Companies (Amendment) Act, 1986

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Number 25 of 1986

COMPANIES (AMENDMENT) ACT, 1986

ARRANGEMENT OF SECTIONS

SCHEDULE

Form and Contents of Accounts

PART I

The Required Formats for Accounts

PART II

Historical Cost Rules in Relation to the Drawing up of Accounts

PART III

Alternative Rules in Relation to the Drawing up of Accounts

PART IV

Information Required by way of Notes to Accounts

PART V

Special Provisions where a Company is a Holding Company or Subsidiary

PART VI

Special Provisions where a Company is an Investment Company

PART VII

Interpretation of Schedule

Number 25 of 1986

COMPANIES (AMENDMENT) ACT, 1986

AN ACT TO AMEND THE LAW RELATING TO COMPANIES [12th July, 1986]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

Interpretation.

1.—(1) In this Act, except where the context otherwise requires—

“the Act of 1983” means the Companies (Amendment) Act, 1983;

“company” does not include an unlimited company;

“private company” does not include an unlimited company;

“public company” means a company other than a private company;

“the Principal Act” means the Companies Act, 1963 .

(2) In this Act, except where the context otherwise requires, a reference to a balance sheet or profit and loss account shall include a reference to any notes to or documents annexed to the accounts in question giving information which is required by any provision of the Companies Acts, 1963 to 1986, and required or allowed by any such provision to be given in a note to or a document annexed to a company's accounts.

Scope of Act.

2.—(1) This Act does not apply to—

(a) a company not trading for the acquisition of gain by the members,

(b) a company to which subsection (4) (c) of section 128 of the Principal Act applies,

(c) a company in respect of which there is in force an order under subsection (5) of that section.

(2) Sections 3 to 6 , 8 to 12 , 17 to 19 , and 24 of this Act do not apply in relation to—

(a) a company that is the holder of a licence under the Central Bank Act, 1971 ,

(b) a company that is a trustee savings bank certified under the Trustee Savings Banks Acts, 1863 to 1965,

(c) a company engaged solely in the making of hire-purchase agreements (within the meaning of the Hire-Purchase Act, 1946 ) and credit-sale agreements (within the meaning of that Act), in respect of goods owned by the company,

(d) a company engaged in the business of accepting deposits or other repayable funds or granting credit for its own account,

(e) Agricultural Credit Corporation, public limited company,

(f) Fóir Teoranta, or

(g) Industrial Credit Corporation Public Limited Company.

(3) Sections 3 to 12 , 17 to 19 and 24 of this Act do not apply in relation to a company that is the holder of an authorisation under the European Communities (Non-Life Insurance) Regulations, 1976 (S.I. No. 115 of 1976), or an authorisation under the European Communities (Life Assurance) Regulations, 1984 (S.I. No. 57 of 1984).

General provisions in relation to accounts.

3.—(1) Subject to subsection (2) of this section, every balance sheet and profit and loss account of a company laid before an annual general meeting of the company, pursuant to section 148 of the Principal Act, shall comply with the following requirements and section 149 (other than subsection (5) and, in so far as it relates to the said subsection (5), subsection (7)) of that Act shall not apply to any such balance sheet or profit and loss account:

(a) every such balance sheet and profit and loss account shall comply with the provisions of sections 4 and 5 of, and the Schedule to, this Act,

(b) every such balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of its financial year and every such profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year,

(c) where a balance sheet or profit and loss account drawn up in accordance with paragraph (a) of this subsection would not provide sufficient information to comply with paragraph (b) of this subsection, any necessary additional information shall be provided in that balance sheet or profit and loss account or in a note to the accounts,

(d) where, owing to special circumstances, the preparation of accounts of a company in compliance with the said paragraph (a) would prevent those accounts from complying with paragraph (b) (even if additional information were provided under paragraph (c) of this subsection), the directors of the company shall depart from the requirements of the Schedule to this Act in preparing those accounts insofar as is necessary in order to comply with that paragraph,

(e) where the directors of a company depart from the requirements of this section, they shall attach a note to the accounts of the company giving details of the particular departures made, the reasons therefor and the effect of those departures on the accounts,

and, accordingly, in the Companies Acts, 1963 to 1982, and the Companies (Amendment) Act, 1983 , in relation to a company to which this Act applies—

(i) references to the said section 149 shall be construed as references to subsection (5) and, in so far as it relates to the said subsection (5), subsection (7) of the said section 149 and to the provisions of this Act corresponding to the other provisions of the said section 149, and

(ii) references to the Sixth Schedule shall be construed as references to the corresponding provisions of this Act.

(2) Subsection (1) of this section shall not apply to the profit and loss account of a company if—

(a) the company has subsidiaries, and

(b) the profit and loss account is framed as a consolidated profit and loss account dealing with all or any of the company's subsidiaries as well as the company, and—

(i) complies with the requirements of this Act relating to consolidated profit and loss accounts, and

(ii) shows how much of the consolidated profit or loss for the financial year concerned is dealt with in the accounts of the company.

(3) Where, in the case of a company, advantage is taken of subsection (2) of this section, that fact shall be disclosed in a note to the group accounts.

(4) Subsection (1) (b) of this section overrides the requirements of sections 4 and 5 of, and the Schedule to, this Act and all other requirements of the Companies Acts, 1963 to 1986, as to the matters to be included in the accounts of a company or in notes to those accounts; and, accordingly, where a balance sheet or profit and loss account of a company drawn up in accordance with those requirements would not provide sufficient information to comply with the said subsection (1) (b), any necessary additional information shall be provided in that balance sheet or profit and loss account or in a note to the accounts.

Format of accounts.

4.—(1) Subject to the provisions of this section, every balance sheet of a company shall show the items listed in either of the balance sheet formats set out in the Schedule to this Act and every profit and loss account of a company shall show the items listed in any one of the profit and loss accounts formats so set out in either case in the order and under the headings and sub-headings given in the format adopted.

(2) Subsection (1) of this section shall not be construed as requiring the heading or sub-heading for any item in the balance sheet, or profit and loss account, of a company to be distinguished by any letter or number assigned to that item in the formats set out in the Schedule to this Act.

(3) Where the balance sheet, or profit and loss account, of a company has been prepared by reference to one of the formats set out in the Schedule to this Act, the directors of the company shall adopt the same format in preparing the accounts for subsequent financial years unless, in their opinion, there are special reasons for a change.

(4) Where any change is made in accordance with subsection (3) of this section in the format adopted in preparing a balance sheet, or profit and loss account, of a company, the reasons for the change, together with full particulars of the change, shall be given in a note to the accounts in which the new format is first adopted.

(5) Any item required in accordance with the Schedule to this Act to be shown in the balance sheet, or profit and loss account, of a company, may be shown in greater detail than that required by the format adopted.

(6) Any items to which an Arabic number is assigned in any of the formats set out in the Schedule to this Act may be combined in the accounts of a company—

(a) in any case where the individual amounts of such items are not material to assessing the state of affairs or profit or loss of the company for the financial year concerned, or

(b) in any case where the combination of such items facilitates that assessment.

(7) Where items are combined in a company's accounts pursuant to subsection (6) (b) of this section, the individual amounts of any items so combined shall be disclosed in a note to the accounts.

(8) In respect of every item shown in the balance sheet, or profit and loss account, of a company, the corresponding amount for the financial year immediately preceding that to which the balance sheet or profit and loss account refers shall also be shown and, if that 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 account relates, the former amount shall be adjusted, and particulars of the adjustment and the reasons therefor shall be given in a note to the accounts.

(9) Subject to subsection (10) of this section, a heading or subheading corresponding to an item listed in the format adopted in preparing the balance sheet, or profit and loss account, of a company, shall not be included in the balance sheet or profit and loss account, as the case may be, 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.

(10) Subsection (9) of this section shall 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 the format adopted as aforesaid.

(11) Amounts in respect of items representing assets or income may not be set off in the accounts of a company against amounts in respect of items representing liabilities or expenditure, as the case may be, or vice versa.

(12) The balance sheet, or profit and loss account, of a company may include an item representing or covering the amount of any asset or liability or income or expenditure not otherwise covered by any of the items listed in the format adopted but the following shall not be treated as assets in the balance sheet of a company—

(a) preliminary expenses,

(b) expenses of, and commission on, any issue of shares or debentures, and

(c) costs of research.

(13) In preparing the balance sheet, or profit and loss account, of a company, the directors of the company shall adapt the arrangement and headings and sub-headings otherwise required by subsection (1) of this section in respect of items to which an Arabic number is assigned in the format adopted, in any case where the special nature of the company's business requires such adaptation.

(14) Every profit and loss account of a company shall show the amount of the profit or loss of the company on ordinary activities before taxation.

(15) The profit and loss account of a company for a financial year shall show—

(a) separately, the aggregate amount of the dividends paid and the aggregate amount of the dividends proposed to be paid,

(b) any transfer between the profit and loss account and reserves,

(c) any increase or reduction in the balance on the profit and loss account since the immediately preceding financial year.

(d) the profit or loss brought forward at the beginning of the year, and

(e) the profit or loss carried forward at the end of the year.

Accounting principles.

5.—Subject to section 6 of this Act, the amounts to be included in the accounts of a company in respect of the items shown shall be determined in accordance with the following principles:

(a) the company shall be presumed to be carrying on business as a going concern,

(b) accounting policies shall be applied consistently from one financial year to the next,

(c) the amount of any item in the accounts shall be determined on a prudent basis and in particular—

(i) only profits realised at the balance sheet date shall be included in the profit and loss account, and

(ii) all liabilities and losses which have arisen or are likely to arise in respect of the financial year to which the accounts relate, or a previous financial year, shall be taken into account, including those liabilities and losses which only become apparent between the balance sheet date and the date on which the accounts are signed in pursuance of section 156 of the Principal Act,

(d) all income and charges relating to the financial year to which the accounts relate shall be taken into account without regard to the date of receipt or payment, and

(e) in determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately.

Departure from the accounting principles.

6.—If it appears to the directors of a company that there are special reasons for departing from any of the principles specified in section 5 of this Act, they may so depart, but particulars of the departure, the reasons for it and its effect on the balance sheet and profit and loss account of the company shall be stated in a note to the accounts, for the financial year concerned, of the company.

Documents to be annexed to annual return.

7.—(1) Subject to the provisions of this Act, there shall be annexed to the annual return—

(a) (i) in the case of a company other than a company to which subsection (2) or (3) section 2 of this Act applies, a copy of the balance sheet, and profit and loss account, of the company drawn up in accordance with sections 3 , 4 and 5 of, and the Schedule to, this Act,

(ii) in the case of a company to which section 2 (2) of this Act applies, a copy of the balance sheet, and profit and loss account, of the company drawn up in accordance with the Principal Act,

and a copy of the report of the auditors on, and the report of the directors accompanying, each such balance sheet and profit and loss account, and each such copy shall be certified both by a director, and the secretary, of the company to be a true copy of such balance sheet, profit and loss account, or report, as the case may be, laid before the annual general meeting of the company held during the period to which the return relates, and

(b) where a document, being a balance sheet, profit and loss account, report, or statement, annexed to the annual return, is in a language other than the English language or the Irish language, there shall be annexed to each such document a translation in the English language or the Irish language certified in the prescribed manner to be a correct translation.

