regulations.

Section 8 Other amendments

In section 32 of the Housing Subsidies Act 1967 (Interpretation), in the definition of “insurance company”, the words “Schedule 9A” shall be substituted for the words “Schedule 9”.

Section 9 Transitional provisions

(1) A company (including any body corporate to which Part VII is applied by any enactment) may, with respect to a financial year of the company commencing on a date prior to 23rd December 1992, prepare such annual accounts as it would have been required to prepare had the modifications to the 1985 Act effected by these Regulations not been made.

(2) The amendments effected by Regulations 3 to 8 above shall, where a company prepares accounts under paragraph (1) of this Regulation, be treated (as regards that company) as not having been made.

Section 1

(1) Subject to the following provisions of this Part of this Schedule:

(a) every balance sheet of a company shall show the items listed in the balance sheet format set out below in section B of this Chapter of this Schedule; and

(b) every profit and loss account of a company shall show the items listed in either of the profit and loss account formats so set out;

in either case in the order and under the headings and sub-headings given in the format adopted.

(2) Sub-paragraph (1) above is not to be read as requiring the heading or sub-heading for any item to be distinguished by any number or letter assigned to that item in the format adopted.

(3) Where the heading of an item in the format adopted contains any wording in square brackets, that wording may be omitted if not applicable to the company.

Section 1

Cash and balances at central [or post office] banks (1)

Section 1

Deposits by banks (11),(20)

(a) Repayable on demand

(b) With agreed maturity dates or periods of notice

Section 1

Contingent liabilities (16)

(1) Acceptances and endorsements

(2) Guarantees and assets pledged as collateral security (17)

(3) Other contingent liabilities

Section 1

Interest receivable (1)

(1) Interest receivable and similar income arising from debt securities [and other fixed income securities]

(2) Other interest receivable and similar income

Section 1

Interest payable (2)

Section 1

Interest receivable (1)

(1) Interest receivable and similar income arising from debt securities [and other fixed income securities]

(2) Other interest receivable and similar income

Section 1 Undertakings to be included in consolidation

(1) An undertaking (other than a credit institution) whose activities are a direct extension of or ancillary to banking business shall not be excluded from consolidation under section 229(4) (exclusion of undertakings whose activities are different from those of the undertakings consolidated).

(2) For the purposes of this paragraph “banking” means the carrying on of a deposit taking business within the meaning of the Banking Act 1987.

Section 1

(1) Where accounts are prepared in accordance with the special provisions of this Schedule relating to banking companies or groups:

(a) the information required by paragraphs 8 and 24 of Schedule 5 (information about significant holdings of the company in undertakings other than subsidiary undertakings) need only be given in respect of undertakings (otherwise falling within the class of undertakings in respect of which disclosure is required) in which the company has a significant holding amounting to 20 per cent. or more of the nominal value of the shares in the undertaking; and

(b) the information required by paragraph 27 of Schedule 5 (information about significant holdings of the group in undertakings other than subsidiary undertakings) need only be given in respect of undertakings (otherwise falling within the class of undertakings in respect of which disclosure is required) in which the group has a significant holding amounting to 20 per cent. or more of the nominal value of the shares in the undertaking.

In addition any information required by those paragraphs may be omitted if it is not material.

(2) Paragraph 13(3) and (4) of Schedule 5 shall apply mutatis mutandis for the purposes of subparagraph (1)(a) above and paragraph 32(3) and (4) of that Schedule shall apply mutatis mutandis for the purposes of sub-paragraph (1)(b) above.

Section 2

(1) Where in accordance with paragraph 1 a company’s profit and loss account for any financial year has been prepared by reference to one of the formats set out in section B below, the directors of the company shall adopt the same format in preparing the profit and loss account for subsequent financial years of the company unless in their opinion there are special reasons for a change.

(2) Particulars of any change in the format adopted in preparing a company’s profit and loss account in accordance with paragraph 1 shall be disclosed, and the reasons for the change shall be explained, in a note to the accounts in which the new format is first adopted.

