New Clause 293

Company Law Reform Bill [Lords] – in a Public Bill Committee at 1:45 pm on 20th July 2006.

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Realised losses and profits and revaluation of fixed assets

‘(1) The following provisions have effect for the purposes of this Part.

(2) The following are treated as realised losses—

(a) in the case of Companies Act accounts, provisions of a kind specified for the purposes of this paragraph by regulations under section 378 (except revaluation provisions);

(b) in the case of IAS accounts, provisions of any kind (except revaluation provisions).

(3) A “revaluation provision” means a provision in respect of a diminution in value of a fixed asset appearing on a revaluation of all the fixed assets of the company, or of all of its fixed assets other than goodwill.

(4) Where—

(a) on the revaluation of a fixed asset, an unrealised profit is shown to have been made, and

(b) on or after the revaluation, a sum is written off or retained for depreciation of that asset over a period,

an amount equal to the amount by which that sum exceeds the sum which would have been so written off or retained for the depreciation of that asset over that period, if that profit had not been made, is treated as a realised profit made over that period.

(5) For the purpose of this section there is treated as having been a revaluation where—

(a) the directors have considered the value of fixed assets of the company, without actually revaluing them, and

(b) they are satisfied that their aggregate value at the time of their consideration was not less than the aggregate amount at which they were then stated in the company’s accounts.

(6) Where the relevant accounts are required to be prepared in accordance with this Act, subsection (5) applies only if it is stated in a note to the accounts—

(a) that the directors have considered the value of fixed assets of the company without actually revaluing them,

(b) that they are satisfied that the aggregate value of those assets at the time of their consideration was not less than the aggregate amount at which they were then stated in the company’s accounts, and

(c) that accordingly, by virtue of that subsection, amounts are stated in the accounts on the basis that a revaluation of fixed assets of the company is treated as having taken place at that time.’.—[Margaret Hodge.]

Brought up, and added to the Bill.