(2) If a document required by this section to be annexed to the annual return referred to in subsection (1) of this section does not comply with the provisions of the law in force at the date of the relevant audit with respect to the form and the contents of the document, there shall be made by the company concerned such amendments in the copy as are necessary in order to bring it into compliance with those provisions, and the fact that the copy has been so amended shall be stated therein.

(3) Section 128 of the Principal Act shall not apply to a company to which this section applies.

Small companies and medium-sized companies.

8.—(1) Subject to section 9 of this Act—

(a) a private company shall qualify to be treated as a small company for the purposes of this Act in respect of any financial year of the company if, in respect of that year and the financial year of the company immediately preceding that year, the company satisfies at least two of the conditions specified in subsection (2) of this section, and

(b) a private company shall qualify to be treated as a medium-sized company for the purposes of this Act in respect of any financial year of the company if, in respect of that year and the financial year of the company immediately preceding that year, the company satisfies at least two of the conditions specified in subsection (3) of this section.

(2) The qualifying conditions for a company to be treated as a small company in respect of any financial year are as follows:

(a) its balance sheet total for that year shall not exceed £1,250,000,

(b) the amount of its turnover for that year shall not exceed £2,500,000, and

(c) the average number of persons employed by the company in that year shall not exceed 50.

(3) The qualifying conditions for a company to be treated as a medium-sized company in respect of any financial year are as follows:

(a) its balance sheet total for that year shall not exceed £5,000,000,

(b) the amount of its turnover for that year shall not exceed £10,000,000, and

(c) the average number of persons employed by the company in that year shall not exceed 250.

(4) In this section “balance sheet total”, in relation to any financial year of a company, means—

(a) where Format 1 of the balance sheet formats set out in the Schedule to this Act is adopted by the company, the aggregate of the amounts shown in the company's balance sheet for that year under headings corresponding to items A and B in that Format, and

(b) where Format 2 of those formats is adopted by the company, the aggregate of the amounts so shown under “Assets”.

(5) In this section “amount of turnover”, in relation to any financial year of a company, means the amounts of the turnover shown in the profit and loss account of the company under headings corresponding to the relevant items in any of the Formats of profit and loss accounts set out in the Schedule to this Act.

(6) In the application of this section to any period which is a financial year of a company, but is not in fact a year, the amounts specified in subsections (2) (b) and (3) (b) of this section shall be proportionately adjusted.

(7) A private company which is incorporated on or after the commencement of this section shall qualify to be treated as a small company or, as the case may be, as a medium-sized company, in respect of its first financial year if it satisfies at least two of the relevant qualifying conditions specified in subsection (2) or (3), as may be appropriate, of this section in respect of that financial year.

(8) A private company which was incorporated before such commencement shall qualify to be treated under subsection (1) of this section as a small company or, as the case may be, as a medium-sized company, in respect of the first financial year of the company in which accounts of the company are required to be prepared in accordance with section 3 of this Act if it satisfies at least two of the relevant qualifying conditions specified in subsection (2) or (3), as may be appropriate, of this section in respect of either that first financial year or the financial year immediately preceding that year.

(9) For the purposes of subsections (2) (c) and (3) (c) of this section, the average number of persons employed by a company shall be determined by applying the method of calculation prescribed by paragraph 42 (4) of the Schedule to this Act for determining the number required by subparagraph (1) of that paragraph to be stated in a note to the accounts of a company.

(10) In determining for the purposes of subsection (8) of this section whether a company satisfies at least two of the relevant conditions specified in subsection (2) or (3), as may be appropriate, of this section in respect of a financial year in a case where the accounts of the company in respect of that year prepared under the Companies Acts, 1963 to 1983, are not prepared in accordance with this Act, subsection (4) of this section shall be construed as referring to the aggregate of any amounts included in the balance sheet of the company for that year which correspond to the amounts mentioned in paragraph (a) or (b), as may be appropriate, of that subsection.

(11) The Minister may by order substitute different amounts, totals and numbers, respectively, for the amounts, totals and numbers specified for the time being in subsections (2) and (3) of this section and those subsections shall have effect in accordance with any order for the time being in force under this section.

(12) An order under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the order is passed by either such House within the next twenty-one days on which that House has sat after the order is laid before it, the order shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.

Reclassification of small companies and medium-sized companies.

9.—(1) Where a private company has qualified to be treated as a small company under subsection 8 of section 8 of this Act, it shall continue to be so qualified, unless, in the latest financial year of the company and the financial year of the company immediately preceding that year, it does not satisfy at least two of the conditions set out in subsection (2) of the said section 8 and if, during each of those two years, it does not satisfy at least two of those conditions, it shall, in respect of its latest financial year, cease to be so qualified.

(2) Where a private company has qualified to be treated as a medium-sized company under subsection (1) of section 8 of this Act, it shall continue to be so qualified unless, in the latest financial year of the company and the financial year of the company immediately preceding that year, it does not satisfy at least two of the conditions set out in subsection (3) of the said section 8 for treatment as a medium-sized company and, if during each of those two years, it does not satisfy at least two of those conditions, it shall, in respect of its latest financial year, cease to be so qualified.

(3) A company which qualified to be treated as a medium-sized company under subsection (2) of this section in the financial year immediately preceding its latest financial year shall qualify to be treated as a small company for the purposes of this Act in respect of its latest financial year if, in those two years, it satisfies at least two of the conditions set out in section 8 (2) of this Act.

(4) Where a private company ceases to be qualified as specified in subsection (1) or (2) of this section, section 8 of this Act shall apply in respect of the company as if it had never previously qualified to be treated as a small company or a medium-sized company under that section.

Exemption for small companies from certain provisions of sections 3 and 7 .

10.—(1) Notwithstanding paragraph (a) of section 3 (1) of this Act, but subject to paragraph (b) of the said section 3 (1), the directors of a company treated as a small company pursuant to section 8 (1) of this Act may draw up an abridged balance sheet showing only those items preceded by letters or roman numerals in Formats 1 and 2 of the balance sheet formats set out in the Schedule to this Act:

Provided that the total amounts falling due within one year and after one year shall be shown separately for item B.II in Format 1 and items B.II under “Assets” and C under “Liabilities” in Format 2 of the balance sheet formats in relation to debtors and creditors.

(2) A company treated as a small company pursuant to section 8 (1) of this Act may, in lieu of complying with the requirements in that behalf in section 7 of this Act, annex to the annual return in relation to the company referred to in that section a copy of the balance sheet of the company drawn up in accordance with subsection (1) of this section in respect of the period to which the return refers and, notwithstanding the said section 7 , the company shall not be required to annex to the return a copy of the profit and loss account of the company or the report of the directors accompanying the balance sheet of the company.

Exemption for medium-sized companies from certain provisions of sections 3 and 7 .

11.—(1) Notwithstanding paragraph (a) of section 3 (1) of this Act, but subject to paragraph (b) of the said section 3 (1), the directors of a company treated as a medium-sized company under this Act may combine as one item in its profit and loss account under the heading “gross profit or loss” the following items that is to say:

(a) items 1, 2, 3 and 6 in Format 1 of the profit and loss account formats set out in the Schedule to this Act,

(b) items 1 to 5 in Format 2 of the said profit and loss account formats,

(c) items A.1, B.1 and B.2 in Format 3 of the said profit and loss account formats,

(d) items A.1, A.2 and B.1 to B.4 in Format 4 of the said profit and loss account formats.

(2) Notwithstanding section 7 of this Act, but subject to section 3 (1) (b) of this Act, a company treated as a medium-sized company under this Act may annex to the annual return in relation to the company a copy of an abridged balance sheet of the company for the period to which the return relates showing only those items preceded by letters or roman numerals in Formats 1 and 2 of the balance sheet formats set out in the Schedule to this Act:

Provided that the amounts in respect of the following items shall be disclosed separately either in the balance sheet of the company or in the notes to the accounts of the company, that is to say:

(a) in Format 1 of the said balance sheet formats, items A.I.3, A.II.1, 2, 3, and 4, A.III.1, 2, 3, 4 and 7, B.II.2, 3 and 6, B.III.1 and 2, C.1, 2, 6, 7, 8 and 9 and F.1, 2, 6, 7, 8 and 9, and

(b) in Format 2 of the said balance sheet formats, under “Assets”, items A.I.3, A.II.1, 2, 3 and 4, A.III.1, 2, 3, 4 and 7, B.II. 2, 3 and 6 and B.III.l and 2 and under “Liabilities”, items C.1, 2, 6, 7, 8 and 9:

Provided also that the balance sheet of the company shall show separately the amounts falling due within one year and after one year in respect of items B.II in the said Format 1 in total and in respect, individually, of items B.II.2 and 3 in the said Format 1 and the amounts falling due in a similar manner in respect of the total of the amounts in respect of the following items, that is to say, in the said Format 2 under “Assets” item B.II and under “Liabilities” item C and in respect, individually, of the following items, that is to say, in the said Format 2 under “Assets” items B.II.2 and 3 and under “Liabilities” items C. 1, 2, 6 and 7.

(3) Notwithstanding section 7 of this Act, a company treated as a medium-sized company pursuant to section 8 (1) of this Act may annex to the annual return in relation to the company a copy of the profit and loss account drawn up in accordance with subsection (1) of this section.

Exemptions in relation to notes to accounts for small companies and medium-sized companies.

12.—(1) The provisions of the Schedule to this Act (other than paragraphs 24, 26, 27, 33, 34 and 44) in relation to the information required to be given by way of a note to the accounts of a company shall not apply to the accounts annexed to the annual return of a company treated as a small company pursuant to section 8 (1) of this Act.

(2) Paragraph 41 of the Schedule to this Act does not apply as respects such information as aforesaid to a company treated as a medium-sized company pursuant to the said section 8 (1).

Information to be included in directors' report.

13.—The report of the directors of a company under section 158 of the Principal Act shall contain, in addition to the information specified in that section, the following information:

(a) a fair review of the development of the business of the company and of its subsidiaries, if any, during the financial year ending with the relevant balance sheet date;

(b) particulars of any important events affecting the company or any of its subsidiaries, if any, which have occurred since the end of that year;

(c) an indication of likely future developments in the business of the company and of its subsidiaries, if any, and

(d) an indication of the activities, if any, of the company and its subsidiaries, if any, in the field of research and development.

Information to be included in directors' report regarding acquisition by company of own shares.

