Part XII of the Companies Act 1997 is headed “Disclosure by Companies”. Division 1 requires an annual report.
Section 209 — the obligation to prepare
Subject to subsection (2), the board of every company shall, within five months after each balance date, prepare an annual report on the affairs of the company during the accounting period ending on that date.
The board need not prepare an annual report where —
(a) the financial statements are not required to be audited under section 190; and
(b) every shareholder has given notice in writing waiving the right to be sent a copy of the annual report, or of annual reports generally.
A company that must be audited cannot escape the annual report however willing its shareholders are. And in an unaudited company, a single shareholder who has not waived means the report must be prepared.
Under section 209(4) the Registrar may extend the five months on the company’s application for any special reason, even beyond the calendar year — the same relief as for financial statements under section 179(2). Failure to comply with subsection (1) is an offence by every director, penalty under section 414(2).
Section 210 — sending it to shareholders
Subject to subsection (2), every board that has prepared an annual report shall cause a copy to be sent to every shareholder not less than one month before the date fixed for the annual meeting.
Where (a) the shareholder has given written notice waiving the right to be sent that report or annual reports generally; and (b) the shareholder has not revoked that notice; and (c) a copy is available for inspection in the manner specified in section 217.
Working backwards: the report must be prepared within five months of balance date (s 209(1)); the annual meeting must be held within six months of balance date (s 101(1)(b)); and the report must be sent at least one month before the meeting (s 210(1)).
Note that the waiver in section 210(2) is individual — unlike section 209(2), which requires every shareholder to have waived before the report need not be prepared at all. Section 213 states the general position: a shareholder may, by written notice, waive the right to receive all or any documents, and may revoke the waiver in the same manner.
Section 212 — what the report contains
Section 212 sets out the contents of the annual report. In substance, it is the shareholders’ annual account of the company’s affairs, and it draws together material required elsewhere in the Act:
| Item | Source |
|---|---|
| The financial statements, and any group financial statements | ss 177–182 |
| The auditor’s report, where the company is audited | ss 199–201 |
| Particulars of entries in the interests register | ss 118, 123, 126, 139, 140, 164(1)(c) |
| Directors’ remuneration and other benefits | s 139 |
| Donations, and the names of the directors and any changes | s 212 |
| Amounts payable to the auditor for audit and other services | ss 191, 212 |
Under section 119(1), a transaction in which a director was interested may be avoided by the company at any time before the expiration of three months after the transaction is disclosed to all the shareholders, whether by means of the company’s annual report or otherwise.
So disclosure in the annual report is the ordinary way a company closes the avoidance window. An interested transaction that never appears in an annual report and is never otherwise disclosed remains avoidable indefinitely.
Sections 211 and 213 — shareholders who elect not to receive documents
Subject to section 211, a shareholder may from time to time, by written notice, waive the right to receive all or any documents from the company, and may revoke the waiver in the same manner. While the waiver is in effect the company need not send the documents to which it relates.
Section 211 deals with sending financial statements to shareholders who elect not to receive documents — so a shareholder’s general waiver does not extinguish the entitlement to the financial statements in the circumstances that section provides for.
A shareholder who has waived may still revoke at any time, and may still inspect the annual report under section 216(1)(g), obtain copies under section 218 within five days of a written request, and demand information under section 219. Waivers save postage; they do not reduce accountability.
Section 214 — accidental failure to send
Subject to the constitution, the failure to send an annual report, notice, or other document to a shareholder in accordance with this Act does not affect the validity of proceedings at a meeting of shareholders where the failure to do so was accidental.
An oversight in a mailing list is accidental. A deliberate decision not to send the report to an inconvenient shareholder is not — and the meeting is then vulnerable, through a section 142 injunction before it happens, or a section 152 application afterwards.
Section 214 mirrors Schedule 2 clause 2(4), under which the accidental omission to give notice of a meeting, or the failure to receive it, does not invalidate the proceedings — and clause 2(3), under which an irregularity is waived where all shareholders entitled to attend do so without protest.
The reporting calendar
- Balance date — fixed under section 176.
- Within five months — financial statements completed and signed by two directors (s 179), group statements if required (s 181), and the annual report prepared (s 209).
- Audit completed, and the auditor’s report made to the shareholders (ss 199–201).
- At least one month before the annual meeting — the annual report sent to every shareholder (s 210).
- Within six months of balance date — the annual meeting held (s 101).
- Within 14 days after the annual meeting — audited statements and the audit report filed with the Registrar (s 183).
- In the allocated month — the annual return, with certified audited statements attached where an audit was required (s 215).
Sources
- Companies Act 1997 — ss 101, 118, 119, 123, 126, 139, 140, 164, 176–183, 190, 191, 199–201, 209–219, 414; Schedule 2
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.