Company accounts for UK public companies after Brexit

There are new accounting rules after Brexit when comes to prepare company accounts for UK public companies both with listing in the UK and in the EU. These rules apply from 01 January 2021 onward.

Generally, your company must adopt the UK adopted IAS for the accounting period beginning on or after 1 January 2021. You would say goodbye to the EU adopted IAS. IAS stands for International Accounting Standards. Both sets of accounting standards are the same at the moment. However, there may be differences later when UK updated the UK adopted IAS.

UK public companies with a UK listing

All UK public companies and groups with shares listed in the London Stock Exchange must prepare accounts using the UK adopted IAS. This rule applies to your company accounts with the accounting period starting on or after 01 January 2021.

However, you have the option to prepare your company accounts using the EU adopted IAS if you wish. This option only available to you for accounts beginning on or before 01 January 2021.

If you are going to use the EU adopted IAS for your accounts then change over to the UK adopted IAS, in this case, you do not have to restate your accounts after 01 January 2021.

UK companies with an EEA listing

If your public limited company has a subsidiary incorporated in the EU with an EEA listing, you must ensure you do both of the following:

First, you must comply with the rules of the country where your subsidiary is located.

Second, you must produce company accounts that comply with the UK Companies Act 2006.

If you have any questions about company accounts for UK public companies after Brexit, contact Companies House. Alternatively, speak with our London accountants.

Another important document, your public limited company must deliver to Companies House is your confirmation statement.

Admission to Stock Exchange

Public limited company must comply with the Admission to Stock Exchange listing rules before they are allowed to trade their shares publicly.

Your public limited company must provide information which satisfies the listing requirements. In this case, the Financial Services Authority set the rules and also governs public companies in the United Kingdom.

The Financial Services Authority is acting as the United Kingdom Listing Authority or UKLA.

Overall, there are two types Stock Exchange markets in the United Kingdom. The Senior Equity Market and the Alternative Investment Market (AIM).

Senior Equity Market

The Senior Equity Market is for larger public companies. It is also known as the Official List.

Alternative Investment Market

The Alternative Investment Market is the secondary stock market. It is opened to smaller companies in the United Kingdom.

Ordinarily, your public limited company must meet the following criteria in order to be eligible for admission to stock exchange in London.

Firstly, your company must be registered as a public limited company. Secondly, it must intend to place on the market shares which are expected to have a market value of £700,000 or more.

3 years preceding company accounts

Your company must have filed 3 years company accounts previously with Companies House. In addition, your company accounts must be audited. Preferably with unqualified audit report attached.

To put it simply, your company will not be admitted to stock exchange if it has not filed accounts covering three years preceding to your application for listing in the Stock Exchange.

Approved Sponsors

Most importantly, your directors must consider that your company is financially viable. Furthermore, your company must have sufficient working capital.

This admission requirement is satisfied by your Approved Sponsor to the issue. Usually, a merchant bank or stockbroker with overall responsibility for arranging the issue. This includes sending a letter to the United Kingdom Listing Authority stating that your directors have made careful enquiries to satisfy themselves and the Approved Sponsor that the working capital is indeed adequate.

The final principal admission requirement is that your company intend that at least 25% of any class of shares will be in the hands of the public. This is a must and it is spelled out in The Listing Rules.

Prospectus

Thereafter, your company must also satisfy the listing particulars requirements. Subsequently, your company must prepare and publish a prospectus which complies with Chapter 5 and 6 of The Listing Rules.

Correspondingly, you company must publish the following information.

  • Information on the shares which are to be listed.
  • Your share or loan capital.
  • Principal activities.
  • Place of business and employees.
  • Company’s finances. In the form of balance sheet and profit and loss accounts for the last three years. Also, management and on trends in the company’s business.

On the other hand, your company need to include a statement in your prospectus that your company accounts have been audited for the last three financial years. Furthermore, the people responsible for the prospectus need to make a declaration. To the effect that to the best of their knowledge, the information given in that part of the prospectus for which they are responsible is in accordance with the facts and contains no admissions likely to affect the import of the prospect us.

Additionally, you must also disclose if there is changes in your auditors in the previous three years. In this case, the details of audit options, tax clearances, and the terms of the directors’ service contracts.

Above all, your information in the prospectus should not be misleading, false or deceptive. Otherwise, your public limited company will incur both civil and criminal liability under the Financial Services and Markets Act 2000 if evidence supporting materials errors on the prospectus is established. In other words, do not even try to mislead your potential investors and manipulate the information on your prospectus.

Public Limited Company obligations

Public limited company (PLC) obligations continue after admission to Stock Exchange. Thus, your PLC must continue to comply with the listing rules. The United Kingdom Listing Authority requires PLC to comply Chapter 9 of the Listing Rules at all times.

UKLA Rules to follow

Your public limited company obligations include:

  • Avoid a false market in your company’s shares.
  • Give notice of the date of a board meeting at which your directors will decide on the payment of dividends and their decision.
  • Announce preliminary profits and losses for the year once your board of directors has given approval for the figures.
  • Publish information about certain acquisitions and realisations of assets including the purchase by your company of its own shares.
  • Comply with the detailed provisions of the Listing Rules as to the content of your company’s annual report and accounts which includes your obligation to prepare half-yearly company accounts.
  • Give details of any changes in the board of directors, as well as adopting rules on dealings by your directors in your company’s shares which contained in the Model Code on directors’ dealings as spell out in The Listing Rule 9. The code prevents directors from abusing their position and insiders dealing.

Public limited company obligations with Companies House

In addition, your PLC must also deliver audited company accounts and financial statements to Companies House. Accordingly, your audited company accounts must reach Companies House within six months after your accounting year ended. Otherwise, your PLC will receive an automatic late filing penalty. The penalty starts from £750 to £7500.

Another compulsory filing your PLC must file is the Confirmation statement.

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