14.—Where, in any financial year of a company, shares in the company—

(a) are acquired by the company by forfeiture or surrender in lieu of forfeiture, or

(b) are acquired by the company in pursuance of section 41 of the Act of 1983, or

(c) are acquired by another person in the circumstances specified in paragraph (c) or (d) of section 43 (1) of that Act, or

(d) are made subject to a lien or other charge that is taken (whether expressly or otherwise) by the company and is permitted by paragraph (a), (c) or (d) of section 44 (2) of that Act,

the directors' report with respect to that financial year of the company shall state—

(i) the number and nominal value of any shares of the company acquired as aforesaid by the company, the number and nominal value of any shares of the company acquired as aforesaid by another person, and the number and nominal value of any shares charged as aforesaid, respectively,

(ii) the maximum number and nominal value of any shares which, having been acquired as aforesaid (whether or not during that year) by the company or by another person or charged as aforesaid (whether or not during that year) are held at any time by the company or that other person during that year,

(iii) the number and nominal value of any shares acquired as aforesaid (whether or not during that year) by the company or another person or charged as aforesaid (whether or not during that year) which are disposed of by the company or that other person or cancelled by the company during that year,

(iv) where the number and nominal value of the shares of any particular description are stated in pursuance of any of the preceding paragraphs, the percentage of the called-up share capital of the company which shares of that description represent,

(v) in the case of a charge as aforesaid, the amount of the charge in each case, and

(vi) in the case of a disposal as aforesaid for money or money's worth, the amount or value of the consideration in each case.

Consideration by auditors of consistency of directors report with company's account.

15.—It shall be the duty of the auditors of a company, in preparing the report in relation to the company required by section 163 of the Principal Act, to consider whether the information given in the report of the directors of the company relating to the financial year concerned is consistent with the accounts prepared by the company for that year and they shall state in the report whether, in their opinion, such information is consistent with those accounts.

Publication of information regarding subsidiary and associated companies.

16.—(1) Subject to the provisions of this section, where at the end of the financial year of a company, the company—

(a) has a subsidiary, or

(b) is beneficially entitled to more than 20 per cent. in nominal value of the shares carrying voting rights (other than voting rights which arise only in specified circumstances) in another body corporate that is not its subsidiary (in this section referred to as “an associated company”) or to more than 20 per cent. in nominal value of the allotted share capital of another body corporate that is not its subsidiary (in this section also referred to as “an associated company”),

a note shall be included in the accounts of the company for that year annexed to the annual return distinguishing between the subsidiaries and the associated companies and giving the following information in relation to them—

(i) the name and registered office of each subsidiary or associated company and the nature of the business carried on by it,

(ii) the identity of each class of shares held by the company in each subsidiary or associated company and the proportion of the nominal value of the allotted shares in the subsidiary or associated company of each such class represented by the shares of that class held by the company,

(iii) the aggregate amount of the capital and reserves of each subsidiary or associated company as at the end of the financial year of the subsidiary or associated company ending with or last before the end of the financial year of the company to which the accounts relate, and

(iv) the profit or loss of the subsidiary or associated company for the financial year thereof mentioned in paragraph (iii) of this subsection.

(2) Paragraphs (iii) and (iv) of subsection (1) of this section shall not apply—

(a) in respect of a subsidiary of a company, if the company is exempt from preparing group accounts by virtue of section 150 (2) (a) of the Principal Act or the company prepares group accounts and either—

(i) the accounts of the subsidiary are included in the group account, or

(ii) the investment of the company in the shares of the subsidiary is included in or in a note to the company's accounts by way of the equity method of valuation,

or

(b) in respect of an associated company of a company if the investment of the company in the shares of the associated company is included in or in a note to the company's accounts by way of the equity method of valuation,

or

(c) if—

(i) the subsidiary or the associated company is not required to publish its accounts, and

(ii) the shares held by the company in the subsidiary or the associated company do not amount to at least one-half in nominal value of the allotted share capital of the subsidiary or the associated company,

or

(d) if the information specified in subsection (1) of this section is not material.

(3) (a) Subject to paragraph (b) of this subsection, the information specified in subsection (1) of this section may, in lieu of Being stated in a note to the accounts of the company concerned for any particular financial year of the company, be given in a statement in writing signed by a director, and the secretary, of the company and annexed to the first annual return made by the company next after its accounts for that year are laid before the annual general meeting of the company if, in the opinion of the directors of the company, compliance with subsection (1) of this section would require a note to the accounts of the company of excessive length.

(b) Paragraph (a) of this subsection shall not apply in relation to information concerning a subsidiary or associated company of a company (referred to subsequently in this paragraph as the “second-mentioned company”) if the financial state of the subsidiary or associated company, as disclosed by its accounts, has, in the opinion of the directors of the second-mentioned company, a substantial effect on the profit or loss, or the amount of the assets, of the second-mentioned company and its subsidiaries.

(c) A copy of a statement annexed, pursuant to paragraph (a) of this subsection, to the annual return referred to in that subsection made by a company shall be certified both by a director, and the secretary, of the company to be a true copy of such statement.

(4) For the purpose of this section, shares in a company being a subsidiary or associated company of another company, shall be treated as being held, or as not being held, by that other company if they would, by virtue of section 155 (3) of the Principal Act be treated as being held or, as the case may be, as not being held by that the company for the purpose of determining whether the first-mentioned company is that other company's subsidiary.

(5) Subsections (4) and (5) of section 158 of the Principal Act shall not apply to a company to which this section applies.

(6) In addition to applying to a company, this section applies to a body corporate which, if it were a company, would be a subsidiary or an associated company.

Exemption for subsidiaries from section 7 .

17.—(1) Where a private company is a subsidiary of another body corporate formed and registered in a Member State of the European Communities, or would be a subsidiary of that other body corporate if that other body corporate were a company, the company shall, as respects any particular financial year of the company, stand exempted from the provisions of section 7 (other than subsection (1) (b)) of this Act if, but only if, the following conditions are fulfilled:

(a) every person who is a shareholder of the company on the date of the holding of the next annual general meeting of the company after the end of that financial year, shall declare his consent to the exemption,

(b) there is in force in respect of the whole of that financial year an irrevocable guarantee by the other body corporate of the liabilities of the company referred to in section 5 (c) of this Act in respect of that financial year and the company has notified in writing every person referred to in paragraph (a) of this subsection of the guarantee,

(c) the annual accounts of the company for that financial year are consolidated in the group accounts prepared by the body corporate and the exemption of the company under this section is disclosed in a note to the group accounts,

(d) a notice stating that the company has availed of the exemption under this section in respect of that financial year and a copy of the guarantee and notification referred to in paragraph (b) of this subsection, together with a declaration by the company in writing that paragraph (a) of this subsection has been complied with in relation to the exemption, is annexed to the annual return for that financial year made by the company under the Principal Act to the registrar of companies,

(e) the group accounts of the other body corporate are drawn up as far as possible in accordance with the requirements of the Fourth Council Directive* , and

(f) the group accounts of the other body corporate are annexed to the annual return aforesaid and are audited in accordance with Article 51.1 of the said Fourth Council Directive.

(2) The Minster may make such orders (if any) as may be necessary for the purpose of enabling this section to have full effect.

Provisions in relation to documents delivered to registrar of companies.

18.—(1) A copy of a balance sheet and profit and loss account of a company prepared pursuant to any of the provisions of sections 10 to 12 of this Act and annexed to the annual return required by the Principal Act to be made by the company to the registrar of companies shall be signed as required by section 156 of the Principal Act and the copy of the balance sheet so annexed shall contain the statement required by subsection (2) of this section in a position immediately above the signatures appended pursuant to the said section 156 and shall be accompanied by a copy of the report of the auditors of the company in relation to the accounts of the company under subsection (3) of this section.

(2) A copy of a balance sheet of a company prepared pursuant to any of the provisions of sections 10 to 12 of this Act and annexed to the said annual return shall contain a statement by the directors that—

(a) they have relied on specified exemptions contained in the said sections 10 to 12 , and

(b) they have done so on the ground that the company is entitled to the benefit of those exemptions as a small company or (as the case may be) as a medium-sized company.

(3) A copy of a balance sheet or profit and loss account of a company prepared pursuant to any of the provisions of sections 10 to 12 of this Act which is delivered to the registrar of companies need not be accompanied by the report of the auditors under section 7 (1) (a) of this Act on those accounts, but shall be accompanied by a special report of the auditors containing—

(a) a copy of the report made by the auditors of the company under subsection (4) of this section on those accounts, and

(b) a copy of the report of the auditors under section 163 of the Principal Act.

(4) Where the directors of a company propose to annex to the annual return accounts for any accounting period prepared pursuant to any of the provisions of sections 10 to 12 of this Act and the auditors of the company are satisfied that the directors of the company are entitled, for that purpose, to rely on exemptions specified in sections 10 to 12 of this Act and that the accounts have been properly prepared pursuant to those provisions, it shall be the duty of the auditors of the company to provide the directors of the company with a report in writing stating that, in the opinion of the auditors of the company, the directors of the company are entitled to annex those accounts to the annual return and that the accounts so annexed are properly prepared as aforesaid.

(5) A copy of the report of the auditors of a company under subsection (3) of this section furnished to the registrar of companies pursuant to this section shall be certified both by a director, and the secretary, of the company to be a true copy of such report.

Publication of full or abbreviated accounts.

19.—(1) Where a company publishes its full accounts, it shall also publish with those accounts any report in relation to those accounts specified in subsection (3) of section 18 of this Act and, if the auditors of the company have refused to provide the directors of the company with a report under subsection (4) of that section, an indication of the refusal.

(2) Where a company publishes abbreviated accounts relating to any financial year, it shall also publish a statement indicating—

(a) that the accounts are not the accounts copies of which are required by this Act to be annexed to the annual return,

(b) whether the copies of the accounts so required to be so annexed have in fact been so annexed,

(c) whether the auditors of the company have made a report under section 163 of the Principal Act in respect of the accounts of the company which relate to any financial year with which the abbreviated accounts purport to deal,

(d) whether the report of the auditors under the said section 163 as to the matters mentioned in the Seventh Schedule to the Principal Act contained any qualifications.

(3) Where a company publishes abbreviated accounts, it shall not publish with those accounts any such report of the auditors as is mentioned in subsection (2) (c) of this section.

(4) In this section—

“abbreviated accounts”, in relation to a company, means any balance sheet or profit and loss account, or summary or abstract of a balance sheet or profit and loss account, relating to a financial year of the company which is published by the company otherwise than as part of the full accounts of the company for that financial year and, in relation to a holding company, includes an account in any form purporting to be a balance sheet or profit and loss account, or a summary or abstract of a balance sheet or profit and loss account, of the group consisting of the holding company and its subsidiaries;

“full accounts”, in relation to a company, means accounts of the company prepared in accordance with section 3 or sections 10 to 12 of this Act and, except in the case of a company which is exempt by virtue of the said section 10 from annexing a copy of such report to the annual return, the report of the directors of the company specified in section 158 (1) of the Principal Act;

“publish”, in relation to a document, includes issue, circulate or otherwise make it available for public inspection in a manner calculated to invite the public generally, or any class of members of the public, to read the document, and cognate words shall be construed accordingly.

Amendment of Act of 1983.

20.—The Act of 1983 is hereby amended by the insertion of the following section after section 45:

“Development costs shown as an asset of a company to be set off against company's distributable profits.

45A.—(1) Subject to the following provisions of this section, where development costs are shown as an asset in a company's accounts, any amount shown in respect of those costs shall be treated—

(a) for the purposes of section 45, as a realised loss, and

(b) for the purposes of section 47, as a realised revenue loss.

