400. Duty to prepare directors' report(1) The directors of a company must prepare a directors' report for each financial year of the company.(2) For a financial year in which—(a) the company is a parent company, and(b) the directors of the company prepare group accounts,the directors' report must be a consolidated report (a "group directors' report") relating to the undertakings included in the consolidation.(3) A group directors' report may, where appropriate, give greater emphasis to the matters that are significant to the undertakings included in the consolidation, taken as a whole.(4) In the case of failure to comply with the requirement to prepare a directors' report, a contravention of these Regulations is committed by every person who—(a) was a director of the company immediately before the end of the period for filing accounts and reports for the financial year in question, and(b) failed to take all reasonable steps for securing compliance with that requirement.(5) A person who commits the contravention referred to in subsection (4) shall be liable to a level 3 fine.(6) This Chapter shall not apply to a company that is a restricted scope company.
401. Directors' report: small companies exemption(1) A company is entitled to small companies exemption in relation to the directors' report for a financial year if—(a) it is entitled to prepare accounts for the year in accordance with the small companies regime, or(b) it would be so entitled but for being or having been a member of an ineligible group.
402. Contents of directors' report: general(1) The directors' report for a financial year must state—(a) the names of the persons who, at any time during the financial year, were directors of the company, and(b) except in the case of a company entitled to the small companies exemption, the amount (if any) that the directors recommend should be paid by way of dividend.(2) The Board may make rules as to other matters that must be disclosed in a directors' report.
403. Contents of directors' report: statement as to disclosure to auditors(1) This section applies to a company unless—(a) it is exempt for the financial year in question from the requirements of Part 15 as to audit of accounts, and(b) the directors take advantage of that exemption.(2) The directors' report must contain a statement to the effect that, in the case of each of the persons who are directors at the time the report is approved—(a) so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and(b) he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information.(3) "Relevant audit information" means information needed by the company's auditor in connection with preparing his report.(4) A director is regarded as having taken all the steps that he ought to have taken as a director in order to do the things mentioned in subsection (2)(b) if he has—(a) made such enquiries of his fellow directors and of the company's auditors for that purpose, and(b) taken such other steps (if any) for that purpose,as are required by his duty as a director of the company to exercise reasonable care, skill and diligence.(5) Where a directors' report containing the statement required by this section is approved but the statement is false, every director of the company who—(a) knew that the statement was false, or was reckless as to whether it was false, and(b) failed to take reasonable steps to prevent the report from being approved,(c) commits a contravention of these Regulations.(6) A person who commits the contravention referred to in subsection (5) shall be liable to a fine of up to level 4.
404. Approval and signing of directors' report(1) The directors' report must be approved by the board of directors and signed on behalf of the board by a director or the secretary of the company.(2) If in preparing the report advantage is taken of the small companies exemption, it must contain a statement to that effect in a prominent position above the signature.(3) If a directors' report is approved that does not comply with the requirements of these Regulations, every director of the company who—(a) knew that it did not comply, or was reckless as to whether it complied, and(b) failed to take reasonable steps to secure compliance with those requirements or, as the case may be, to prevent the report from being approved,commits a contravention of these Regulations.(4) A person who commits the contravention referred to in subsection (3) shall be liable to a fine of up to level 4.