| 9.2 | Except as permitted or required by paragraph 9.3, a parent entity shall present consolidated financial statements in which it consolidates all its investments in subsidiaries in accordance with this FRS. A parent entity need only prepare consolidated accounts under the Act if it is a parent at the year end. |
| 9.3 | A parent is exempt from the requirement to prepare consolidated financial statements on any one of the following grounds: |
| When its immediate parent is established under the law of an EEA State (Section 400 of the Act): |
| (a) | The parent is a wholly-owned subsidiary. Exemption is conditional on compliance with certain further conditions set out in section 400(2) of the Act. |
| (b) | The parent holds 90% or more of the allotted shares in the entity and the remaining shareholders have approved the exemption. Exemption is conditional on compliance with certain further conditions set out in section 400(2) of the Act. |
| (bA) | The immediate parent holds more than 50% (but less than 90%) of the allotted shares in the entity, and notice requesting the preparation of consolidated financial statements has not been served on the entity by shareholders holding in aggregate at least 5% of the allotted shares in the entity. Exemption is conditional on compliance with certain further conditions set out in section 400(2) of the Act. |
| When its parent is not established under the law of an EEA State (Section 401 of the Act): |
| (c) | The parent is a wholly-owned subsidiary. Exemption is conditional on compliance with certain further conditions set out in section 401(2) of the Act. |
| (d) | The immediate parent holds 90% or more of the allotted shares in the entity and the remaining shareholders have approved the exemption. Exemption is conditional on compliance with certain further conditions set out in section 401(2) of the Act. |
| (dA) | The parent holds more than 50% (but less than 90%) of the allotted shares in the entity, and notice requesting the preparation of consolidated financial statements has not been served on the entity by shareholders holding in aggregate at least 5% of the allotted shares in the entity. Exemption is conditional on compliance with certain further conditions set out in section 401(2) of the Act. |
| Other situations |
| (e) | The parent, and the group headed by it, qualify as small as set out in section 383 of the Act and the parent and the group are considered eligible for the exemption as determined by reference to sections 384 and 399(2A) of the Act. |
| (f) | All of the parent's subsidiaries are required to be excluded from consolidation by paragraph 9.9 (Section 402 of the Act). |
| (g) | For a parent not reporting under the Act, if its statutory framework does not require the preparation of consolidated financial statements. |
| In sub-paragraphs (a) to (dA), the parent is not exempt if any of its transferable securities are admitted to trading on a regulated market of any EEA State within the meaning of Directive 2004/39/EC. [AMD 76] |
| 9.4 | A subsidiary is an entity that is controlled by the parent. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. |
| 9.5 | Control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. That presumption may be overcome in exceptional circumstances if it can be clearly demonstrated that such ownership does not constitute control. Control also exists when the parent owns half or less of the voting power of an entity but it has: |
| (a) | power over more than half of the voting rights by virtue of an agreement with other investors; |
| (b) | power to govern the financial and operating policies of the entity under a statute or an agreement; |
| (c) | power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body; or |
| (d) | power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body. |
| 9.6 | Control can also be achieved by having options or convertible instruments that are currently exercisable or by having an agent with the ability to direct the activities for the benefit of the controlling entity. |
| 9.6A | Control can also exist when the parent has the power to exercise, or actually exercises, dominant influence or control over the undertaking or it and the undertaking are managed on a unified basis. |
| 9.7 | [Deleted] |
| 9.8 | A subsidiary is not excluded from consolidation because its business activities are dissimilar to those of the other entities within the consolidation. Relevant information is provided by consolidating such subsidiaries and disclosing additional information in the consolidated financial statements about the different business activities of subsidiaries. |
| 9.8A | A subsidiary is not excluded from consolidation because the information necessary for the preparation of consolidated financial statements cannot be obtained without disproportionate expense or undue delay, unless its inclusion is not material (individually or collectively for more than one subsidiary) for the purposes of giving a true and fair view in the context of the group. |
