(a) is exempt from the requirements of paragraph 36A of Schedule 4 (disclosure with respect to compliance with accounting standards), and

 (b) is entitled to the exemptions provided by Schedule 8 with respect to the delivery to the registrar under section 242 of individual accounts and other documents for that financial year.

    (2) In that Schedule

Part I relates to small companies,

Part II relates to medium-sized companies, and

Part III contains supplementary provisions.

    (3) A company is not entitled to the exemptions mentioned in subsection (1) if it is, or was at any time within the financial year to which the accounts relate

 (a) a public company,

 (b) a banking or insurance company, or

 (c) an authorised person under the Financial Services Act 1986,

    (4) A group is ineligible if any of its members is

 (a) a public company or a body corporate which (not being a company) has power under its constitution to offer its shares or debentures to the public and may lawfully exercise that power,

 (b) an authorised institution under the Banking Act 1987,

 (c) an insurance company to which Part II of the Insurance Companies Act 1982 applies, or

 (d) an authorised person under the Financial Services Act 1986.

    (5) A parent company shall not be treated as qualifying as a small company in relation to a financial year unless the group headed by it qualifies as a small group, and shall not be treated as qualifying as a medium-sized company in relation to a financial year unless that group qualifies as a medium-sized group (see section 249).

 (a) in the case of the company's first financial year, in that year, and

 (b) in the case of any subsequent financial year, in that year and the preceding year.

    (2) A company shall be treated as qualifying as small or medium-sized in relation to a financial year

 (a) if it so qualified in relation to the previous financial year under subsection (1); or

 (b) if it was treated as so qualifying in relation to the previous year by virtue of paragraph (a) and the qualifying conditions are met in the year in question.

    (3) The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements

Small company
1. Turnover	Not more than £2 million
2. Balance sheet total	Not more than £975,000
3. Number of employees	Not more than 50
Medium-sized company
1. Turnover	Not more than £8 million
2. Balance sheet total	Not more than £3.9 million
3. Number of employees	Not more than 250.

    (4) For a period which is a company's financial year but not in fact a year the maximum figures for turnover shall be proportionately adjusted.

    (5) The balance sheet total means

 (a) where in the company's accounts Format 1 of the balance sheet formats set out in Part I of Schedule 4 is adopted, the aggregate of the amounts shown in the balance sheet under the headings corresponding to items A to D in that Format, and

 (b) where Format 2 is adopted, the aggregate of the amounts shown under the general heading "Assets".

    (6) The number of employees means the average number of persons employed by the company in the year (determined on a weekly basis).

That number shall be determined by applying the method of calculation prescribed by paragraph 56(2) and (3) of Schedule 4 for determining the corresponding number required to be stated in a note to the company's accounts.

 (a) if the company has been dormant from the time of its formation, by a special resolution passed before the first general meeting of the company at which annual accounts are laid;

 (b) if the company has been dormant since the end of the previous financial year and (i) is entitled in respect of its individual accounts for that year to the exemptions conferred by section 246 on a small company, or would be so entitled but for being a member of an ineligible group, and (ii) is not required to prepare group accounts for that year,by a special resolution passed at a general meeting of the company at which the annual accounts for that year are laid.

    (2) A company may not pass such a resolution if it is

 (a) a public company,

 (b) a banking or insurance company, or

 (c) an authorised person under the Financial Services Act 1986.

    (3) A company is "dormant" during a period in which no significant accounting transaction occurs, that is, no transaction which is required by section 221 to be entered in the company's accounting records; and a company ceases to be dormant on the occurrence of such a transaction.

For this purpose there shall be disregarded any transaction arising from the taking of shares in the company by a subscriber to the memorandum in pursuance of an undertaking of his in the memorandum.

