The Companies (Accounting) Bill 2016 was recently published. The main purpose of the Bill is to transpose Directive 2013/34/EU on financial statements and related reports of certain types of undertakings into Irish Law. The Bill also proposes some amendments to the Companies Act 2014 to rectify technical issues and anomalies arising from the Act which have been identified since it came into operation.

End of ‘non-filing structures

The scope for unlimited companies to avoid filing financial statements will be reduced significantly. At the moment only certain designated unlimited companies (a “Designated ULC”) must file financial statements in the Companies Registration Office (the “CRO”). Irish unlimited companies with at least one member being a non-EEA incorporated unlimited liability company fall outside the definition of a Designated ULC and therefore are not presently required to file financial statements. Many Irish group companies have availed of the above exemption to put in place what is known as a ‘non-filing structure’. Non-filing structures involve inserting non-EEA companies into the group structure so as to fall within this exemption from the requirement to file accounts while retaining limited liability status for the group’s members. However, due to the amended and much boarder definition of “Designated ULC” introduced under the Bill, unlimited companies with a non-filing structure in place will fall within the scope of the definition and as a result will be required to file financial statements in the CRO.

Introduction of the “micro” company and new thresholds for small and medium sized companies

Less burdensome accounting compliance requirements will be introduced for smaller companies that qualify as ‘micro’ companies. In addition, changes are proposed for the criteria for companies to qualify as ‘small’ and ‘medium’ sized companies. To qualify for a category, a company must not exceed 2 of the 3 thresholds set out in the table below. The new proposed thresholds are a significant increase from the existing thresholds applicable to ‘small’ and ‘medium’ companies which are set out in bold in the table below.

Micro

Small

Medium

Net turnover

€700,000

€12,000,000

(€8,800,000)

€40,000,000

(€20,000,000)

Balance sheet total

€350,000

€6,000,000

(€4,400,000)

€20,000,000

(€10,000,000)

Employees

10

50

250


Disclosure of Directors’ Remuneration

Micro companies will also be exempt from disclosing directors’ remuneration in their financial reports.

Disclosure of payments to Governments by companies in the mining, extractive or logging industries

New provisions are proposed which will require certain companies in the mining or extractive industries or the logging of primary forests to prepare and file annual reports on payments made to governments with the CRO.

Changes to the Companies Act 2014

The Bill only amends a small number of the anomalies and issues identified as arising under the Act. However, it is anticipated that more of the issues and anomalies identified since the Act came into operation will be addressed in the subsequent drafts of the Bill to be published.

Timing

At the moment there is no firm timetable available for when the Bill will become law, nor is it clear as to which financial period the new accounting related changes will be applicable. However, it is hoped that the Bill will apply to the accounting periods beginning on or after 1 January 2017. Although irrespective of which accounting periods are affected, clients with non-filing structures in place should bear in mind that the previous year’s figures will have to be included in the financial statements as comparator figures in the usual way.

Conclusion

We will be following the progress of this Bill closely and notify you of any further developments, particularly as soon as we have knowledge of which financial year the accounting related changes will apply.

We are working closely with our clients that have non-filing structures in place and will be impacted by the new changes proposed under the Bill. Should you have any queries or concerns arising from the changes, we would be happy to help you further.