Environmental and social transparency under the ... - ClientEarth

126 | Environmental and social transparency under the Companies Act 2006Annex 5: Regulatory implementation and compliance: the FRRP | 127A.5.4.3Panel enquiryIf the Chairmen form the view that there may have been a breach ofrequirements worthy of investigation and correction, they will open anenquiry, and form a ‘group’ of FRRP members to conduct the enquiry.The company / entity under enquiry will be formally notified of the specificsof the enquiry and the members of the appointed group, and will begiven the chance to raise any perceived conflicts of interest in the group,and comment on the matters raised by the enquiry.The group will proceed to put its concerns to the company directors incorrespondence and at meetings. The FRRP encourages directors to consulttheir auditors, to involve their audit committee and to take any otheradvice they feel they need.The initial process is primarily informal, and the group aims to reachagreement with the directors of the company by persuasion. 323 It seeksto achieve voluntary revision of reports where they are non-compliant.However, if agreement cannot be reached (the group having formed aview that the report is in breach of requirements and the company beingunwilling to voluntarily revise the report), the group may decide to seek acourt order for compliance, at which point they will inform the company/ entity of their intention and offer a final opportunity to voluntarily reachagreement.A.5.4.4RevisionsThe FRRP exercises discretion over how accounts or reports must berevised, having regard to the context. Factors it will take into account are:nature and effect of the defect; the need to protect users of accounts; theneed to correct / prevent a false market operating; timing of the entity’sreporting cycle).Depending on context, voluntary revision may be effected by way of:- full revision and reissue of reports;- supplementary note to the reports; or- corrective statement issued separately or in the next interim report,along with a corrective statement issued in the following annualreport.If an order is to be made by a court, the court has broad powers, and discretionas to the form of revisory action it may take.s456 Application to court in respect of defective accounts or reports(1) An application may be made to the court—(a) by the Secretary of State, after having complied with section 455, or(b) by a person authorised by the Secretary of State for the purposes of thissection,for a declaration (in Scotland, a declarator) that the annual accounts of a companydo not comply, or a directors’ report does not comply, with the requirements ofthis Act (or, where applicable, of Article 4 of the IAS Regulation) and for an orderrequiring the directors of the company to prepare revised accounts or a revisedreport.(2) Notice of the application, together with a general statement of the matters at issuein the proceedings, shall be given by the applicant to the registrar for registration.(3) If the court orders the preparation of revised accounts, it may give directions asto—(a) the auditing of the accounts,(b) the revision of any directors’ remuneration report, directors’ report orsummary financial statement, and(c) the taking of steps by the directors to bring the making of the order to thenotice of persons likely to rely on the previous accounts,and such other matters as the court thinks fit.(4) If the court orders the preparation of a revised directors’ report it may give directionsas to—(a) the review of the report by the auditors,(b) the revision of any summary financial statement,(c) the taking of steps by the directors to bring the making of the order to thenotice of persons likely to rely on the previous report, and(d) such other matters as the court thinks fit.(5) If the court finds that the accounts or report did not comply with the requirementsof this Act (or, where applicable, of Article 4 of the IAS Regulation) it mayorder that all or part of—(a)(b)the costs (in Scotland, expenses) of and incidental to the application, andany reasonable expenses incurred by the company in connection with or inconsequence of the preparation of revised accounts or a revised report,are to be borne by such of the directors as were party to the approval of the defectiveaccounts or report.For this purpose every director of the company at the time of the approval of theaccounts or report shall be taken to have been a party to the approval unless heshows that he took all reasonable steps to prevent that approval.(6) Where the court makes an order under subsection (5) it shall have regard towhether the directors party to the approval of the defective accounts or reportknew or ought to have known that the accounts or report did not comply with therequirements of this Act (or, where applicable, of Article 4 of the IAS Regulation),and it may exclude one or more directors from the order or order the payment of