Historical identity and general obligation
Issued on 27 April 2006, this direction immediately revokes and supersedes No. 9 of 2005. It interprets then sections 201(1A), (3) and (3A). Directors present profit/loss and balance-sheet information at AGM in compliance with prescribed standards and a true/fair view; holding-company requirements cover group accounts and its own balance sheet. These are historical sections/FRS 27, not today’s complete consolidation framework.
Why definitions differ
Companies Act section 5(1)/(2) subsidiary/holding definitions resemble but do not equal FRS 27 subsidiary/parent definitions. A company can be an accounting parent but not legal holding company, or legal holding company but not accounting parent. The latter’s legal subsidiary may fall under FRS 28, 31 or 39 instead of strict FRS 27 consolidation, prompting uncertainty about statutory group accounts.
Standards-driven legislative intent
The 2002 changes intended internationally accepted, true/fair reporting and replacement of statutory reporting/disclosure details with standards. ACRA therefore says accounting parents must prepare standard-compliant consolidated accounts even without legal holding status, and legal holding companies must include their legal subsidiaries’ financial information by the appropriate standards. The Act does not prohibit an accounting parent consolidating merely because it lacks legal holding status.
Broad statutory meaning of consolidated accounts
Section 209A’s Part VI definition covers group consolidated accounts or accounts/consolidated accounts complying with standards. Its second limb is wide enough for legal-subsidiary information treated under FRS 28, 31 or 39. The phrase does not force every legal subsidiary into a technical FRS 27 consolidation method regardless of accounting substance.
All three table cases and exemption
Case 1: not legal holding but FRS 27 parent—consolidate under FRS 27 for compliant true/fair accounts. Case 2: both legal holding and accounting parent—consolidate under Act 201(3A) and FRS 27. Both cases exclude FRS 27 paragraph 10 exemption circumstances. Case 3: legal holding but not accounting parent—include subsidiary financial information using applicable FRS 28/31/39; 209A accommodates this. For a holding company also a parent within FRS 27 paragraph 10, 201(3BA) provides an exception to 201(3A).
References and use of the interpretation
The direction references the Companies Act and Companies (Accounting Standards) Regulations, the superseded 2005 direction, and ACRA legal enquiries. It does not reproduce all FRS 27 paragraph 10 exemption tests; users should read that historical standard rather than assume all parents are exempt. Later legislative changes are separate sources.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