S.314 – Information on Related Undertakings

Section 314 (1), CA 2014 notes what information is required to be disclosed and notes that where at the end of a financial year, a company;

-has a subsidiary undertaking, or
-holds an interest in any class of equity shares equal to 20 per cent or more of all such interests (in that class) in an undertaking that is not its subsidiary undertaking (in this section referred to as an “undertaking of substantial interest”),

a note shall be included in the statutory financial statements of the company for that year distinguishing between the subsidiary undertakings and the undertakings of substantial interest and giving the following information in relation to them:

(i) the name and registered office or, if there is no registered office, the principal place of business of each subsidiary undertaking or undertaking of substantial interest 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 undertaking or undertaking of substantial interest and the proportion of the nominal value of the allotted shares in the subsidiary undertaking or undertaking of substantial interest of each such class represented by the shares of that class held by the company;
(iii) the aggregate amount of the net assets of each subsidiary undertaking or undertaking of substantial interest as at the end of the financial year of the subsidiary undertaking or undertaking of substantial interest ending with or last before the end of the financial year of the company to which the statutory financial statements relate; and
(iv) the profit or loss of the subsidiary undertaking or undertaking of substantial interest for its financial year identified in paragraph (iii).

Section 314 (2A) notes that a company that qualifies for the small companies regime or for the micro companies regime shall be exempt from the requirements of this section.

S.315 – Information on Related Undertakings: Exemption From Disclosures

Section 315 CA 2014 contains a number of exemptions in relation to disclosure of the information on related undertakings required by paragraphs (iii) (net assets) and (iv) (profit or loss) of section 314(1) above.

This information need not be given in statutory financial statements;

a. in respect of a subsidiary undertaking of a company, if the company prepares group financial statements and either;
-the subsidiary undertaking is consolidated in the statutory financial statements prepared by the company, or
-the interest of the company in the equity shares of the subsidiary undertaking is included in or in a note to the company’s statutory financial statements by way of the equity method of accounting,

or

b. in respect of a subsidiary undertaking of a company, if the company is exempt from the requirement to prepare group financial statements because it is relying on the consolidated accounts of a higher holding undertaking in accordance with section 299 or 300 or in accordance with IFRS, and either;
-the subsidiary undertaking is consolidated in the consolidated accounts of the higher holding undertaking, or
-the interest of the company in the equity shares of the subsidiary undertaking is included in or in a note to the higher holding undertaking’s consolidated accounts by way of the equity method of accounting,

or

c. in respect of an undertaking of substantial interest of a company, if the interest in the equity shares of the undertaking of substantial interest is included in or in a note to the company’s statutory financial statements by way of the equity method of accounting,

or

d. in respect of an undertaking of substantial interest of a company, if the undertaking is not required to publish its balance sheet,

or

e. in relation to any undertaking, if the information required by paragraphs (iii) and (iv) of section 314(1) is not material to the true and fair view given by the statutory financial statements.