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Ireland - Companies Act 2014: Don’t Hit the Snooze Button on Compliance!
As we begin to approach certain key milestone dates under the Irish Companies Act 2014, now is the time to check whether your organisation is up to speed with the key new compliance requirements introduced by the legislation.
Below is a checklist of items which directors of Irish companies and their advisors should be focusing on at this time.
The time to act is now!
1. Directors' Compliance Statements - Will your Irish limited liability company have turnover of more than €25 million and a balance sheet (gross asset) total of more than €12.5 million in its current financial year, where that financial year began on or after 1 June 2015?
If the answer is yes, the company falls within the new Directors’ Compliance Statement regime. This means that the directors are obliged to, amongst other things, (i) prepare a Compliance Policy Statement setting out the company’s policies as regards compliance with certain Irish company law obligations and Irish tax law; (ii) put in place appropriate arrangements or structures that are designed to secure material compliance with such laws; and (iii) conduct a review of the company’s compliance measures during the financial year. A compliance statement is also required to be included in the directors’ report to the financial statements confirming that these matters have been done or, if not, setting out the reasons for non-compliance.
Failure to comply with these requirements is an offence under the Companies Act 2014 – this requires some dedicated focus by those Irish companies who are covered by this provision.
2. Audit Committees – Large companies must decide whether to form an audit committee if they have turnover of more than €50 million and a balance sheet (gross asset) total of more than €25 million (on a consolidated basis) for each of the current financial year and the previous financial year.
Companies in this category must either establish an audit committee, or decide not to do so and set out the reasons for the decision in their directors' report.
For Irish group subsidiaries, where many of the functions of an audit committee are effectively already undertaken at group level, the expectation is that a decision would be taken not to establish an audit committee. However this is something that should be considered and agreed by the board on a case by case basis.
3. Conversion of Private Limited Companies – Private limited companies formed before 1 June 2015 must convert to either (i) the new form of private company limited by shares (LTD); or (ii) the designated activity company (DAC) form prior to November 30, 2016, with the vast majority likely to opt for the LTD as the new simplified form of private limited company.
For those companies who have not yet converted, they should take the steps to do so soon to ensure they meet the deadline given the inevitable ‘traffic’ which will be seen at the registry in the lead up to November 30.
Check out our Conversion Guide for further information.
4. Unlimited Company Change of Name – November 30, 2016 is also the deadline for unlimited liability companies to change their name to include the suffix "Unlimited Company" at the end of their existing name.
Now is the time for those companies who have not yet made the change (and who do not have an exemption from the requirement) to finalise arrangements to make the change and to ensure that all implications of the name change for the business have been considered.