Companies Act 2014 section 364

Audit exemption (group situation) not available unless annual return filed in time

Section 364 provides that a holding company and its group members cannot claim audit exemption in a group situation unless all members of the group have filed their annual returns on time with the Registrar.

• If any member of the group fails to file its annual return on time with the Registrar (with the required financial statements annexed), the entire group loses audit exemption for the two financial years following the year of the late filing.
• A "relevant body" means the holding company or any other member of the group that is a company registered under the Companies Act 2014 or an existing company.
• Subsidiary undertakings that are not registered companies under the Act do not count as group members for the purpose of triggering the loss of exemption, though the exemption loss still applies to other group members.
• The penalty of losing audit exemption does not apply where the late return is a relevant body's first annual return, as this return is not required to have financial statements annexed to it.