Question:
For private unlimited companies can they apply for audit exemptions and if so do they need to file financial statements if the UBO are individuals and not held directly or indirectly by a limited liability undertaking? Does Section 78 of the Companies Accounting Act 2017 apply?
Is my understanding correct that if an entity is a non-designated private unlimited company (ie it is owned by two individuals) then they can claim an audit exemption once they meet the criteria and are also exempt from filing financial statements. Section 1277 of the Companies Act set outs the documents required to be annexed to the B1 and so if they continue to meet the criteria for the audit exemptions then under the terms of Section 1277(5) of the Companies Act, the company can claim an audit exemption and file a B1 with no accounts? If they are not claiming the audit exemption, then does Section 1277(1) apply and an auditors report must be attached to the B1 confirming the auditors have audited the financial statements etc but no financial statements?
Answer:
There is nothing to stop a designated or non-designated ULC availing of the audit exemption, provided the normal conditions are met- if you need guidance on this please provide information on size etc and I can give guidance on this.
Assuming your entity does not meet the definition of a designated ULC- defined below- they can avail of the reduced filing requirements allowed under S.1277 of CA 14
(a) an ULC that at any time during the relevant financial year—
(i) has been a subsidiary undertaking of an undertaking which was at that time limited,
(ii) has had rights exercisable in respect of it by or on behalf of 2 or more undertakings which were at that time limited, being rights which if exercisable by one of the undertakings would have made the ULC a subsidiary undertaking of it, or
(iii) has been a holding company of an undertaking which was at that time limited ****
(b) an ULC which is a credit institution or an insurance undertaking or the holding company of a credit institution or an insurance undertaking,
(c) an ULC, all of the members of which are—
(i) companies limited by shares or by guarantee,
(ii) unlimited companies, each of whose members is a limited company,
(iii) partnerships which are not limited partnerships, each of whose members is a limited company,
(iv) limited partnerships, each of whose general partners (within the meaning of the Limited Partnerships Act 1907) is a limited company, or
(v) any combination of the types of bodies referred to in the preceding subparagraphs of this paragraph and paragraph (a), or
(d) an ULC, the direct or indirect members of which comprise any combination of ULCs and bodies referred to in paragraph (c) such that the ultimate beneficial owners enjoy the protection of limited liability.
If audit exempt and a non-designated ULC then the non-designated ULC files a B1 with no accounts.
If audit exemption is not claimed for the non-designated ULC then the B1 and S.1277 audit report should be filed.