Approval of Directors' Report and Accounts
The annual accounts of a company must be approved by the board and signed on behalf of the board by a director on the company’s individual accounts balance sheet. The directors must not approve the accounts until they are satisfied that they give a true and fair view of the company's assets, liabilities, financial position and profit and loss.. The directors' report of a company must be approved by the board and signed on behalf of the board by a director or the secretary of the company.
Approving annual accounts or a directors' report that do not comply with the statutory requirements constitutes a criminal offence by every director who:
- 1. knew that they did not comply, or was reckless as to whether they complied, and
- 2. failed to take reasonable steps to secure compliance with those requirements or, as the case may be, to prevent the accounts or report from being approved.
The penalty for such an offence is:
- 1. on conviction on indictment, a (potentially unlimited) fine, and
- 2. on summary conviction, a fine not exceeding £5,000.