Companies Act 2014 section 1377

Certain exemptions from consolidation of financial statements not available to traded company

Section 1377 restricts the availability of certain exemptions from preparing consolidated financial statements where the company in question is a traded company.

• Sections 299 and 300 of the Companies Act 2014 allow certain holding companies that are themselves subsidiaries to claim exemption from preparing consolidated (group) financial statements, provided specific conditions are met.
• Section 1377 adds an extra condition for traded companies: a lower holding company cannot avail of the consolidation exemption if it has any shares, debentures, or other debt securities admitted to trading on a regulated market in an EEA state.
• This restriction applies equally whether the higher parent undertaking is registered within the EEA (section 299) or outside the EEA (section 300).
• The effect is that traded companies with securities listed on a regulated EEA market must always prepare consolidated financial statements and cannot rely on the subsidiary holding company exemptions.