    (4) Where a company is, at the end of a financial year, exempt by virtue of this section from the provisions of this Part relating to the audit of accounts

 (a) sections 238 and 239 (right to receive or demand copies of accounts and reports) have effect with the omission of references to the auditors' report;

 (b) no copies of an auditors' report need be laid before the company in general meeting;

 (c) no copy of an auditors' report need be delivered to the registrar, and if none is delivered, the copy of the balance sheet so delivered shall contain a statement by the directors, in a position immediately above the signature required by section 233(4), that the company was dormant throughout the financial year; and

 (d) the company shall be treated as entitled in respect of its individual accounts for that year to the exemptions conferred by section 246 on a small company notwithstanding that it is a member of an ineligible group.

    (5) Where a company which is exempt by virtue of this section from the provisions of this Part relating to the audit of accounts

 (a) ceases to be dormant, or

 (b) would no longer qualify (for any other reason) to make itself exempt by passing a resolution under this section,

In this subsection "listed" means admitted to the Official List of The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited.

    (2) Copies of the documents referred to in section 238(1) shall, however, be sent to any member of the company who wishes to receive them; and the Secretary of State may by regulations make provision as to the manner in which it is to be ascertained whether a member of the company wishes to receive them.

    (3) The summary financial statement shall be derived from the company's annual accounts and the directors' report and shall be in such form and contain such information as may be specified by regulations made by the Secretary of State.

    (4) Every summary financial statement shall

 (a) state that it is only a summary of information in the company's annual accounts and the directors' report;

 (b) contain a statement by the company's auditors of their opinion as to whether the summary financial statement is consistent with those accounts and that report and complies with the requirements of this section and regulations made under it;

 (c) state whether the auditors' report on the annual accounts was unqualified or qualified, and if it was qualified set out the report in full together with any further material needed to understand the qualification;

 (d) state whether the auditors' report on the annual accounts contained a statement under (i) section 237(2) (accounting records or returns inadequate or accounts not agreeing with records and returns), or (ii) section 237(3) (failure to obtain necessary information and explanations),

and if so, set out the statement in full.

    (5) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

    (6) If default is made in complying with this section or regulations made under it, the company and every officer of it who is in default is guilty of an offence and liable to a fine.

    (7) Section 240 (requirements in connection with publication of accounts) does not apply in relation to the provision to members of a company of a summary financial statement in accordance with this section.
"

    (2) An election has effect in relation to the accounts and reports in respect of the financial year in which the election is made and subsequent financial years.

    (3) Whilst an election is in force, the references in the following provisions of this Act to the laying of accounts before the company in general meeting shall be read as references to the sending of copies of the accounts to members and others under section 238(1)

 (a) section 235(1) (accounts on which auditors are to report),

 (b) section 270(3) and (4) (accounts by reference to which distributions are justified), and

 (c) section 320(2) (accounts relevant for determining company's net assets for purposes of ascertaining whether approval required for certain transactions);

    (4) If an election under this section ceases to have effect, section 241 applies in relation to the accounts and reports in respect of the financial year in which the election ceases to have effect and subsequent financial years.

 (a) shall be sent not less than 28 days before the end of the period allowed for laying and delivering accounts and reports, and

 (b) shall be accompanied, in the case of a member of the company, by a notice informing him of his right to require the laying of the accounts and reports before a general meeting;

    (2) Before the end of the period of 28 days beginning with the day on which the accounts and reports are sent out in accordance with section 238(1), any member or auditor of the company may by notice in writing deposited at the registered office of the company require that a general meeting be held for the purpose of laying the accounts and reports before the company.

    (3) If the directors do not within 21 days from the date of the deposit of such a notice proceed duly to convene a meeting, the person who deposited the notice may do so himself.

    (4) A meeting so convened shall not be held more than three months from that date and shall be convened in the same manner, as nearly as possible, as that in which meetings are to be convened by directors.

    (5) Where the directors do not duly convene a meeting, any reasonable expenses incurred by reason of that failure by the person who deposited the notice shall be made good to him by the company, and shall be recouped by the company out of any fees, or other remuneration in respect of their services, due or to become due to such of the directors as were in default.

