UPDATE 24 March 2012: Following the EU’s adoption of the Directive on micro-entity reporting in February 2012, the Government has now announced that it intends to take advantage of the new EU regime and will consult on implementation in due course. See this post for details.
The European Parliament on 13 December 2011 agreed its position on a draft directive on the accounting and financial reporting requirements of very small companies – what are now referred to as “micro entities”. The effect is to create a new reporting regime better suited to micro entities than that set out in the 1978 Fourth Company Law Directive and the 1983 Seventh Company Law Directive (and in turn reflected in the UK Companies Acts), which is considered too demanding for the very smallest companies.
The draft directive is expected to come into force in early 2012. The result will be that the UK Government will be able to proceed – should it decide to – with its proposal to develop a reporting regime for the smallest companies. That proposal was set out in a joint Department of Business, Innovation and Skills and Financial Reporting Council discussion paper titled “Simpler Reporting for the Smallest Businesses” in August 2011, which we discussed in this post.
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