The Companies (Accounting) Bill 2016 (the Accounting Bill), passed through the Report and Final Stages in Dáil Eireann last night, when a number of technical amendments were discussed and agreed.

Amendment to non-filing regime for ULCs - position of ULCs which are holding companies

One of the changes agreed during last night's debates will be of interest to some private unlimited companies, known as ULCs. It was introduced by the Minister for Jobs, Enterprise and Innovation (Deputy Mary Mitchell O'Connor) in response to what she described as concerns expressed to her by some companies about a particular amendment which the Accounting Bill will make to the Companies Act 2014, discussed below.

The Accounting Bill proposes to amend Section 1274 of the Companies Act 2014 in order to give effect to some provisions of the EU Accounting Directive which are designed to limit the ability of ULCs to avoid the obligation to file their accounts. This Section distinguishes ULCs which are "designated ULCs" as defined by the Section, from those which are not. If the ULC is a "designated ULC", it will have to file its accounts.

One of the new criteria that the Bill introduces in order to qualify for the exemption from having to file accounts is that the unlimited company is not a holding company of one or more limited liability subsidiaries. However, the effect of the amendment agreed during last night's debates will be that the application of this particular provision will be deferred, and will only come into operation on 1 January 2022 for any financial year which commences on or after that date. The effect of this change would appear to be that an unlimited company can continue to be a holding company of one or more limited liability subsidiaries.

However, in order to be able to avoid the obligation to file its accounts, it would appear, as things currently stand, that the ULC will also have to ensure that it does not otherwise fall within the definition of "designated ULC", having regard to the remaining provisions of Section 1274, as proposed to be amended by the Accounting Bill.

The changes proposed by the Accounting Bill as amended are highly technical, and the impact of this change on any current or proposed unlimited company non-filing structures will need to be carefully considered when the Accounting Bill is eventually enacted, in order to assess the implications for any arrangements designed to ensure that ULCs will not have to file their accounts in future.

Next steps

The Bill will now be sent to Seanad Eireann, and it is understood that the debates in Seanad Eireann (during which time further amendments to the Bill may be proposed) will commence early next month.