    (6) The directors shall be deemed not to have duly convened a meeting if they convene a meeting for a date more than 28 days after the date of the notice convening it.
"

    (2) The conditions are that at no time during the relevant accounting reference period

 (a) has the company been, to its knowledge, a subsidiary undertaking of an undertaking which was then limited, or

 (b) have there been, to its knowledge, exercisable by or on behalf of two or more undertakings which were then limited, rights which if exercisable by one of them would have made the company a subsidiary undertaking of it, or

 (c) has the company been a parent company of an undertaking which was then limited.

    (3) The exemption conferred by this section does not apply if at any time during the relevant accounting period the company carried on business as the promoter of a trading stamp scheme within the Trading Stamps Act 1964.

    (4) Where a company is exempt by virtue of this section from the obligation to deliver accounts, section 240 (requirements in connection with publication of accounts) has effect with the following modifications

 (a) in subsection (3)(b) for the words from "whether statutory accounts" to "have been delivered to the registrar" substitute "that the company is exempt from the requirement to deliver statutory accounts", and

 (b) in subsection (5) for "as required to be delivered to the registrar under section 242" substitute "as prepared in accordance with this Part and approved by the board of directors".

    (2) Accounts so prepared shall contain a statement that they are prepared in accordance with the special provisions of this Part relating to banking companies or insurance companies, as the case may be.

    (3) In relation to the preparation of individual accounts in accordance with the special provisions of this Part relating to banking or insurance companies, the references to the provisions of Schedule 4 in section 226(4) and (5) (relationship between specific requirements and duty to give true and fair view) shall be read as references to the provisions of Part I of Schedule 9.

    (4) The Secretary of State may, on the application or with the consent of the directors of a company which prepares individual accounts in accordance with the special provisions of this Part relating to banking or insurance companies, modify in relation to the company any of the requirements of this Part for the purpose of adapting them to the circumstances of the company.

This does not affect the duty to give a true and fair view.

    (2) Accounts so prepared shall contain a statement that they are prepared in accordance with the special provisions of this Part relating to banking groups or insurance groups, as the case may be.

    (3) References in this Part to a banking group are to a group where

 (a) the parent company is a banking company, or

 (b) at least one of the undertakings in the group is an authorised institution under the Banking Act 1987 and the predominant activities of the group are such as to make it inappropriate to prepare group accounts in accordance with the formats in Part I of Schedule 4.

    (4) References in this Part to an insurance group are to a group where

 (a) the parent company is an insurance company, or

 (b) the predominant activity of the group is insurance business and activities which are a direct extension of or ancillary to insurance business.

    (5) In relation to the preparation of group accounts in accordance with the special provisions of this Part relating to banking or insurance groups, the references to the provisions of Schedule 4A in section 227(5) and (6) (relationship between specific requirements and duty to give true and fair view) shall be read as references to those provisions as modified by Part II of Schedule 9.

    (6) The Secretary of State may, on the application or with the consent of the directors of a company which prepares group accounts in accordance with the special provisions of this Part relating to banking or insurance groups, modify in relation to the company any of the requirements of this Part for the purpose of adapting them to the circumstances of the company.

    (2) In relation to a banking company, or the parent company of a banking company, the provisions of Schedule 6 (disclosure: emoluments and other benefits of directors and others) have effect subject to Part IV of Schedule 9.

    (2) The information required to be given by paragraph 6, 8 or 13 of Part I of Schedule 9 (which is allowed to be given in a statement or report annexed to the accounts), may be given in the directors' report instead.

Information so given shall be treated for the purposes of audit as forming part of the accounts.

    (3) The reference in section 234(1)(b) to the amount proposed to be carried to reserves shall be construed as a reference to the amount proposed to be carried to reserves within the meaning of Part I of Schedule 9.

    (4) If the company takes advantage, in relation to its individual or group accounts, of the exemptions conferred by paragraph 27 or 28 of Part I of Schedule 9, paragraph 1 of Schedule 7 (disclosure of asset values) does not apply.

    (5) The directors' report shall, in addition to complying with Schedule 7, also comply with Schedule 10 (which specifies additional matters to be disclosed).
"