The European Union (Disclosure of non-financial and diversity information by certain large undertakings and groups) Regulations 2017 (the Regulations) came into effect on 21 August 2017.

The Regulations require the directors of certain large companies to include:

  • in the company's directors’ report a statement containing certain non-financial information; and
  • in the company’s corporate governance statement a diversity report.

The Regulations will apply to financial years beginning on or after 1 August 2017.

What companies do the Regulations apply to?

The requirement to prepare a non-financial statement applies to any company which:

  • qualifies as a large company under Section 280H of the Companies Act 2014 (the 2014 Act)
  • is the holding company of a group
  • has an average number of employees which exceeds 500, and
  • is an ineligible entity

Broadly, "ineligible entities" are companies which, for various reasons, don’t qualify for audit exemption under the 2014 Act.

The requirement to prepare a diversity report applies only to a “large traded company” ie a large company (within the meaning of the 2014 Act) that is a PLC, DAC, company limited by guarantee or a public unlimited company and has debentures (and/or, in the case of a PLC, shares) traded on a regulated market within the EEA.

Non-financial statement

The non-financial statement should include information necessary for an understanding of the development, performance, position, policies pursued, risks and impact of the company’s activity relating to the following matters:

  • environmental matters
  • social and employee matters
  • respect for human rights
  • bribery and corruption

Diversity report

A diversity report should include:

  • a description of the diversity policy applied in relation to the company’s board of directors with regard to aspects such as age, gender or educational and professional backgrounds, and
  • information about the objective, implementation and results of the diversity policy

Statutory auditors

The statutory auditors of a company to whom the Regulations apply are required to establish that the company has prepared the non-financial statement and, in the case of large traded companies, to state whether in their opinion the diversity report contains the required information.

Penalties for non-compliance

A person who fails to comply with the provisions of the Regulations shall be guilty of an offence and be liable to a class A fine (not exceeding €5,000) or to imprisonment for up to six months, or both.

European Union (Disclosure of non-financial and diversity information by certain large undertakings and groups) Regulations 2017 (S.I. 360/2017)