Most of the provisions of the Companies (Accounting) Act 2017 (the "Act") came into effect on 9 June 2017.
The main purpose of the Act is to transpose the "EU Accounting Directive"1 into Irish law. This Directive reduces filing obligations for certain private micro and small companies. It also brings certain unlimited companies and limited or unlimited partnerships whose members are limited liability companies within the scope of its filing requirements (in this respect, see our previous update Major Changes to Filing Obligations for Unlimited Companies).
This update does not summarise all provisions of the Act. Rather it focuses on one particular element that may have significant implications for sponsors of Irish investment funds (both UCITS and AIFs).
In an investment funds context, the Act introduces: (i) changes to the European Communities Undertakings for Collective Investment in Transferable Securities Regulations 2011 that now require UCITS investment companies to file annual financial statements (together with directors' and auditors' reports) with the Irish Companies Registration Office ("CRO"); and (ii) corresponding changes to the Companies Act 2014 that have the same effect for AIF investment companies.
Such filed accounts will then be publicly accessible records.
To date, while investment companies have been required to file audited annual financial statements2 with the Central Bank of Ireland (as well as providing them to shareholders and complying with any stock exchange listing or foreign registration obligations), they have not been obliged to file accounts on a publicly accessible basis.
Eleven Month Deadline
Specifically, in both UCITS and AIF cases, statutory financial statements must be filed at the CRO within eleven months of the relevant financial year end.
The eleven month deadline will mean that much proprietary or potentially sensitive data in such financial statements will be somewhat historic and therefore less sensitive. However, it remains the case that UCITS and AIF investment companies will be making certain financial information publicly available that was not previously public.
ICAVs not in scope
It is worth noting that Irish collective asset-management vehicles ("ICAVs") established under the Irish Collective Asset-management Act 2015 (the "ICAV Act") fall outside the remit of the EU Accounting Directive and therefore corresponding changes have not been made to the ICAV Act. ICAVs are therefore not captured by this new requirement.
In some cases this may present another compelling reason to consider converting an existing Irish fund from an investment company structure to an ICAV. A summary of some of the key advantages of the ICAV over the investment company structure is set out in the Appendix - with the requirement to now publicly file annual financial statements added as the latest factor.
The new requirements regarding financial statements described above will apply to financial years commencing on or after 1 January 2017.
 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC.
 As well as unaudited semi-annual financial statements in the case of UCITS investment companies and retail investor AIF investment companies, but not qualifying investor AIF investment companies.
Key Features of the ICAV
|No Risk Spreading Rules||ICAVs are not subject to legal risk spreading obligations, making them extremely useful for single asset funds and/or funds with very concentrated positions. However ICAVs structured as UCITS are still subject to the principle of risk spreading and the diversification requirements under the UCITS Directives.|
|EEA Passport||As the ICAV can be established as either a UCITS or an AIF structure, the ICAV can avail of the EEA UCITS and/or AIFMD marketing passports respectively.|
|Separate Sub-Fund Accounts||Umbrella ICAVs can produce separate financial reports and accounts for sub-funds with differing year end dates (as opposed to one consolidated set of accounts for the entire umbrella). This has proven attractive for promoters of multi-manager or hosted platforms concerned by sensitivities in disclosing differing fee arrangements or portfolio compositions of individual managers within the same platform.|
|Tax Efficiencies||The ICAV will constitute an investment undertaking for Irish tax purposes and will be subject to the same gross roll-up regime that currently applies to existing Irish investment funds.|
|Ability to "check-the-box" for US tax purposes||An ICAV may elect to "check the box" and be treated as a pass-through entity for US federal tax purposes.|
|Efficient Constitutional Changes||There is no requirement to obtain prior shareholder approval for changes to the constitutional document of an ICAV, the Instrument of Incorporation, where the depositary of the ICAV certifies that the changes to the Instrument of Incorporation do not prejudice the interests of shareholders.|
|Ability to Dispense with AGMs||To reduce the administrative burden on funds, directors of an ICAV are permitted to elect to dispense with the holding of an annual general meeting ("AGM") by giving written notice to all of the ICAV's shareholders. There is a safeguard in that shareholders in the ICAV holding 10% or greater of shares can demand an AGM.|
|Exemption from publicly filing annual report at the CRO||Unlike funds established as public limited companies, ICAVs are not required to publicly file annual reports with the CRO. Accounts are filed only with the Central Bank.|
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.