Section 2

Treasury bills and other eligible bills (20)

(a) Treasury bills and similar securities (2)

(b) Other eligible bills (3)

Section 2

Customer accounts (12),(20)

(a) Repayable on demand

(b) With agreed maturity dates or periods of notice

Section 2

Commitments (18)

(1) Commitments arising out of sale and option to resell transactions (19)

(2) Other commitments

Section 2

Interest payable (2)

Section 2

Fees and commissions payable (4)

Section 2

Dividend income

(a) Income from equity shares [and other variable-yield securities]

(b) Income from participating interests

(c) Income from shares in group undertakings

Section 2 General application of provisions applicable to individual accounts

(1) In paragraph 1 of Schedule 4A (application to group accounts of provisions applicable to Schedule 1Part IIindividual accounts), the reference in sub-paragraph (1) to the provisions of Schedule 4 shall be construed as a reference to the provisions of Part I of this Schedule; and accordingly:

(a) the reference in sub-paragraph (2) to paragraph 59 of Schedule 4 shall be construed as a reference to note (20) on the balance sheet format set out in Section B of Chapter I of Part I of this Schedule and paragraphs 66(4) and 67 of Part I of this Schedule; and

(b) sub-paragraph (3) shall be omitted.

(2) The general application of the provisions of Part I of this Schedule in place of those of Schedule 4 is subject to the following provisions.

Section 3

(1) Any item required in accordance with paragraph 1 to be shown in a company’s balance sheet or profit and loss account may be shown in greater detail than so required.

(2) A company’s balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not specifically covered by any of the items listed in the balance sheet format provided or the profit and loss account format adopted, but the following shall not be treated as assets in any company’s balance sheet:

(i) preliminary expenses;

(ii) expenses of and commission on any issue of shares or debentures; and

(iii) costs of research.

(3) Items to which lower case letters are assigned in any of the formats set out in section B below may be combined in a company’s accounts for any financial year if either:

(a) their individual amounts are not material for the purpose of giving a true and fair view; or

(b) the combination facilitates the assessment of the state of affairs or profit or loss of the company for that year;

but in a case within paragraph (b) the individual amounts of any items so combined shall be disclosed in a note to the accounts and any notes required by this Schedule to the items so combined shall, notwithstanding the combination, be given.

(4) Subject to paragraph 4(3) below, a heading or sub-heading corresponding to an item listed in the balance sheet format or the profit and loss account format adopted in preparing a company’s balance sheet or profit and loss account shall not be included if there is no amount to be shown for that item in respect of the financial year to which the balance sheet or profit and loss account relates.

Section 3

Loans and advances to banks (4),(20)

(a) Repayable on demand

(b) Other loans and advances

Section 3

Debt securities in issue (13),(20)

(a) Bonds and medium term notes

(b) Others

Section 3

Dividend income

(a) Income from equity shares [and other variable-yield securities]

(b) Income from participating interests

(c) Income from shares in group undertakings

Section 3

Dealing losses (5)

Section 3

Fees and commissions receivable (3)

Section 3 Minority interests and associated undertakings

(1) The provisions of this paragraph shall have effect so as to adapt paragraphs 17 and 21 of Schedule 4A (which require items in respect of “Minority interests” and associated undertakings to be added to the formats set out in Schedule 4) to the formats prescribed by Part 1 of this Schedule.

(2) The item required to be added to the balance sheet format by paragraph 17(2) shall be added either between Liabilities items 7 and 8 or after Liabilities item 12.

(3) The item required to be added to the profit and loss account format by paragraph 17(3) shall be added:

(a) in the case of format 1, between items 17 and 18; or

(b) in the case of format 2, between items A11 and A12 or between items B9 and B10.

(4) The item required to be added to the profit and loss account format by paragraph 17(4) shall be added:

(a) in the case of format 1, between items 22 and 23; or

(b) in the case of format 2, between items A14 and A15 or between items B11 and B12.

(5) Paragraph 17(5) shall not apply but for the purposes of paragraph 3(3) of Part I of this Schedule (power to combine items) the additional items required by the foregoing provisions of this paragraph shall be treated as items to which a letter is assigned.

