At present to apply FRS 101 (a reduced disclosure framework) or take advantage of certain disclosure exemptions available in FRS 102, a qualifying entity is required to notify its shareholders in writing that it intends to take advantage of the disclosure exemptions in FRS 101 / FRS 102.
Financial Reporting Council (FRC) is currently consulting on removing this requirement from FRS 101. Subject to the results of the consultation, it is expected that the amendments will be finalised in December 2006 and become effective for accounting periods beginning on or after 1 January 2016.
A similar, consequential, amendment is also expected to be proposed to FRS 102.
This is an excellent news for the FRS 101 and potentially FRS 102 reporters as the existing requirement has often created significant application issues, especially for companies with a broad shareholder base.
The stakeholders’ response to this amendment has been largely supportive with the only concern being around protection of minority shareholders with some respondents asking FRC to consider including a clause allowing minority shareholders to object to the use of the disclosure exemption, if they wish to do so.
Overall, however, it appears likely that the amendments will be passed, and it is much hoped that once enacted the current compliance burden will see much wanted reduction.
Further reading (FRC publication): >>> Draft amendments to FRS 101
If you feel that issues highlighted in this article are likely to affect your reporting and would like to discuss this further with one of our specialist, you can contact AVEY of London on:
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This guidance is designed to alert to an important issue of general application. It is not intended to be a definitive statement covering all aspects of the related legislation. It is only a brief summary and no action should be taken without consulting the detailed legislation or seeking professional advice. No responsibility for any person acting or referring to act as a result of any material contained in this guidance can be accepted by AVEY of London.