| 9.9 | A subsidiary shall be excluded from consolidation where: |
| (a) | severe long-term restrictions substantially hinder the exercise of the rights of the parent over the assets or management of the subsidiary; or |
| (b) | the interest in the subsidiary is held exclusively with a view to subsequent resale; and the subsidiary has not previously been consolidated in the consolidated financial statements prepared in accordance with this FRS. |
| 9.9A | A subsidiary may be excluded from consolidation when its inclusion is not material for the purpose of giving a true and fair view (but two or more subsidiaries may be excluded only if they are not material taken together). [AMD 257] |
| 9.9B | A subsidiary excluded from consolidation on the grounds set out in paragraph 9.9(a) shall be measured using an accounting policy selected by the parent in accordance with paragraph 9.26, except where the parent still exercises a significant influence over the subsidiary. If this is the case, the parent should treat the subsidiary as an associate using the equity method set out in paragraph 14.8. [AMD 255] |
| 9.9C | A subsidiary excluded from consolidation on the grounds set out in paragraph 9.9(b) which is: |
| (a) | held as part of an investment portfolio shall be measured at fair value with changes in fair value recognised in profit or loss;33 or |
| (b) | not held as part of an investment portfolio shall be measured using an accounting policy selected by the parent in accordance with paragraph 9.26. [AMD 256] |
| AMD 76 Amendment Paragraph 9.3 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Small entities and other minor amendments (issued July 2015) Effective date 01/01/2016 (Earlier application permitted subject to certain conditions - see paragraph 1.15) Previous text 9.3 A parent is exempt from the requirement to prepare consolidated financial statements on any one of the following grounds: (a) The parent is a wholly-owned subsidiary and its immediate parent is established under the law of an EEA State. Exemption is conditional on compliance with certain further conditions set out in section 400(2) of the Act. (b) The parent is a majority-owned subsidiary and meets all the conditions for exemption as a wholly-owned subsidiary set out in section 400(2) of the Act as well as the additional conditions set out in section 400(1)(b) of the Act. (c) The parent is a wholly-owned subsidiary of another entity and that parent is not established under the law of an EEA State. Exemption is conditional on compliance with certain further conditions set out in section 401(2) of the Act. (d) The parent is a majority-owned subsidiary and meets all of the conditions for exemption as a wholly-owned subsidiary set out in section 401(2) of the Act as well as the additional conditions set out in section 401(1)(b) of the Act. (e) The parent, and group headed by it, qualify as small as set out in section 383 of the Act and the group is not ineligible as set out in section 384 of the Act. (f) All of the parent's subsidiaries are required to be excluded from consolidation by paragraph 9.9. (g) For parents not reporting under the Act, if its statutory framework does not require the preparation of consolidated financial statements. In sub-paragraphs (a) to (d), the parent is not exempt if any of its securities are admitted to trading on a regulated market of any EEA State within the meaning of Directive 2004/39/EC. |
| AMD 257 Amendment Paragraph 9.9A added by Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 |
| AMD 255 Amendment Paragraph 9.9B renumbered and amended by Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 Previous text 9.9A A subsidiary excluded from consolidation on the grounds set out in paragraph 9.9(a) shall be measured using an accounting policy selected by the parent in accordance with paragraph 9.26, except where the parent still exercises a significant influence over the subsidiary. If this is the case, the parent should treat the subsidiary as an associate using the equity method set out in paragraph 14.8. |
| 33 Additional disclosures may need to be provided in accordance with company law (see Appendix III, paragraph A3.17). |
| AMD 256 Amendment Paragraph 9.9C renumbered and amended by Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 Previous text 9.9B A subsidiary excluded from consolidation on the grounds set out in paragraph 9.9(b) which is: (a) held as part of an investment portfolio shall be measured at fair value with changes in fair value recognised in profit or loss;31 or (b) not held as part of an investment portfolio shall be measured using an accounting policy selected by the parent in accordance with paragraph 9.26. 31 Additional disclosures may need to be provided in accordance with company law (see Appendix IV, paragraph A4.17). |
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