in the supply of goods, but it seems that if the total turnover (not just the part relating to the supply of goods) exceeds £50,000 they must disclose the information required by the section. Although no guidance is given about the method of calculating the value of the goods, it would seem logical to use the same basis as is used in calculating the turnover. Special Classes of Company Exemption from certain of the accounting requirements of the 8th Schedule is still available to banking and discount companies, insurance companies and shipping companies, but the Board of Trade now have the power (Section 12) by statutory instrument to amend or repeal paragraph 23 of the 8th Schedule, which confers the exemption on banking and discount companies. However, even if the Board of Trade exercise this power it will not extend to the disclosure of turnover figures since banking and discounting business is specifically excluded from the provisions of paragraph 13A of the 8th Schedule and Section 17. Banking and discount companies for the present retain all the exemptions which were available to them under the principal Act and the exemption is extended to almost all of the new requirements. The number of exemptions available to insurance companies has been somewhat reduced and it seems that they will have to disclose their turnover figures. Shipping companies also retain the exemptions available to them under the principal Act but are required to comply with nearly all the new requirements of the 8th Schedule except those calling for valuation of fixed assets and disclosure of turnover figures; moreover, this exemption is now expressly limited to companies which own or operate ships and satisfy the Board of Trade that it is in the national interest that they should enjoy the accounting exemptions. The new requirements relating to companies' Accounts, namely Sections 3 to 8 and the revised 8th Schedule to the principal Act, apply to oversea companies which have a place of business in Great Britain and have therefore registered under Part X of the principal Act. It is not clear whether there is any requirement under the principal Act on an oversea company to file a copy of a Directors' Report and it is therefore uncertain whether such companies are obliged to comply with the provisions of Sections 16 to 20 of the new Act. The matter is now of some consequence in view of the important nature of some of the items required to be disclosed in the Directors' Report. As a result of the repeal of the proviso to Section 410 (1) of the principal Act, companies incorporated in Northern Ireland, and registered under Part X of the principal Act, which would formerly have been exempt private companies had they been incorporated in England, will, after 27th January, 1968, lose their exemption from filing Accounts and will have to comply with the new requirements in full. Auditors' Report The provisions of the principal Act with regard to the duties of auditors and to the Auditors' Report have been revised. Section 162 and the 9th Schedule to the principal Act are, with effect from 27th January, 1968, repealed and are replaced by Section 14 of the new Act. Section 14 (4) states that it is the duty of the auditors to make such investigation as will enable them to form an opinion as to whether proper books of account have been kept by the company and proper reports received from branches not visited by them and as to whether the balance sheet and (unless it is consolidated) the profit and loss account are in agreement with the books of account and returns. If the auditors are not satisfied that these things have been done they must say so in their report but, if they are satisfied, there is no longer any requirement that their report should contain a statement to that effect. Under the new Act the auditors must state in their report whether in their opinion the balance sheet and profit and loss visions of the principal Act and the new Act. They must also state whether in their opinion the balance sheet gives a true and fair view of the state of the company's affairs at its year end and the profit and loss account a true and fair view of the profit or loss for the period (Section 14 (3)). In the case of banking and discount companies, insurance companies and shipping companies only the first of these statements has to be made. Directors' Interests and Directors' Interests There are probably few sections of the new Act of more farreaching importance than Sections 27, 28, 29 and 31. Every director of a company - be it private or public, quoted or unquoted, limited or unlimited - who has an interest (which, as will be seen, has an extended meaning) in shares or debentures of the company or of any other company in the group of which the company is a member is affected by them since he is required to give written notice to the company of his interest. Notifiable events Under Section 27 (1) (a) a director of a company at the date the section comes into operation (27th October, 1967), who is interested in any relevant shares or debentures, is obliged to give the company notice of those interests not later than 15th November, 1967, and a newly appointed director has to give notice of his interests existing at the time of his appointment. Section 27 (1) (b) specifies the other events in which a director has to give notice regarding his interests. These are (i) any event in consequence of which a director becomes, or ceases to be, interested in any relevant shares or debentures; (ii) the entering into a contract of sale (rather than the formal transfer) of any such shares or debentures; (iii) the assignment of a right granted to him to subscribe for any such shares or debentures and (iv) the grant to him by another company in the group, other than a wholly owned subsidiary (Section 27 (13) ), of a right to subscribe any relevant shares or debentures and the exercise of such a right. There is no obligation to notify the company of which he is a director when it grants an option to him; the duty is then on the company to make the appropriate entry in the register of directors' interests (Section 29 (2) (a)). However, Section 31 (2) does require a director to give notice of the grant by the company of which he is a director of a right to subscribe for any of its securities to (and of the exercise of such a right by) his wife or any of his infant children. It is not clear whether the purchase or sale by a director of an option to subscribe granted to someone else is notifiable as being an event whereby the director becomes, or ceases to be, interested in securities. On the wording of the sections an option to subscribe does not seem to be treated as an interest in securities in the absence of express wording to that effect, and the wording of Section 27 (1) (b) (iii) seems to limit the obligation to notification of assignments of options granted to the director himself. Contents of notice The notice to be given to the company has to specify the number or amount of shares or debentures involved and, except in respect of interests existing at the time when the section comes into operation or (if later) at the time of the director's appointment, state the price paid or received or that there was no consideration (Section 27 (5) and (6)). In the case of the grant of a notifiable option, details of the date of grant, the time at or during which the option is exercisable and the consideration paid or payable for both the grant and the exercise of the option have to be given. Notice again has to be given upon the exercise of a notifiable option, indicating the extent of the exercise, the names of the persons who have been registered as the holders of the securities with the amount of each holding (Section 27 (7)). Finally, the notice has to make clear that it is being given in fulfilment of the statutory obligation (Section 27 (9)). but also to any person in accordance with whose directions or instructions the directors of a company are accustomed to act (Section 27 (11) ). This extended meaning also appears in the principal Act, but the concept appears to be more important in the context of the new Act. Section 56 (3) contains an express saving with regard to professional advisers. Meaning of interest Section 28 contains rules for determining what constitutes an interest in securities and starts from the premise than an interest cannot be disregarded on the grounds that it is remote, or may be limited (Section 28 (1) ). A contract of purchase, a right to call for delivery of shares or debentures or the ability to exercise or control the exercise of rights attaching to any such securities constitutes an interest (Section 28 (4)); a joint interest is notifiable, and so is an interest under a trust, other than a discretionary interest or an interest in reversion or remainder (Section 28 (2) and (7) ). In particular, it should be noted that Section 31 (1) treats the interests (including grants and exercises of, and dealings with, options to subscribe for securities) of the wife and infant children of a director, including a 'constructive' director, as the director's own interests or acts. In the same way, the interest of a director-trustee is an interest within the scope of Section 27 unless he holds merely as bare trustee or custodian trustee (Section 28 (8)). The effect of the inclusion of these somewhat artificial interests is, of course, to exaggerate the extent of directors' interests in the share capital of a company: if, for example, A and B are the trustees of a settlement of which c is the life tenant and the 100 relevant shares are registered in the name of D as mortgagee, then (assuming all to be directors), the register required to be maintained by the company under Section 29 would reveal interests in 400 shares. The definition of 'interest' seems to have been extended too far since it would appear that the phrase 'interest under a trust' is wide enough to embrace a prospective right to retirement benefits under a pension scheme (if constituted in the normal way with trustees) as well as all schemes authorised under proviso (b) to |