(2) Subsection (1) shall not apply to any part of the amount aforesaid representing an unrealised profit made on revaluation of those costs.

(3) Subsection (1) shall not apply if—

(a) there are special circumstances justifying the directors of the company concerned in deciding that the amount mentioned in respect thereof in the company's accounts shall not be treated as required by that subsection, and

(b) the note to the accounts required by paragraph 8 (2) of the Schedule to the Companies (Amendment) Act, 1986, states that that amount is not to be so treated and explains the circumstances relied upon to justify the decision of the directors to that effect.”.

Power to apply Act to unregistered companies.

21.—Section 377 of, and the Ninth Schedule to, the Principal Act shall have effect as if the references in the second column of that Schedule, opposite the references in the first column thereof to accounts and audit, to specified provisions of the Act of 1963 were, in the case of such of those provisions as are amended by this Act, references to those provisions as so amended.

Offences and penalties.

22.—(1) (a) If a company fails to comply with a provision of section 5 , 6 , 7 , 10 , 11 , 16 , 18 or 19 of this Act, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding £1,000.

(b) Proceedings for an offence under this subsection, in relation to sections 7 , 10 , 11 , 16 or 18 of this Act, may be brought and prosecuted by the registrar of companies.

(2) If any person, being a director of a company, fails to take all reasonable steps to secure compliance with the requirements of section 3 or section 4 (other than subsections (3) and (13)) of this Act or to comply with the provisions of subsections (3) or (13) of section 4 or section 13 or 14 of this Act, he shall in respect of each offence be liable on summary conviction to imprisonment for a term not exceeding 6 months, or, at the discretion of the court to a fine not exceeding £1,000 or to both so, however, that—

(a) in any proceedings against a person in respect of an offence under this subsection, it shall be a defence to prove that he had reasonable grounds to believe and did believe that a competent and reliable person was charged with the duty of ensuring that the provisions of the said section 3 or section 4 (other than subsections (3) and (13)), as may be appropriate, were complied with and that the latter person was in a position to discharge that duty, and

(b) a person shall not be liable to be sentenced to imprisonment for such an offence unless, in the opinion of the court, the offence was committed wilfully.

(3) If any person in any return, report, certificate, balance sheet or other documents required by or for the purposes of any of the provisions of this Act wilfully makes a statement false in any material particular, knowing it to be false, he shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding 3 years or a fine not exceeding £2,500 or both, or

(b) on summary conviction, to imprisonment for a term not exceeding 6 months or a fine not exceeding £1,000 or both.

(4) Section 385 of the Principal Act shall have effect as if for the sum mentioned in subsection (1) there were substituted “£1,000”.

(5) In this section “director” and “officer” includes any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

Restriction of section 222 of Principal Act.

23.—Section 222 of the Principal Act shall not apply to proceedings before the Employment Appeals Tribunal.

Power of Minister to modify Act in certain respects.

24.—(1) The Minister may by order alter or add to the provisions of this Act, in so far as it relates to the balance sheet and profit and loss account of a company and the notes to and documents to be attached to such a balance sheet or profit and loss account, either generally or in relation to a specified class or classes of company.

(2) An order under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the order is passed by either such House within the next twenty-one days on which that House has sat after the order is laid before it, the order shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.

Short title, collective citation, construction and commencement.

25.—(1) This Act may be cited as the Companies (Amendment) Act, 1986.

(2) The Companies Acts, 1963 to 1982, the Companies (Amendment) Act, 1983 , section 6 of the Designated Investment Funds Act, 1985 , and this Act may be cited together as the Companies Acts, 1963 to 1986.

(3) The Companies Acts, 1963 to 1982, the Companies (Amendment) Act, 1983 , section 6 of the Designated Investment Funds Act, 1985 , and this Act shall be construed together as one.

(4) Save as is otherwise specifically provided thereby, this Act shall come into operation on such day or days as, by order or orders made by the Minister under this section, may be fixed therefor either generally or with reference to any particular purpose or provision and different days may be so fixed for different purposes and different provisions.

(5) (a) Subject to paragraph (b) of the subsection, each provision of this Act shall apply as respects the accounts of a company, and the report by the directors of a company specified in section 158 of the Principal Act, for each financial year of the company beginning or ending, as may be specified by the Minister by order, after such date after the commencement of the provision as may be specified by the Minister by order.

(b) Paragraph (a) of this subsection does not apply in relation to subsection (7) or (8) of section 8 of this Act.

SCHEDULE

FORM AND CONTENTS OF ACCOUNTS

Part I

THE REQUIRED FORMATS FOR ACCOUNTS

Preliminary

1. References in this Part of this Schedule to the items listed in any of the formats set out in this Part are references to those items read together with any notes following the formats which apply to any of those items.

2. A number in brackets following any item in, or any heading to, any of the formats set out in this Part is a reference to the note of that number in the notes following the formats.

3. In the notes following the formats—

(a) the heading of each note gives the required heading or sub-heading for the item to which it applies and a reference to any letters and numbers assigned to that item in the formats set out in this Part; and

(b) references to a numbered format are references to the balance sheet format or (as the case may require) to the profit and loss account format of that number set out in this Part.

BALANCE SHEET FORMATS

Format 1

A. Fixed Assets

I. Intangible assets

1. Development costs

2. Concessions, patents, licences, trade marks and similar rights and assets (1)

3. Goodwill (2)

4. Payments on account

II. Tangible assets

1. Land and buildings

2. Plant and machinery

3. Fixtures, fittings, tools and equipment

4. Payments on account and assets in course of construction

III. Financial assets

1. Shares in group companies

2. Loans to group companies

3. Shares in related companies

4. Loans to related companies

5. Other investments other than loans

6. Other loans

7. Own shares (3)

B. Current Assets

I. Stocks

1. Raw materials and consumables

2. Work in progress

3. Finished goods and goods for resale

4. Payments on account

II. Debtors (4)

1. Trade debtors

2. Amounts owed by group companies

3. Amounts owed by related companies

4. Other debtors

5. Called up share capital not paid

6. Prepayments and accrued income

III. Investments

1. Shares in group companies

2. Own shares (3)

3. Other investments

IV. Cash at bank and in hand

C. Creditors: amounts falling due within one year

1. Debenture loans (5)

2. Bank loans and overdrafts

3. Payments received on account (6)

4. Trade creditors

5. Bills of exchange payable

6. Amounts owed to group companies

7. Amounts owed to related companies

8. Other creditors including tax and social welfare (7)

9. Accruals and deferred income (8)

D. Net current assets (liabilities)

E. Total assets less current liabilities

F. Creditors: Amounts falling due after more than one year

1. Debenture loans (5)

2. Bank loans and overdrafts

3. Payments received on account (6)

4. Trade creditors

5. Bills of exchange payable

6. Amounts owed to group companies

7. Amounts owed to related companies

8. Other creditors including tax and social welfare (7)

9. Accruals and deferred income (8)

G. Provisions for liabilities and charges

1. Pensions and similar obligations

2. Taxation, including deferred taxation

3. Other provisions.

H. Capital and reserve

I. Called up share capital (9)

II. Share premium account

III. Revaluation reserve

IV. Other reserves

1. The capital redemption reserve fund

2. Reserves for own shares

3. Reserves provided for by the articles of association

4. Other reserves

V. Profit and loss account

BALANCE SHEEET FORMATS

Format 2

Assets

A. Fixed Assets

I. Intangible assets

1. Development costs

2. Concessions, patents, licences, trade marks and similar rights and assets (1)

3. Goodwill (2)

4. Payments on account

II. Tangible assets

1. Land and buildings

2. Plant and machinery

3. Fixtures, fittings, tools and equipment

4. Payments on account and assets in course of construction

III. Financial assets

1. Shares in group companies

2. Loans to group companies

3. Shares in related companies

4. Loans to related companies

5. Other investments other than loans

6. Other loans

7. Own shares (3)

B. Current Assets

I. Stocks

1. Raw materials and consumables

2. Work in progress

3. Finished goods and goods for resale

4. Payments on account

II. Debtors (4)

1. Trade debtors

2. Amounts owed by group companies

3. Amounts owed by related companies

4. Other debtors

5. Called up share capital not paid

6. Prepayments and accrued income

III. Investments

1. Shares in group companies

2. Own shares (3)

3. Other investments

IV. Cash at bank and in hand

Liabilities

A. Capital and reserves

I. Called up share capital (9)

II. Share premium account

III. Revaluation reserve

IV. Other reserves

1. The capital redemption reserve fund

2. Reserve for own shares

3. Reserves provided for by the articles of association

4. Other reserves

V. Profit and loss account

B. Provisions for liabilities and charges

1. Pensions and similar obligations

2. Taxation, including deferred taxation

3. Other provisions

C. Creditors (10)

1. Debenture loans (5)

2. Bank loans and overdrafts

3. Payments received on account (6)

4. Trade creditors

5. Bills of exchange payable

6. Amounts owed to group companies

7. Amounts owed to related companies

8. Other creditors including tax and social welfare (7)

9. Accruals and deferred income (8)

NOTES ON THE BALANCE SHEET FORMATS

(1) Concessions, patents, licences, trade marks and similar rights and assets

(Formats 1 and 2, items A.I.2)

Amounts in respect of assets shall only be included in a company's balance sheet under this item if either—

(a) the assets were acquired for valuable consideration and are not required to be shown under goodwill, or

(b) the assets in question were created by the company itself.

(2) Goodwill

(Formats 1 and 2, items A.I.3)

Amounts representing goodwill shall only be included to the extent that the goodwill was acquired for valuable consideration.

(3) Own shares

(Formats 1 and 2, items A.III.7 and B.III.2)

The nominal value of the shares held shall be shown separately.

(4) Debtors

(Formats 1 and 2, items B.II.1 to 6)

The amount falling due after more than one year shall be shown separately for each item included under debtors.

(5) Debenture loans

(Format 1, item C.1 and F.1 and Format 2, item C.1)

The amount of any convertible loans shall be shown separately.

(6) Payments received on account

(Format 1, items C.3 and F.3 and Format 2, item C.3)

Payments received on account of orders shall be shown for each of these items insofar as they are not shown as deductions from stocks.

(7) Other creditors including tax and social welfare

(Format 1, items C.8 and F.8 and Format 2, item C.8)

The amount for creditors in respect of taxation and social welfare shall be shown separately from the amount for other creditors and in respect of taxation there shall be stated separately the amounts included in respect of income tax payable on emoluments to which Chapter IV of Part V of the Income Tax Act, 1967, applies, any other income tax, corporation tax, capital gains tax, value-added tax and any other tax.

(8) Accruals and deferred income (Format 1, items C. 9 and F. 9 and Format 2, item C. 9)

The amount in respect of Government grants, that is to say, grants made by or on behalf of the Government, included in this item shall be shown separately in a note to the accounts unless it is shown separately in the balance sheet.

(9) Called up share capital

(Format 1, item H.I and Format 2, item A.I)

The amount of allotted share capital and the amount of called up share capital which has been paid up shall be shown separately.

