Companies Act 2014 section 298

Application of section 297 in certain circumstances and cessation of exemption

Section 298 deals with how a newly formed holding company qualifies for the small group exemption from preparing consolidated financial statements, and when that exemption ceases to apply.

• The "group requirement being met" means the holding company and all its subsidiary undertakings, taken together, satisfy at least two of the three size conditions in section 297(3).
• A new holding company may claim the small group exemption in its first financial year if the group requirement is met for that year.
• Once qualified, the holding company continues to enjoy the exemption unless the group requirement is not met in both its latest financial year and the immediately preceding financial year.
• In effect, a holding company only loses the exemption after failing the group size test for two consecutive years.