2017 has seen numerous changes to the laws affecting Irish companies. The majority of the changes derive from EU law. We highlight some of the main changes introduced last year.
Companies (Accounting) Act 2017 (CAA 2017)
The most significant piece of legislation affecting companies in 2017 was the CAA 2017. The CAA 2017 both amended and inserted new sections into the Companies Act 2014 (CA 2014). We discuss some of the main changes made under CAA 2017:
- The main purpose of the CAA 2017 was to transpose into Irish law a 2013 EU Accounting Directive which aims to reduce the financial reporting obligations burden of smaller companies. The CAA 2017 introduced a new regime for 'micro undertakings' which are a subset of 'small undertakings'. In addition, CAA 2017 introduced mandatory requirements for large companies, large groups and ineligible companies that are active in the mining and extractive industries or logging of primary forests to prepare and file annual reports on payments made to governments.
- The definition of designated ULCs was amended under the CAA 2017 and is now much broader. This has the effect of requiring many unlimited companies which had set up a certain group structure so that they were not required to file accounts in the CRO while, at the same time, allowing their ultimate shareholders to benefit from limited liability to now be required to file financial statements in the CRO.
- The CAA 2017 also made a number of changes to the CA 2014 to correct some anomalies and typographical errors identified after it came into operation.
Click here for a more detailed overview of the changes.
Introduction of measures to enhance transparency for large companies and groups
New regulations require certain large companies and groups to make disclosures of non-financial and diversity information for financial years commencing on or after 1 August 2017 and came into force in August 2017. Companies should assess whether they are required to comply with the regulations and, if so, ensure that they have adequate measures in places to ensure they comply with their obligations.
Click here for in-depth review of the measures.
US GAAP may in certain circumstances be availed of for a limited period
A provision under the CA 2014 allows certain Irish companies that are registered with, or are otherwise subject to the reporting requirements of, the Securities and Exchange Commission (SEC) to prepare their financial statements in Ireland using US GAAP. This provision was a temporary measure and was due to end on 31 December 2020. The Companies (Amendment) Act 2017 has extended this deadline by a further 10 years, to end on 31 December 2030. It has also placed a limitation on this measure where in order to avail of it, a company must have been incorporated in Ireland before 18 July 2017.
What's on the horizon for 2018?
We expect numerous more laws to commence in 2018 which will affect companies, these include:
- A law giving the Registrar of Companies the responsibility for establishing and maintaining the central register of beneficial ownership of companies and certain legal entities (expected Q1 of 2018). Companies will have an extended period of time within which to make their relevant filings and based on recent political agreement reached at a European level the register will ultimately be accessible by the public. See our previous insight for further details.
- The Companies (Statutory Audits) Bill 2017 will be enacted and come into force in 2018.
- The modernisation of Ireland's corruption and anti-bribery laws (expected Q4 of 2018). A noteworthy change relates to the criminal liability of companies.
- The coming into effect of a provision under CAA 2017 which will see an expansion of the application of the filing requirements of foreign body corporates that establish 'branches' in Ireland to include any foreign undertaking whose members' liability is unlimited and which is a subsidiary undertaking of a body corporate whose members have limited liability. This amendment is expected to commence from June 2018.
- Legislation to establish the Office of Director of Corporate Enforcement as an independent agency and to correct typographical errors and anomalies in the CA 2014.
- From 21 July 2018 certain new exemptions will apply to prospectus legislation which include an exemption from the obligation to publish a prospectus where the total consideration of a capital raising or crowdfunding project (being an offer of securities to the public) in the EU is less than €1 million, calculated over a 12 month period.
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.