(10) Creditors

(Format 2, items C.1 to 9)

Amounts falling due within one year and after one year shall be shown separately for each of these items and their aggregate shall be shown separately for all of these items.

PROFIT AND LOSS ACCOUNT FORMATS

Format 1 (14)

1. Turnover

2. Cost of Sales (11)

3. Gross Profit or Loss

4. Distribution costs (11)

5. Administrative expenses (11)

6. Other operating income

7. Income from shares in group companies

8. Income from shares in related companies

9. Income from other financial assets (12)

10. Other interest receivable and similar income (12)

11. Amounts written off financial assets and investments held as current assets

12. Interest payable and similar charges (13)

13. Tax on profit or loss on ordinary activities

14. Profit or loss on ordinary activities after taxation

15. Extraordinary income

16. Extraordinary charges

17. Extraordinary profit or loss

18. Tax on extraordinary profit or loss

19. Other taxes not shown under the above items

20. Profit or loss for the financial year

PROFIT AND LOSS ACCOUNT FORMATS

Format 2

1. Turnover

2. Variation in stocks of finished goods and in work in progress

3. Own work capitalised

4. Other operating income

5. (a) Raw materials and consumables

(b) Other external charges

6. Staff costs:

(a) Wages and salaries

(b) Social welfare costs

(c) Other pension costs

7. (a) Depreciation and other amounts written off tangible and intangible fixed assets

(b) Exceptional amounts written off current assets

8. Other operating charges

9. Income from shares in group companies

10. Income from shares in related companies

11. Income from other financial assets (12)

12. Other interest receivable and similar income (12)

13. Amounts written off financial assets and investments held as current assets

14. Interest payable and similar charges (13)

15. Tax on profit or loss on ordinary activities

16. Profit or loss on ordinary activities after taxation

17. Extraordinary income

18. Extraordinary charges

19. Extraordinary profit or loss

20. Tax on extraordinary profit or loss

21. Other taxes not shown under the above items

22. Profit or loss for the financial year

PROFIT AND LOSS ACCOUNT FORMATS

Format 3 (14)

A. Charges

1. Cost of sales (11)

2. Distribution costs (11)

3. Administrative expenses (11)

4. Amounts written off financial assets and investments held as current assets

5. Interest payable and similar charges (13)

6. Tax on profit or loss on ordinary activities

7. Profit or loss on ordinary activities after taxation

8. Extraordinary charges

9. Tax on extraordinary profit or loss

10. Other taxes not shown under the above items

11. Profit or loss for the financial year

B. Income

1. Turnover

2. Other operating income

3. Income from shares in group companies

4. Income from shares in related companies

5. Income from other financial assets (12)

6. Other interest receivable and similar income (12)

7. Profit or loss on ordinary activities after taxation

8. Extraordinary income

9. Profit or loss for the financial year

PROFIT AND LOSS ACCOUNT FORMATS

Format 4

A. Charges

1. Reduction in stocks of finished goods and in work in progress

2. (a) Raw materials and consumables

(b) Other external charges

3. Staff costs

(a) Wages and salaries

(b) Social welfare costs

(c) Other pension costs

4. (a) Depreciation and other amounts written off tangible and intangible fixed assets

(b) Exceptional amounts written off current assets

5. Other operating charges

6. Amounts written off financial assets and investments held as current assets

7. Interest payable and similar charges (13)

8. Tax on profit or loss on ordinary activities

9. Profit or loss on ordinary activities after taxation

10. Extraordinary charges

11. Tax on extraordinary profit or loss

12. Other taxes not shown under the above items

13. Profit or loss for the financial year

B. Income

1. Turnover

2. Increase in stocks of finished goods and in work in progress

3. Own work capitalised

4. Other operating income

5. Income from shares in group companies

6. Income from shares in related companies

7. Income from other financial assets (12)

8. Other interest receivable and similar income (12)

9. Profit or loss on ordinary activities after taxation

10. Extraordinary income

11. Profit or loss for the financial year

NOTES ON THE PROFIT AND LOSS ACCOUNT FORMATS

(11) Cost of sales: Distribution costs: Administrative expenses

(Format 1, items 2, 4 and 5 and Format 3, items A.1, 2 and 3)

These items shall be stated after taking into account any necessary provisions for depreciation or diminution in value of assets.

(12) Income from other financial assets: other interest receivable and similar income

(Format 1, items 9 and 10; Format 2, items 11 and 12; Format 3, items B.5 and 6; Format 4, items B.7 and 8)

Income and interest derived from group companies shall be shown separately from income and interest derived from other sources.

(13) Interest payable and similar charges

(Format 1, item 12; Format 2, item 14; Format 3, item A. 5; Format 4, item A. 7)

The amount payable to group companies shall be shown separately.

(14) Formats 1 and 3

The amounts of any provisions for depreciation and diminution in value of tangible and intangible fixed assets falling to be shown under items 7(a) and A. 4(a), respectively, in Formats 2 and 4 shall be disclosed in a note to the accounts in any case where the profit and loss account is prepared by reference to Format 1 or Format 3.

Part II

HISTORICAL COST RULES IN RELATION TO THE DRAWING UP OF ACCOUNTS

Preliminary

4. Subject to Part III of this Schedule , the amounts to be included in respect of all items shown in a company's accounts shall be determined in accordance with the rules set out in the following paragraphs of this Part.

FIXED ASSETS

General rules

5. Subject to any provision for depreciation or diminution in value made in accordance with paragraph 6 or 7 of this Schedule the amount to be included in respect of any fixed asset shall be its purchase price or production cost.

6. In the case of any fixed asset which has a limited useful economic life, the amount of—

(a) its purchases price or production cost, or

(b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its purchase price or production cost less that estimated residual value,

shall be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset's useful economic life.

7. (1) Where a financial asset of a description falling to be included under item A.III of either of the balance sheet formats set out in Part I of this Schedule has diminished in value, provisions for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly; and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

(2) Provisions for diminution in value shall be made in respect of any fixed asset which has diminished in value if the reduction in its value is expected to be permanent (whether its useful economic life is limited or not) and the amount to be included in respect of it shall be reduced accordingly; and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

(3) Where the reasons for which any provision was made in accordance with subparagraph (1) or (2) of this paragraph have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary; and any amounts written back in accordance with this subparagraph which are not shown in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

Rules for determining particular fixed asset items

8. (1) Notwithstanding that an item in respect of “development costs” is included under “fixed assets” in the balance sheet formats set out in part I of this Schedule , an amount may only be included in a company's balance sheet in respect of that item in special circumstances.

(2) If an amount is included in a company's balance sheet in respect of development costs, the following information shall be given in a note to the accounts—

(a) the period over which the amount of those costs originally capitalised is being or is to be written off, and

(b) the reasons for capitalising the costs in question.

9. (1) The application of paragraphs 5 to 7 of this Schedule in relation to goodwill (in any case where goodwill is treated as an asset) is subject to the following provisions of this paragraph.

(2) Subject to subparagraph (3) of this paragraph, the amount of the consideration for any goodwill acquired by a company shall be reduced by provisions for depreciation calculated to write off that amount systematically over a period chosen by the directors of the company.

(3) The period chosen shall not exceed the useful economic life of the goodwill in question.

(4) In any case where any goodwill acquired by a company is shown or included as an asset in the company's balance sheet, the period chosen for writing off the consideration for that goodwill and the reasons for choosing that period shall be disclosed in a note to the accounts.

CURRENT ASSETS

10. Subject to paragraph 11 of this Schedule the amount to be included in respect of any current asset shall be its purchase price or production cost.

11. (1) If the net realisable value of any current asset is lower than its purchase price or production cost, the amount to be included in respect of that asset shall be the net realisable value.

(2) Where the reasons for which any provision for diminution in value was made under subparagraph (1) of this paragraph have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary.

MISCELLANEOUS

Excess of money owed over value received as an asset item

12. (1) Where the amount repayable on any debt owed by a company is greater than the value of the consideration received in the transaction giving rise to the debt, the amount of the difference may be treated as an asset.

(2) Where any such amount exists—

(a) it shall be written off by reasonable amounts each year and shall be completely written off before repayment of the debt; and

(b) if the amount not written off is not shown as a separate item in the company's balance sheet, it shall be disclosed in a note to the accounts.

Assets included at a fixed amount

13. (1) Subject to subparagraph (2) of this paragraph, assets which fall to be included—

(a) amongst the fixed assets of a company under the item “tangible assets”, or

(b) amongst the current assets of a company under the item “raw materials and consumables”,

may be included at a fixed quantity and value.

(2) Subparagraph (1) of this paragraph applies to assets of a kind which are constantly being replaced, where—

(a) their overall value is not material to assessing the company's state of affairs, and

(b) their quantity, value and composition are not subject to material variation.

Determination of purchase price or production cost

14. (1) The purchase price of an asset shall be determined by adding to the actual price paid any expenses incidential to its acquisition.

(2) The production cost of an asset shall be determined by adding to the purchases price of the raw materials and consumables used the amount of the costs incurred by the company which are directly attributable to the production of that asset.

(3) In addition there may be included in the production cost of an asset—

(a) a reasonable proportion of the costs incurred by the company which are only indirectly attributable to the production of that asset, but only to the extent that they relate to the period of production, and

(b) interest on capital borrowed to finance the production of that asset, to the extent that it accrues in respect of the period of production:

Provided, however, in a case within clause (b) of this subparagraph that the inclusion of the interest in determining the cost of that asset is disclosed in a note to the accounts.

(4) In the case of current assets, distribution costs may not be included in production costs.

15. (1) Subject to the qualification mentioned in this subparagraph, the purchase price or production cost of—

(a) any assets which fall to be included under any item shown in a company's balance sheet under the general item “stocks”, and

(b) any assets which are fungible assets (including investments),

may be determined by the application of any of the methods mentioned in subparagraph (2) of this paragraph in relation to any such assets of the same class.

The method chosen must be one which appears to the directors to be appropriate in the circumstances of the company.

(2) Those methods are:

(a) the method known as “first in, first out” (FIFO),

(b) a weighted average price, and

(c) any other method similar to any of the methods mentioned above.

(3) Where, in the case of any company—

(a) the purchase price or production cost of assets falling to be included under any item shown in the company's balance sheet has been determined by the application of any method permitted by this paragraph, and

(b) the amount shown in respect of that item differs materially from the relevant alternative amount given below in this paragraph,

the amount of that difference shall be disclosed in a note to the accounts.

(4) Subject to subparagraph (5) of this paragraph, for the purposes of subparagraph (3) (b) of this paragraph, the relevant alternative amount, in relation to any item shown in a company's balance sheet, is the amount which would have been shown in respect of that item if assets of any class included under that item at an amount determined by any method permitted by this paragraph had instead been included at their replacement cost as at the balance sheet date.

(5) The relevant alternative amount may be determined by reference to the most recent actual purchase price or production cost before the balance sheet date of assets of any class included under the item in question instead of by reference to their replacement cost as at that date, but only if the former appears to the directors of the company to constitute the more appropriate approach in the case of assets of that class.

(6) For the purpose of this paragraph, assets of any description shall be regarded as fungible if assets of that description are substantially indistinguishable one from another.