(6) Paragraph 21(2) shall apply with respect to a balance sheet prepared under this Schedule as if it required Assets item 7 (Participating interests) in the balance sheet format to be replaced by the two replacement items referred to in that paragraph.

(7) Paragraph 21(3) shall not apply, but the following items in the profit and loss account formats, namely:

(a) format 1 item 3(b) (Income from participating interests)

(b) format 2 item B2(b) (Income from participating interests),

shall be replaced by the following two replacement items:

“Income from participating interests other than associated undertakings”, which shall be shown at position 3(b) in format 1 and position B2(b) in format 2; and

“Income from associated undertakings”, which shall be shown at an appropriate position.

Section 4

(1) In respect of every item shown in the balance sheet or profit and loss account, there shall be shown or stated the corresponding amount for the financial year immediately preceding that to which the accounts relate.

(2) Where the corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss Schedule 1Part Iaccount relates, the former amount shall be adjusted and particulars of the adjustment and the reasons for it shall be given in a note to the accounts.

(3) Paragraph 3(4) does not apply in any case where an amount can be shown for the item in question in respect of the financial year immediately preceding that to which the balance sheet or profit and loss account relates, and that amount shall be shown under the heading or sub-heading required by paragraph 1 for that item.

Section 4

Loans and advances to customers (5),(20)

Section 4

Other liabilities

Section 4

Fees and commissions receivable (3)

Section 4

Administrative expenses

(a) Staff costs

(i) Wages and salaries

(ii) Social security costs

(iii) Other pension costs

(b) Other administrative expenses

Section 4

Dealing profits (5)

Section 4 Minority interests and associated undertakings

Paragraphs 18 and 22(1) of Schedule 4A shall apply as if, in substitution for the references therein to paragraphs 17 to 19 and 21 of Schedule 4, they referred to paragraphs 24 to 26 and 28 of Part I of this Schedule.

Section 5

(1) Subject to the following provisions of this paragraph and without prejudice to note (6) to the balance sheet format, amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be), or vice versa.

(2) Charges required to be included in profit and loss account format 1, items 11(a) and 11(b) or format 2, items A7(a) and A7(b) may however be set off against income required to be included in format 1, items 12(a) and 12(b) or format 2, items B5(a) and B5(b) and the resulting figure shown as a single item (in format 2 at position A7 if negative and at position B5 if positive).

(3) Charges required to be included in profit and loss account format 1, item 13 or format 2, item A8 may also be set off against income required to be included in format 1, item 14 or format 2, item B6 and the resulting figure shown as a single item (in format 2 at position A8 if negative and at position B6 if positive).

Section 5

Debt securities [and other fixed income securities] (6),(20)

(a) Issued by public bodies

(b) Issued by other issuers

Section 5

Accruals and deferred income

Section 5

Fees and commissions payable (4)

Section 5

Depreciation and amortisation (6)

Section 5

Adjustments to provisions

(a) Adjustments to provisions for bad and doubtful debts (9)

(b) Adjustments to provisions for contingent liabilities and commitments (10)

Section 5 Foreign currency translation

Any difference between:

(a) the amount included in the consolidated accounts for the previous financial year with respect to any undertaking included in the consolidation or the group’s interest in any associated undertaking, together with the amount of any transactions undertaken to cover any such interest; and

(b) the opening amount for the financial year in respect of those undertakings and in respect of any such transactions

arising as a result of the application of paragraph 45 of Part I of this Schedule may be credited to (where (a) is less than (b)), or deducted from (where (a) is greater than (b)), (as the case may be) consolidated reserves.

Section 6

(1) Assets shall be shown under the relevant balance sheet headings even where the company has pledged them as security for its own liabilities or for those of third parties or has otherwise assigned them as security to third parties.

(2) A company shall not include in its balance sheet assets pledged or otherwise assigned to it as security unless such assets are in the form of cash in the hands of the company.

Section 6

Equity shares [and other variable-yield securities]

Section 6

Provisions for liabilities and charges

(a) Provisions for pensions and similar obligations

(b) Provisions for tax

(c) Other provisions

Section 6

Dealing [profits] [losses] (5)