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, Companies Act 2006) where the parent guarantees the subsidiary’s outstanding liabilities for a particular financial year.

One of the conditions for using this exemption is that the members of the subsidiary company must agree to the exemption. That agreement must be unanimous.

What this written notice is for

There is no prescribed statutory form for the members’ notice of consent/agreement. Companies House guidance states that the notice should show the subsidiary company’s name and registered number in a prominent place, and a written notice signed by all members is considered satisfactory.

This template can be used to evidence the members’ unanimous agreement for the purposes of the section 479A audit exemption.

Who must consent

Unanimous consent is required from all members of the subsidiary, including:

• holders of any ordinary shares (including the immediate parent undertaking, which need not be the undertaking providing the guarantee);
• holders of preference shares or non-voting shares; and
• holders of any shares presented as liabilities for financial reporting purposes.

Year-by-year consent and Companies House filing

Separate consent is needed for each financial year in which the exemption is used.

A single document may evidence consent by a parent in relation to multiple subsidiaries. However, separate copies of that document should be filed at Companies House for each subsidiary claiming the exemption.

Withdrawal and audit requests

The Companies Act 2006 does not provide a facility for a member to withdraw consent for a particular year once given.

However, the exemption is subject to section 476, 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 relevant financial year.

Other possible audit exemptions

A subsidiary in a small group, or a dormant company subsidiary, may qualify for an audit exemption under the Companies Act 2006 without the need for a parent guarantee.

Further detail on this exemption and the other formalities required to qualify for it is set out in our guidance note, Accounts & Audit.

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