Substitution of original stated amount where price or cost unknown

16. Where there is no record of the purchase price or production cost of any asset of a company or of any price, expense or costs relevant for determining its purchase price or production cost in accordance with paragraph 14 of this Schedule or any such record cannot be obtained without unreasonable expense or delay, its purchase price or production cost shall be taken for the purposes of paragraphs 5 to 11 of this Schedule to be the value ascribed to it in the earliest available record of its value made on or after its acquisition or production by the company.

Part III

ALTERNATIVE RULES IN RELATION TO THE DRAWING UP OF ACCOUNTS

Preliminary

17. (1) The rules set out in Part II of this Schedule are referred to subsequently in this Schedule as the historical cost accounting rules.

(2) Those rules, with the omission of paragraphs 4, 9 and 13 to 16, are referred to subsequently in this Part of this Schedule as the depreciation rules; and references subsequently in this Schedule to the historical cost accounting rules do not include the depreciation rules as they apply by virtue of paragraph 20 of this Schedule.

18. Subject to paragraphs 20 to 22 of this Schedule, the amounts to be included in respect of assets of any description mentioned in paragraph 19 of this Schedule may be determined on any basis so mentioned.

Alternative accounting rules

19. (1) Intangible fixed assets, other than goodwill, may be included at their current cost.

(2) Tangible fixed assets may be included at a market value determined as at the date of their last valuation or at their current cost.

(3) Financial fixed assets may be included either—

(a) at a market value determined as at the date of their last valuation; or

(b) at a value determined on any basis which appears to the directors to be appropriate in the circumstances of the company,

but in the latter case particulars of the method of valuation adopted and of the reasons for adopting it shall be disclosed in a note to the accounts.

(4) Investments of any description falling to be included under item B.III of either of the balance sheet formats set out in Part I of this Schedule may be included at their current cost.

(5) Stocks may be included at their current cost.

Application of the depreciation rules

20. (1) Where the value of any asset of a company is determined on any basis mentioned in paragraph 19 of this Schedule, that value shall be, or (as the case may require) be the starting point for determining, the amount to be included in respect of that asset in the company's accounts, instead of its purchase price or production cost or any value previously so determined for that asset; and the depreciation rules shall apply accordingly in relation to any such asset with the substitution for any reference to its purchase price or production cost of a reference to the value most recently determined for that asset on any basis mentioned in the said paragraph 19.

(2) The amount of any provision for depreciation required in the case of any fixed asset by paragraph 6 or 7 of this Schedule as it applies by virtue of subparagraph (1) of this paragraph is referred to below in this paragraph as the adjusted amount; and the amount of any provision which would be required by that paragraph in the case of that asset according to the historical cost accounting rules is referred to as the historical cost amount.

(3) Where subparagraph (1) of this paragraph applies in the case of any fixed asset, the amount of any provision for depreciation in respect of that asset—

(a) included in any item shown in the profit and loss account in respect of amounts written off assets of the description in question; or

(b) taken into account in stating any item so shown which is required by note (11) of the notes on the profit and loss account formats set out in Part I of this Schedule to be stated after taking into account any necessary provisions for depreciation or diminution in value of assets included under it,

may be the historical cost amount instead of the adjusted amount:

Provided that, if the amount of the provision for depreciation is the historical cost amount, the amount of any difference between the two shall be shown separately in the profit and loss account or in a note to the accounts.

Additional information in case of departure from historical cost rules

21. (1) This paragraph applies where the amounts to be included in respect of assets covered by any items shown in a company's accounts have been determined on any basis mentioned in paragraph 19 of this Schedule.

(2) The items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in a note to the accounts.

(3) In the case of each balance sheet item affected (except stocks) either—

(a) the comparable amounts determined according to the historical cost accounting rules, or

(b) the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item,

shall be shown separately in the balance sheet or in a note to the accounts.

(4) In subparagraph (3) of this paragraph, references in relation to any item to the comparable amounts determined as there mentioned are references to—

(a) the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules, and

(b) the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

Revaluation reserve

22. (1) With respect to any determination of the value of an asset of a company on any basis mentioned in paragraph 19 of this Schedule, the amount of any profit or loss arising from that determination (after allowing, where appropriate, for any provisions for depreciation or diminution in value made otherwise than by reference to the value so determined and any adjustments of any such provisions made in the light of that determination) shall be credited or (as the case may be) debited to a separate reserve (referred to in this paragraph as “the revaulation reserve”).

(2) Subparagraph (1) of this paragraph applies in relation to any determination of the value of an asset of a company which takes place before the commencement of this paragraph as it applies to any such determination taking place on or after such commencement.

(3) The amount of the revaluation reserve shall be shown in the company's balance sheet under a separate sub-heading in the position given for the item “revaluation reserve” in Format 1 or 2 of the balance sheet formats set out in Part I of this Schedule .

(4) The revaluation reserve shall be reduced to the extent that the amounts standing to the credit of the reserve are, in the opinion of the directors of the company, no longer necessary for the purpose of the accounting policies adopted by the company; but an amount may only be transferred from the reserve to the profit and loss account if either—

(a) the amount in question was previously charged to that account, or

(b) it represents realised profit.

(5) The treatment for taxation purposes of amounts credited or debited to the revaluation reserve shall be disclosed in a note to the accounts.

Part IV

INFORMATION REQUIRED BY WAY OF NOTES TO ACCOUNTS

Preliminary

23. (1) Any information required in the case of any company by the following provisions of this Part shall (if not given in the company's accounts) be given by way of a note to those accounts.

(2) Notes to a company's accounts may be contained in the accounts or in a separate document annexed to the accounts.

24. The accounting policies adopted by the company in determining the amounts to be included in respect of items shown in the balance sheet and in determining the profit or loss of the company shall be stated (including such policies with respect to the depreciation and diminution in value of assets).

Information supplementing the balance sheet

25. Paragraphs 26 to 37 of this Schedule require information which either supplements the information given with respect to any particular items shown in the balance sheet or is otherwise relevant to assessing the company's state of affairs in the light of the information so given.

Share capital and debentures

26. (1) The following information shall be given with respect to the company's share capital—

(a) the authorised share capital, and

(b) where shares of more than one class have been allotted, the number and aggregate nominal value of shares of each class allotted.

(2) In the case of any part of the allotted share capital that consists of redeemable shares, the following information shall be given—

(a) the earliest and latest dates on which the company has power to redeem those shares,

(b) whether those shares must be redeemed in any event or are liable to be redeemed at the option of the company, and

(c) whether any (and, if so, what) premium is payable on redemption.

27. If the company has allotted any shares during the financial year to which the accounts relate, the following information shall be given—

(a) the reason for making the allotment,

(b) the classes of shares allotted, and

(c) in respect of each class of shares, the number allotted, their aggregate nominal value and the consideration received by the company for the allotment.

28. (1) If the company has issued any debentures during the financial year to which the accounts relate, the following information shall be given—

(a) the reason for making the issue,

(b) the classes of debentures issued, and

(c) in respect of each class of debentures, the amount issued and the consideration received by the company for the issue.

(2) Particulars of any redeemed debentures which the company has power to re-issue shall also be given.

(3) Where any of the company's debentures are held by a nominee of or trustee for the company, the nominal amount of the debentures and the amount at which they are stated in the accounting records kept by the company in accordance with section 147 of the Principal Act shall be stated.

Fixed assets

29. (1) In respect of each item which is or would, but for section 4 (6) (b) of this Act, be shown under the general item “fixed assets” in the company's balance sheet, the following information shall be given—

(a) the appropriate amounts in respect of that item as at the date of the beginning of the financial year and as at the balance sheet date respectively,

(b) the effect on any amount shown in the balance sheet in respect of that item of—

(i) any revision of the amount in respect of any assets included under that item made during that year on any basis mentioned in paragraph 19 of this Schedule,

(ii) acquisitions during that year of any assets,

(iii) disposals during that year of any assets, and

(iv) any transfers of assets of the company to and from that item during that year.

(2) The reference in subparagraph (1) (a) of this paragraph to the appropriate amounts in respect of any item as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of assets falling to be included under that item either—

(a) on the basis of purchase price or production cost (determined in accordance with paragraphs 14 and 15 of this Schedule,) or

(b) on any basis mentioned in paragraph 19 of this Schedule.

(leaving out of account in either case any provisions for depreciation or diminution in value).

(3) In respect of each item within subparagraph (1) of this paragraph—

(a) the cumulative amount of provisions for depreciation or diminution in value of assets included under that item as at each date mentioned in subparagraph (1) (a) of this paragraph,

(b) the amount of any such provisions made in respect of the financial year concerned,

(c) the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any assets, and

(d) the amount of any other adjustments made in respect of any such provisions during that year.

shall be also stated.

30. Where any fixed assets of the company (other than listed investments) are included under any item shown in the company's balance sheet at an amount determined on any basis mentioned in paragraph 19 of this Schedule, the following information shall be given—

(a) the years (so far as they are known to the directors) in which the assets were severally valued and the several values, and

(b) in the case of assets that have been valued during the financial year, the names of the persons who valued them or particulars of their qualifications for doing so and (in either case) the bases of valuation used.

Financial assets and investments held as current assets

31. (1) In respect of the amount of each item which is or would, but for section 4 (6) (b) of this Act, be shown in the company's balance sheet under the general items “financial assets” or “investments, held as current assets” there shall be stated—

(a) how much of that amount is ascribable to listed investments, and,

(b) how much of any amount so ascribable is ascribable to investments as respects which there has been granted a listing on a recognised stock exchange and how much to other listed investments.

(2) Where the amount of any listed investments is stated for any item in accordance with subparagraph (1) (a) of this paragraph, the following amounts shall also be stated—

(a) the aggregate market value of those investments where it differs from the amount so stated, and

(b) both the market value and stock exchange value of any investments of which the former value is, for the purposes of the accounts, taken as being higher than the latter.

Reserves and provisions

32. (1) Where any amount is transferred—

(a) to or from any reserves, or

(b) to any provisions for liabilities and charges, or

(c) from any provision for liabilities and charges otherwise than for the purpose for which the provision was established,

and the reserves or provisions are or would, but for section 4 (6) (b) of this Act, be shown as separate items in the company's balance sheet, the information mentioned in subparagraph (2) of this paragraph shall be given in respect of the aggregate of reserves or provisions included in the same item.

(2) That information is—

(a) the amount of the reserves or provisions as at the date of the beginning of the financial year and as at the balance sheet date respectively,

(b) any amount transferred to or from the reserves or provisions during that year, and

(c) the source and application respectively of any amounts so transferred.

(3) Particulars shall be given of each provision included in the item “other provisions” in the company's balance sheet in any case where the amount of that provision is material.

Provision for taxation

33. The amount of any provision for taxation other than deferred taxation shall be stated.

Details of indebtedness

34. (1) In respect of each item shown under “creditors” in the company's balance sheet there shall be stated—

(a) the aggregate amount of any debts included under that item which are payable or repayable otherwise than by instalments and fall due for payment or repayment after the end of the period of five years beginning with the day next following the end of the financial year,

(b) the aggregate amount of any debts so included which are payable or repayable by instalments any of which fall due for payment after the end of that period,

(c) the aggregate amount of any debts included under that item in respect of which any security has been given, and

(d) an indication of the nature of the securities so given,

and, in the case of debts within clause (b) of this subparagraph, the aggregate amount of instalments falling due after the end of that period shall also be disclosed for each such item.

