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UK small company 50% foreign-owned - Audit?

A UK small company is selling 50% of its shares to a European company with a T/O of €9M and >50 employees - is the UK small company now part of a large group and required to submit audited accounts?

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25th Aug 2010 10:02

50%

 ... of the shares does not usually make the UK company a subsidiary.  If so, nothing changes.  The UK company is small, entitled to use the FRSSE and exempt from audit.

If there is some other factor apart from the 50% shareholding that makes the UK company a subsidiary, it remains small and is entitled to use the FRSSE, but as a member of a group which is not small, it is not exempt from audit.

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25th Aug 2010 11:03

Other factors

Thanks Euan,

That's the way I read the definition of the CA; that unless the parent has a majority of the voting rights then a 50% owned company is not necessarily a subsidiary of the parent group. Therefore if it's not part of a group it is still exempt from audit.

CA 479 states that “group company” means a company that is a parent company or a subsidiary undertaking;

CA 1162 states that a parent/subsidiary undertaking has the majority of voting rights or it has the right to exercise dominant influence over the undertaking;

Neither of these apply as it is a 50:50 and in essence a joint venture, with the majority of the control still residing in the non-parent 50% under the provisions in the Articles, therefore it's not part of the group that would mean it wasn't exempt.  So it still qualifies as a small company and is exempt... I think!

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