Gibraltar :

F.1 Statutory requirements

S114 of the Companies Ordinance requires proper books of account to be kept with respect to:

  • All sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place.
  • All sales and purchases of goods by the company.
  • The assets and liabilities of the company.

S115 requires that a balance sheet and profit and loss account be set before the company in general meeting not later than eighteen months after incorporation and subsequently once at least in every calendar year. A report by the directors as to the state of the companyes affairs should be attached to the balance sheet. This report should also mention what dividend, if any, is recommended for payment and the amount which has been transferred to reserves.

Prescription as to the content of the accounts is minimal. However, the following is required:

  • A summary of the authorised share capital and of the issued share capital of the company, its liabilities and its assets, together with such particulars as are necessary to show the nature of the liabilities and assets and distinguish between the fixed and floating assets.
    The method of asset valuation must be disclosed.
    • Preliminary expenses of the company in so far as they are not written off.
    • Expenses incurred in connection with any issue of share capital or debentures not written off.
    • The amount of any goodwill, patents and trademarks should be separately shown in the balance sheet as should any assets consisting of shares in subsidiary companies.
  • Particulars of loans to and remuneration of directors by the company or the subsidiary are required to be disclosed, other than loans made in the ordinary course of business by a company, the ordinary business of which includes the lending of money.

At present there is no requirement to consolidate accounts of groups of companies in Gibraltar. However, s 118 of the Companies Ordinance requires a statement to appear in the financial statements of the holding company indicating how the profits and losses of its subsidiaries have been dealt with in, or for the purposes of, the accounts of the holding company.
Auditors must be appointed by the company annually in general meeting. No director or officer of the company may be appointed auditor, nor a body corporate. If the company is not a private company, a person who is a partner of or in the employment of an officer of the company may not be appointed auditor. The auditor must report on:

  • Whether or not they have obtained all the information and explanations required.
  • Whether, in their opinion, the balance sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the company's affairs according to the best of their information and the explanations given to them, as shown by the books of the company.

Every auditor of a company has the right of access at all times to the books, accounts and vouchers of the company, and is entitled to require from the directors and officers of the company such information and explanations as may be deemed necessary for the performance of their duties.

F.2 Accounting Principles

As a large number of accountants and auditors in Gibraltar are members of two of the United Kingdomes major accounting bodies, guidance on accounting principles is obtained from pronouncements of the United Kingdom Accounting Standards Board. The Gibraltar Society of Chartered and Certified Accountants has adopted most Accounting and all Auditing Standards issued to date in the UK, tailoring them where necessary to Gibraltar's circumstances.

Regulations made under the Financial Services Ordinance have given statutory force to Accounting Standards adopted by the Consultative Committee of Accountancy Bodies in the United Kingdom in so far as they must be applied to the financial statements of companies licensed under this Ordinance.

F.3 Financial Services Ordinance

Most classes of financial services businesses in Gibraltar require licensing by the Financial Services Commission in accordance with the regulatory framework provided by the Financial Services Ordinance and subsidiary regulations.

The Commission comprises eight members, including the Commissioner who is also the Chairman, who are appointed by the Governor with the approval of the Foreign and Commonwealth Secretary in the U.K.

The Commissioner is also responsible for the supervision of banks and insurance companies under the requirements of the corresponding ordinances. Commission personnel now include individual supervisors for banking, insurance and controlled activities.

On 1st January 1996 the Criminal Justice Ordinance 1995 came into force. This extended money laundering offenses from drug trafficking to all crimes. Persons carrying on relevant financial business are required (as they have been since 1994) to put into place measures to ensure the prevention, detection and reporting of suspicious transactions.

The Commission has taken the view that this requirement should apply to all its licensees and not just those carrying out relevant financial business. Gibraltar is, therefore, fully in compliance with the FATF 40 Recommendations, the Basle Principles, the Vienna Convention and the EU directive on Money Laundering.

Return to Index