(2) References in subparagraph (1) of this paragraph to an item shown under “creditors” in the company's balance sheet include references, where amounts falling due to creditors within one year and after more than one year are distinguished in the balance sheet—

(a) in a case within subparagraph (1) (a) of this paragraph, to an item shown under the latter of those categories, and

(b) in a case within subparagraph (1) (d) of this paragraph, to an item shown under either of those categories,

and references to items shown under “creditors” include references to items which would, but for section 4 (6) (b) of this Act, be shown under that heading.

35. If any fixed cumulative dividends on the company's shares are in arrears, there shall be stated—

(a) the amount of the arrears, and

(b) the period for which the dividends or, if there is more than one class, each class of them are in arrears.

Guarantees and other financial commitments

36. (1) Particulars shall be given of any charge on the assets of the company to secure the liabilities of any other person, including, where practicable, the amount secured.

(2) The following information shall be given with respect to any other contingent liability not provided for—

(a) the amount or estimated amount of that liability.

(b) its legal nature, and

(c) whether any valuable security has been provided by the company in connection with that liability and, if so, what.

(3) There shall be stated, where practicable—

(a) the aggregate amount or estimated amount of contracts for capital expenditure, so far as not provided for, and

(b) the aggregate amount or estimated amount of capital expenditure authorised by the directors which has not been contracted for.

(4) Particulars shall be given of:

(a) any pension commitments included under any provision shown in the company's balance sheet, and

(b) any such commitments for which no provision has been made,

and, where any such commitment relates wholly or partly to pensions payable to past directors of the company, separate particulars shall be given of that commitment so far as it relates to such pensions.

(5) The following information shall also be given:

(a) the nature of every pension scheme operated by or on behalf of the company including information as to whether or not each scheme is a defined benefit scheme or a defined contribution scheme,

(b) whether each such scheme is externally funded or internally financed,

(c) whether any pension costs and liabilities are assessed in accordance with the advice of a professionally qualified actuary and, if so, the date of the most recent relevant actuarial valuation,

(d) whether and, if so, where any such actuarial valuation is available for public inspection.

(6) Particulars shall also be given of any other financial commitments which—

(a) have not been provided for, and

(b) are relevant to assessing the company's state of affairs.

(7) Commitments within any of the preceding subparagraphs undertaken on behalf of or for the benefit of—

(a) any holding company or fellow subsidiary of the company, or

(b) any subsidiary of the company,

shall be stated separately from the other commitments within that subparagraph (and commitments within clause (a) of this subparagraph shall also be stated separately from those within clause (b) of this subparagraph).

Miscellaneous matters

37. (1) Particulars shall be given of any case where the purchase price or production cost of any assets is for the first time determined under paragraph 16 of this Schedule.

(2) The aggregate amount of any outstanding loans permitted by section 60 of the Principal Act, as amended by the Act of 1983 (other than loans to which subsection (13) (a) of that section refers), shall be shown, indicating separately loans permitted by paragraphs (b) and (c) of the said subsection (13).

(3) The aggregate amount which is recommended for distribution by way of dividend shall be stated.

Information supplementing the profit and loss account

38. Paragraphs 39 to 43 of this Part require information which either supplements the information given with respect to any particular items shown in the profit and loss account or otherwise provides particulars of income or expenditure of the company or of circumstances affecting the items shown in the profit and loss account.

Separate statement of certain items of income and expenditure

39. (1) Subject to the following provisions of this paragraph, each of the amounts mentioned in subparagraphs (2) to (6) of this paragraph shall be stated.

(2) The amount of interest on or any similar charges in respect of—

(a) bank loans and overdrafts, and loans made to the company (other than bank loans and overdrafts) which—

(i) are repayable otherwise than by instalments and fall due for repayment before the end of the period of five years beginning with the day next following the end of the financial year of the company, or

(ii) are repayable by instalments the last of which falls due for payment before the end of that period, and

(b) loans of any other kind made to the company.

This subparagraph does not apply to interest or charges on loans to the company from group companies, but, with that exception, it applies to interest or charges on all loans, whether made on the security of debentures or not.

(3) The amounts respectively provided for redemption of share capital and for redemption of loans.

(4) The amount of income from listed and unlisted investments.

(5) The amount of the remuneration of the auditors (including any sums paid by the company in respect of the auditors' expenses).

(6) The aggregate amounts of the emoluments of, and compensation in respect of loss of office to, directors and compensation in respect of loss of office to past-directors.

Particulars of tax

40. (1) The basis on which the charge for corporation tax, income tax and other taxation on profits (whether payable in or outside the State) is computed shall be stated.

(2) Particulars shall be given of any special circumstances which affect liability in respect of taxation on profits, income or capital gains for the financial year concerned or liability in respect of taxation of profits, income or capital gains for succeeding financial years.

(3) The amount of the charge for corporation tax, income tax and other taxation on profits or capital gains, so far as charged to revenue, including taxation payable outside the State on profits (distinguishing where practicable between corporation tax and other taxation) shall be stated.

These amounts shall be stated separately in respect of each of the amounts which is or would, but for section 4 (6) (b) of this Act, be shown under the following items in the profit and loss account, that is to say, “tax on profit or loss on ordinary activities” and “tax on extraordinary profit or loss”.

Particulars of turnover

41. (1) If in the course of the financial year, the company has carried on business of two or more classes which, in the opinion of the directors, differ substantially from each other, there shall be stated in respect of each class (describing it) the amount of the turnover attributable to that class.

(2) If, in the course of the financial year, the company has supplied markets which, in the opinion of the directors, differ substantially from each other, the amount of the turnover attributable to each such market shall also be stated.

In this subparagraph “market” means a market delimited in a geographical manner.

(3) In analysing for the purposes of this paragraph the source (in terms of business or in terms of market) of turnover, the directors of the company shall have regard to the manner in which the company's activities are organised.

(4) For the purpose of this paragraph—

(a) classes of business which, in the opinion of the directors, do not differ substantially from each other shall be treated as one class, and

(b) markets which, in the opinion of the directors, do not differ substantially from each other shall be treated as one market,

and any amounts properly attributable to one class of business or (as the case may be) to one market which are not material may be included in the amount stated in respect of another.

(5) Where in the opinion of the directors the disclosure of any information required by this paragraph would be seriously prejudicial to the interests of the company, that information need not be disclosed, but the fact that any such information has not been disclosed must be stated.

Particulars of staff

42. (1) The following information shall be given with respect to the employees of the company—

(a) the average number of persons employed by the company in the financial year, and

(b) the average number of persons employed within each category of persons employed by the company.

(2) In respect of all persons employed by the company during the financial year who are taken into account in determining the relevant annual number for the purposes of subparagraph (1) (a) of this paragraph, there shall also be stated the aggregate amounts respectively of—

(a) wages and salaries paid or payable in respect of that year to those persons,

(b) social welfare costs incurred by the company on their behalf, and

(c) other pension costs so incurred,

save insofar as these amounts or any of them are stated in the profit and loss account.

(3) The categories of persons employed by the company by reference to which the number required to be disclosed by subparagraph (1) (b) of this paragraph is to be determined shall be such as the directors may select, having regard to the manner in which the company's activities are organised.

(4) (a) For the purposes of clauses (a) and (b) of subparagraph (1) of this paragraph, the average number of persons employed by a company shall be determined by dividing the relevant annual number by the number of weeks in the financial year of the company.

(b) For the purposes of this subparagraph, the relevant annual number shall be determined by ascertaining for each week in the financial year of the company concerned—

(i) in the case of the said clause (a), the number of persons employed under contracts of service by the company in that week (whether throughout the week or not), and

(ii) in the case of the said clause (b), the number of persons in the category in question of persons so employed,

and, in either case, adding together all the weekly numbers.

Miscellaneous matters

43. (1) Where any amount relating to any preceding financial year is included in any item in the profit and loss account, the effect shall be stated.

(2) Particulars shall be given of any extraordinary income or charges arising in the financial year.

(3) The effect shall be stated of any transactions that are exceptional by virtue of size or incidence notwithstanding the fact that they fall within the ordinary activities of the company.

(4) Any amount expended on research and development in the financial year, and any amount committed in respect of research and development in subsequent years, shall be stated.

(5) Where, in the opinion of the directors, the disclosure of any information required by subparagraph (4) of this paragraph would be prejudicial to the interests of the company, that information need not be disclosed, but the fact that any such information has not been disclosed shall be stated.

General

44. (1) Where sums originally denominated in foreign currencies have been brought into account under any items shown in the balance sheet or profit and loss account, the basis on which those sums have been translated into Irish currency shall be stated.

(2) In respect of every balance sheet or profit and loss account item which would, but for its inclusion in a note to the accounts, be shown in the balance sheet or profit and loss account format set out in Part I of this Schedule and chosen pursuant to section 4 of this Act, there shall also be shown in a note to the accounts the corresponding amount for the financial year immediately preceding that to which the accounts relate and where the corresponding amount is not comparable by reason of—

(a) a change in accounting policy in the current financial year, or

(b) a fundamental error in the accounts of an earlier financial year,

it shall be adjusted and particulars of the adjustment and the reasons for it shall be given.

(3) Subparagraph (2) of this paragraph does not apply in relation to any amount stated by virtue of paragraphs 29 and 32 of this Schedule.

Part V

SPECIAL PROVISIONS WHERE A COMPANY IS A HOLDING COMPANY OR SUBSIDIARY

Company's own accounts

45. (1) This Part applies where the company is a holding company, whether or not it is itself a subsidiary of another body corporate, but paragraphs 54 and 55 of this Schedule do not apply to a private company taking advantage of section 154 of the Principal Act nor to a company which is at the end of its financial year the wholly owned subsidiary of another body corporate incorporated in the State.

(2) Where a company is a holding company or a subsidiary of another body corporate and any item required by Part I of this Schedule to be shown in the company's balance sheet, in relation to group companies, includes—

(a) amounts attributable to dealings with or interests in any holding company or fellow subsidiary of the company, or

(b) amounts attributable to dealings with or interests in any subsidiary of the company,

the aggregate amounts within paragraphs (a) and (b) of this subparagraph, respectively, shall be shown as separate items, either by way of subdivision of the relevant item in the balance sheet or in a note to the company's accounts.

46. (1) Subject to subparagraph (2) of this paragraph, where the company is a holding company, the number, description and amount of the shares in and debentures of the company held by its subsidiaries or their nominees shall be disclosed in a note to the company's accounts.

