Written Notice of Members Agreeing to Audit Exemption (s.479A CA 2006) 
A UK company that is a subsidiary of a UK parent company can qualify for exemption from audit under the subsidiary company exemption (section 479A of the Companies Act 2006) whereby the parent guarantees the subsidiary’s outstanding liabilities for a particular financial year. One of the conditions that must be fulfilled to use this exemption is that the members of the subsidiary company must agree to the exemption, this must be unanimous agreement.
There is no prescribed form for the written notice of consent/agreement by the members of the company. Companies House guidance however states that the notice of agreement by members must show the subsidiary company’s name and registered number in a prominent place. A written notice signed by all members is considered satisfactory. This template written notice therefore may be used for this purpose.
The members of the subsidiary must consent unanimously. This includes the holders of any ordinary shares (including the immediate parent undertaking which need not be the undertaking that is providing the guarantee); holders of preference shares or non-voting shares; and holders of any shares that are presented as liabilities for financial reporting purposes.
Separate consent will need to be given for each year that the exemption is used. A single document may evidence consent by a parent in relation to multiple subsidiaries. However, separate copies of the document should be filed at Companies House for each subsidiary claiming the exemption.
There is no facility in the Companies Act 2006 for a member to withdraw consent for a particular year once it has been given. However, the exemption is subject to the requirements of s476 of the Companies Act 2006, which allows members holding 10% of any class of shares to require an audit by giving notice to the company at least one month before the end of the financial year in question. Therefore, this can be used by one or more members to in effect “withdraw their consent”.
Our guidance note on accounts and audit has more detail on this audit exemption and the other formalities that must be met in order to qualify for it.
Note that a subsidiary in a small group or a dormant company subsidiary may qualify for exemption from audit under the Companies Act 2006 without the need for a parent guarantee.
Optional phrases/clauses are in enclosed brackets. These should be read carefully and selected to be compatible with one another. Unused options should be removed from the document.
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