Environmental and social transparency under the ... - ClientEarth

70 | Environmental and social transparency under the Companies Act 2006Annex 1: UK law governing company environmental and social accounting and reporting | 71When prepared in accordance with the Companies Act, the accounts mustcontain a balance sheet as of the last day of the financial year, and a profitand loss account. These must give a ‘true and fair view’ of (respectively)the state of affairs of the company as at the end of the financial year, andthe profit or loss of the company for the financial year. The Companies Act2006 also requires companies to comply with any Regulations made by theSecretary of State as to the form and content of the balance sheet and profitand loss account, and any additional information to be provided by wayof notes to the accounts. Pursuant to this, detailed Regulations have beenmade on the form and content of accounts prepared under the CompaniesAct 2006. These are examined in Annex 1.1.2 below.s414 Approval and signing of accounts(1) A company’s annual accounts must be approved by the board of directors andsigned on behalf of the board by a director of the company.(2) The signature must be on the company’s balance sheet.(3) If the accounts are prepared in accordance with the provisions applicable to companiessubject to the small companies regime, the balance sheet must contain astatement to that effect in a prominent position above the signature.(4) If annual accounts are approved that do not comply with the requirements of thisAct (and, where applicable, of Article 4 of the IAS Regulation), every director ofthe 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 requirementsor, 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.s437 Public companies: laying of accounts and reports before general meeting(1) The directors of a public company must lay before the company in general meetingcopies of its annual accounts and reports.(2) This section must be complied with not later than the end of the period for filingthe accounts and reports in question.(3) In the Companies Acts “accounts meeting”, in relation to a public company,means a general meeting of the company at which the company’s annual accountsand reports are (or are to be) laid in accordance with this section.The accounts must be approved by the board of directors and signed bya director of the company on behalf of the board. The Companies Act2006 requires that the directors must not approve the accounts unless theyare satisfied that they give a true and fair view of the assets, liabilities,financial position and profit or loss of the company. In the case of publiccompanies, the accounts must also be laid before the company in generalmeeting.When prepared in accordance with International Accounting Standards(‘IAS’), companies must follow the detailed and extensive provisions relatingto form and content provided by the various IAS. These are now setout in a European Commission Regulation, which will be discussed belowin Annex 1.1.2.Environmental and social elementsWhile these requirements do not explicitly require environmental orsocial accounting, they will inevitably require the accounting of somesuch issues, to the extent that they impact the balance sheet or profit andloss account. ‘Environmental’ and ‘social’ issues do not exist in a vacuum;they are business issues also. It is therefore important to recognise that therequirements for financial accounting will require the incorporation ofcertain ‘environmental’ and ‘social’ issues into overall financial accounts.CommencementThe majority of the accounting and reporting requirements of the CompaniesAct 2006 (other than the provision relating to narrative reporting,discussed below) came into effect on 6 April 2008, and apply to all reportingyears starting on or after that date. 210ii.The directors’ reports415 Duty to prepare directors’ report(1) The directors of a company must prepare a directors’ report for each financialyear of the company.s416 Contents of directors’ report: general(1) The directors’ report for a financial year must state—(a) the names of the persons who, at any time during the financial year, weredirectors of the company, and(b) the principal activities of the company in the course of the year.(2) In relation to a group directors’ report subsection (1)(b) has effect as if the referenceto the company was to the undertakings included in the consolidation.