(2) Subparagraph (1) of this paragraph does not apply in relation to any shares or debentures—

(a) in the case of which the subsidiary is concerned as personal representative, or

(b) in the case of which it is concerned as trustee:

Provided that in the latter case neither the company nor a subsidiary of the company is beneficially interested under the trust, otherwise than by way of security only for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

Consolidated accounts of holding company and subsidiaries

47. Subject to paragraph 49 of this Schedule, the consolidated balance sheet and profit and loss account shall combine the information contained in the separate balance sheets and profit and loss accounts of the holding company and of the subsidiaries dealt with by the consolidated accounts, but with such adjustments, if any, as the directors of the holding company think necessary.

48. (1) Subject to paragraphs 49 to 51 of this Schedule and to Part VI of this Schedule , the consolidated accounts shall, in giving the said information, comply so far as practicable, with the requirements of this Schedule and the other requirements of the Companies Acts, 1963 to 1986, as if they were the accounts of an actual company.

(2) This paragraph is without prejudice to any requirement of the Companies Acts, 1963 to 1986, which applies (otherwise than by virtue of paragraph 47 of this Schedule and subparagraph (1) of this paragraph) to group accounts.

49. The following provisions shall not, by virtue of paragraphs 47 and 48 of this Schedule, apply for the purpose of the consolidated accounts—

(a) sections 191 and 192 of the Principal Act, and

(b) paragraphs (iii) and (iv) of section 16 (1) of this Act.

50. (1) Notwithstanding paragraph 48 of this Schedule the consolidated accounts prepared by a holding company may, at the discretion of the directors, deal with an investment of any member of the group in the shares of any other body corporate by way of the equity method of accounting in any case where it appears to the directors of the holding company that that other body corporate is so closely associated with any member of the group as to justify the use of that method in dealing with investments by that or any other member of the group in the shares of that other body corporate.

(2) In this paragraph, references to the group, in relation to consolidated accounts prepared by a holding company, are references to the holding company and the subsidiaries dealt with by the accounts.

51. Paragraphs 5 to 7 and 9 of this Schedule may be applied to any amount shown in the consolidated balance sheet in respect of goodwill arising on consolidation.

52. In relation to any subsidiaries of the holding company not dealt with by the consolidated accounts, paragraphs 45 and 46 of this Schedule shall apply for the purpose of those accounts as if those accounts were the accounts of an actual company of which they were subsidiaries.

Group accounts not prepared as consolidated accounts

53. Group accounts which are not prepared as consolidated accounts, together with any notes to those accounts, shall give the same or equivalent information as that required to be given by consolidated accounts by virtue of paragraphs 47 to 51 of this Schedule.

Provisions of general application

54. (1) This paragraph applies where a company is a holding company and either—

(a) does not prepare group accounts, or

(b) prepares group accounts which do not deal with one or more of its subsidiaries,

and references in this paragraph to subsidiaries shall be read in a case within clause (b) of this subparagraph as references to such of the subsidiaries of the company concerned as are excluded from the group accounts.

(2) Subject to the following provisions of this paragraph—

(a) the reasons why subsidiaries are not dealt with in group accounts, and

(b) a statement showing any qualifications contained in the reports of the auditors of the subsidiaries on their accounts for their respective financial years ending with or during the financial year of the company, and any note or saving contained in those accounts to call attention to a matter which, apart from the note or saving, would properly have been referred to in such a qualification, insofar as the matter which is the subject of the qualification or note is not covered by the company's own accounts and is material from the point of view of its members.

shall be given in a note to the company's accounts.

(3) Subject to the following provisions of this paragraph, the aggregate amount of the total investment of the holding company in the shares of subsidiaries shall be stated in note to company's accounts by way of the equity method of valuation.

(4) Insofar as information required by any of the preceding provisions of this paragraph to be stated in a note to the company's accounts is not obtainable, a statement to that effect shall be given instead in a note to those accounts.

(5) Where in any case within subparagraph (1) (b) of this paragraph the group accounts are consolidated accounts, references in the preceding subparagraphs of this paragraph to the company's accounts shall be read as references to the consolidated accounts.

55. Where a company has subsidiaries whose financial years did not end with that of the company, the following information shall be given in relation to each such subsidiary (whether or not dealt with in any group accounts prepared by the company) by way of a note to the company's accounts or (where group accounts are prepared) to the group accounts, that is to say—

(a) the reasons why the company' directors consider that the subsidiaries' financial years should not end with that of the company, and

(b) the dates on which the subsidiaries financial years ending last before that of the company respectively ended or the earliest and latest of those dates.

Part VI

SPECIAL PROVISIONS WHERE A COMPANY IS AN INVESTMENT COMPANY

56. (1) Paragraph 22 of this Schedule shall not apply to the amount of any profit or loss arising from a determination of the value of any investments of an investment company on any basis mentioned in paragraph 19 (3) of this Schedule.

(2) Any provisions made by virtue of subparagraph (1) or (2) of paragraph 7 of this Schedule in the case of an investment company in respect of any fixed asset investments need not be charged to the company's profit and loss account if they are either—

(a) charged against any reserve account to which any amount excluded by subparagraph (1) of this paragraph from the requirements of the said paragraph 22 has been credited, or

(b) shown as a separate item in the company's balance sheet under the sub-heading “other reserves”.

(3) For the purposes of this paragraph as it applies in relation to any company, “fixed asset investment” means any asset falling to be included under any item shown in the company' balance sheet under the subdivision “financial assets” under the general item “fixed assets”.

57. Any distribution made by an investment company which reduces the amount of its net assets to less than the aggregate of its called-up share capital and undistributable reserves shall be disclosed in a note to the company's accounts.

58. A company shall be treated as an investment company for the purposes of this Part in relation to any financial year of the company if—

(a) during the whole of that year, it was an investment company within the meaning of Part IV of the Act of 1983,

(b) it was not at any time during that year prohibited by section 47 of that Act from making a distribution.

59. Where a company entitled to the benefit of any provision contained in this Part is a holding company, the reference in paragraph 48 of this Schedule to consolidated accounts complying with the requirements of the Companies Acts, 1963 to 1986, shall, in relation to consolidated accounts of that company, be construed as referring to those requirements insofar only—

(a) as they apply to the separate accounts of that company, and

(b) as they apply otherwise than by virtue of paragraphs 47 and 48 of this Schedule to any group accounts prepared by that company.

Part VII

INTERPRETATION OF SCHEDULE

Assets: fixed or current

60. For the purposes of this Schedule, assets of a company shall be taken to be fixed assets if they are intended for use on a continuing basis in the company's activities, and any assets not intended for such use shall be taken to be current assets.

Balance sheet date

61. For the purposes of this Schedule, “balance sheet date”, in relation to a balance sheet, means the date as at which the balance sheet was prepared.

Capitalisation

62. References in this Schedule to capitalising any work or costs are references to treating that work or those costs as a fixed asset.

Fellow subsidiary

63. For the purposes of this Schedule, a body corporate shall be treated as a fellow subsidiary of another body corporate if both are subsidiaries of the same body corporate but neither is the other's.

Group companies

64. For the purposes of this Schedule, “group company”, in relation to any company, means any body corporate which is that company's subsidiary or a holding company, or a subsidiary of that company's holding company.

Historical cost accounting rules

65. References in this Schedule to the historical cost accounting rules shall be read in accordance with paragraph 17 of this Schedule.

Listed investments

66. In this Schedule, “listed investments” means an investment as respects which there has been granted a listing on a recognised stock exchange within the State or on any stock exchange of repute outside the State.

Loans

67. For the purposes of this Schedule, a loan shall be treated as falling due for payment, and an instalment of a loan shall be treated as falling due for payment, on the earliest date on which the lender could require repayment or (as the case may be) payment, if he exercised all options and rights available to him.

Materiality

68. Amounts which in the particular context of any provision of this Schedule are not material may be disregarded for the purposes of that provision.

Provisions

69. (1) References in this Schedule to provisions for depreciation or diminution in value of assets are references to any amount written off by way of providing for depreciation or diminution in value of assets.

(2) Any reference in the profit and loss account formats set out in Part I of this Schedule to the depreciation of, or amounts written off, assets of any description is a reference to any provision for depreciation or diminution in value of assets of that description.

70. References in this Schedule to provisions for liabilities or charges are references to any amount retained as reasonably necessary for the purpose of providing for any liability or loss which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

Purchase price

71. References in this Schedule (however expressed) to the purchase price of an asset of a company or of any raw materials or consumables used in the production of any such asset shall be read as including references to any consideration (whether in cash or otherwise) given by the company in respect of that asset or in respect of those materials or consumables (as the case may require).

Realised profits

72. Without prejudice to—

(a) the construction of any other expression by reference (where appropriate) to accepted accounting principles or practice, or

(b) any specific provision for the treatment of profits of any description as realised,

it is hereby declared for the avoidance of doubt that references in this Schedule to realised profits, in relation to a company's accounts, are references to such profits of the company as fall to be treated as realised profits for the purposes of those accounts in accordance with principles generally accepted with respect to the determination for accounting purposes of realised profits at the time when those accounts are prepared.

Related companies

73. (1) For the purposes of this Schedule, “related company”, in relation to any company, means any body corporate (other than one which is a group company in relation to that company) in which that company holds on a long term basis a qualifying capital interest for the purpose of securing a contribution to that company's own activities by the exercise of any control or influence arising from that interest.

(2) In this paragraph—

“qualifying capital interest” in relation to any body corporate, means an interest in shares comprised in the equity share capital of that body corporate of a class carrying rights to vote in all circumstances at general meetings of that body corporate;

“equity share capital” has the meaning assigned to it by section 155 (5) of the Principal Act.

(3) Where—

(a) a company holds a qualifying capital interest in a body corporate, and

(b) the nominal value of any such shares in that body corporate held by that company as are mentioned in subparagraph (2) of this paragraph is equal to twenty per cent. or more of the nominal value of all such shares in that body corporate as are mentioned in subparagraph (2) of this paragraph,

it shall be presumed to hold that interest on the basis and for the purpose mentioned in subparagraph (1) of this paragraph unless the contrary is shown.

Staff costs

74. In this Schedule—

“social welfare costs” means any contribution by a company to any state social welfare, social security or pension scheme, fund or arrangement, being a fund or arrangement connected with such a scheme, and “social welfare” means any such scheme fund or arrangement;

“pension costs” include any other contributions by a company for the purposes of any pension scheme established for the purpose of providing pensions for persons employed by the company, any sums set aside for that purpose and any amounts paid by the company in respect of pensions without first being so set aside;

and any amount stated in respect of either of the above items or in respect of the item “wages and salaries” in a company's profit and loss account shall be determined by reference to payments made or costs incurred in respect of all persons employed by the company during the financial year concerned who are taken into account in determining the relevant annual number for the purposes of paragraph 42 (1) (a) of this Schedule.

Turnover

75. For the purposes of this Schedule, “turnover”, in relation to any company, means the amounts derived from the provision of goods and services falling within the company's ordinary activities, after deduction of—

(a) trade discounts,

(b) value-added tax, and

(c) any other taxes based on the amounts so derived.

Wholly-owned Subsidiaries

76. A body corporate shall be deemed for the purposes of this Schedule to be a wholly-owned subsidiary of another if it would be so deemed for the purposes of section 150 of the Principal Act.

Council Directive No. 78/660/EEC (OJ No. L 222 of 14.8.1978).