Brexit caused business uncertainty and currency volatility and this impacted a number of areas.
Key legal highlights for 2016 included:
On 15 November 2016, the EU (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 came into force requiring the majority of companies and other legal entities incorporated in Ireland to hold adequate, accurate and current information in respect of its beneficial owners and to insert this information in their own beneficial ownership register.
The new requirements do not apply to entities which are either listed on a regulated market that is subject to disclosure requirements consistent with EU law or are subject to equivalent international standards, which require adequate transparency of ownership information. Companies need to be aware of these requirements when dealing with proposed investors and when drafting and negotiating investment agreements.
Market abuse regulation
On 3 July 2016, market abuse law – the law that regulates insider dealing, provision of information to the markets, market manipulation and the reporting of directors’ dealings – was aligned for all quoted companies. Regulation 596/2014 and various Commission measures made under that Regulation now apply throughout the EU, replacing the 2003 Market Abuse Directive and other domestic law. The Central Bank of Ireland is now the single regulatory authority responsible for investigating and enforcement under market abuse law.
European Union (Statutory Audits) Regulations 2016
The new Irish Statutory Audit Regulations came into effect on 17 June 2016 and give effect to much of the EU Statutory Audit Directive 2014 (Directive 2014/56/EU) and give further effect to the EU Audit Regulations (Regulation (EU) No 537/2014). These rules impact upon all audited organisations. Key changes include:
Organisations which are classified as “Public Interest Entities” must now rotate their statutory auditors at least every ten years, except in certain exceptional cases
Any contractual clause which has the effect of restricting the shareholders’ choice of auditor to certain categories or lists is now void
There are new rules for dealing with the conduct of audits
What’s on the horizon for 2017?
In early 2017, it is expected that the Companies (Accounting) Bill 2016 will be enacted and will come into operation to bring new EU rules on financial statements into Irish law and to tidy-up some anomalies in the Companies Act 2014. This Bill will introduce less burdensome accounting requirements for small companies that qualify as “micro” companies, introduce new thresholds for small and medium-sized companies and abolish “non-filing structures” which rely on the current exemption from filing accounts for unlimited companies with certain non-EU/EEA shareholdings. We understand that the mandatory provisions under the Bill are to apply to financial years commencing on or after 1 January 2017.
The Statutory Audits Bill 2016 is expected in early 2017. This Bill will further transpose the EU Statutory Audit Directive 2014 and give effect to some elements of the EU Audit Regulations. It will deal with the selection of available options to Member States under the EUStatutory Audit Directive 2014 and the Bill is expected to also correct some other unintended drafting errors in the Companies Act 2014 (which will not be addressed in the Companies (Accounting) Bill 2016).
The EU Commission has proposed changes to the Shareholder Rights Directive. These changes will further strengthen shareholders’ rights in companies listed or traded on a regulated market in the EU. Shareholders will be able to hold management accountable for their decisions and ensure that they take into account the business' long-term interests. Formal adoption looks likely in early 2017 and Member States will have 24 months for transposition.
The EU Commission has proposed a new Prospectus Regulation, which may come into force at EU level in early 2017 and at national level later in 2017 or 2018. This Regulation is intended to improve access to finance for companies, help to reduce regulatory burdens, deliver shorter prospectuses, better and more concise information for investors and a fast track regime for companies that frequently tap capital markets. Proposals include an exemption for start-ups and SMEs raising up to €1 million on local growth markets from preparing a prospectus.