In this briefing, we take a look back over 2017 and give an overview of key changes made to the Companies Act, 2014. We also take a look forward to proposed changes in 2018.
1. Companies (Accounting) Act 2017
The Companies (Accounting) Act 2017 (the "Accounting Act") commenced on 9 June 2017. The main purpose of the Act was to transpose Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings (the "Accounting Directive"). The aim of the Accounting Directive is to simplify and reduce the administrative burdens associated with the preparation of financial statements for enterprises, in particular SMEs. The Act also made a number of miscellaneous amendments to the Companies Act 2014 (the "Companies Act") not related to the transposition of the Accounting Directive.
Key changes under the Act include:
- Increase in the size thresholds for companies to qualify as "small" or "medium" and the introduction of a new "micro" category of company.
- Simplified regime for micro companies with regard to the preparation and filing of financial statements.
- Broader definition of 'designated ULC' such that more unlimited companies are obliged to file financial statements. The changes are intended to capture unlimited companies that have ultimate limited liability. Where a company is a "pure" unlimited company (i.e. there is no ultimate protection of limited liability in the group structure) it will still be possible to avail of an exemption from filing financial statements.
- Narrowing of the definition of 'credit institution'.
Read our full briefing on the Accounting Act here.
2. Companies (Amendment) Act 2017
The Companies (Amendment) Act 2017 (the "Amendment Act") commenced on 18 July 2017.
Changes under the Amendment Act are:
- New criterion to the definition of "relevant holding company", which is a company that is eligible to use US Generally Accepted Accounting Principles (GAAP). The new criterion is that the company must be incorporated in the State prior to the commencement of the Act.
- Extension of the use of GAAP by relevant holding companies from financial years ending at the latest on 31 December 2020, until financial years ending at the latest on 31 December 2030.
3. European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017
The European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 commenced on 21 August 2017 and apply for financial years after 1 August 2017. The Regulations transpose EU Directive 2014/95/EU and require
- some large companies to provide information on non-financial matters in their directors' report and,
- large listed companies to include in their corporate governance statement a report on their diversity policy with regard to their board of directors.
4. Companies (Statutory Audits) Bill 2017
The Companies (Statutory Audits) Bill 2017 (the " Bill") is currently making its way through the Dáil. The cumulative aim of the Bill is to further improve audit quality. The Bill will amend the Companies Act and insert a new Part 27 into the Act. The government's intention is to enact the Bill in early 2018. After enactment there will be one single body of legislation governing statutory audits in Ireland.
Proposed changes under the Bill include:
- Dispensing with the requirement for an audit committee for certain public interest entities.
- Applications to extend time for the filing of annual returns to be made before the High Court only.
- Giving the Irish Auditing & Accounting Supervisory Authority (IAASA) appropriate powers to ensure effective monitoring and enforcement of new requirements.
- Replacing the term 'public auditor' with 'statutory auditor'.
5. Central Register of Beneficial Ownership
Although the register of beneficial owners is an anti –money laundering rather than a company law creation, it is relevant as it applies to companies formed and registered under the Companies Act.
The Companies Registration Office (CRO) recently published a notice that a Statutory Instrument is expected in the coming months assigning responsibility to the Registrar of Companies for the establishment and maintenance of the central register of beneficial ownership of companies and industrial and provident societies (I&Ps). According to the CRO notice the register is expected to be in place and ready to be populated in early 2018. It is expected that there will be an extended time-frame for companies and I&Ps to file without being in breach of the statutory duty to file.