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New EU regulations on company accounts
PRACTICE AREA GROUP: Corporate
The Minister for Enterprise, Trade and Employment recently published the European Communities (Directive 2006/46/EC) Regulations (S.I. 450 of 2009) (the “Regulations”), which implement Directive 2006/46/EC on company reporting into Irish law.
Some of the key changes arising from the Regulations include:
- A requirement that all listed companies provide a corporate governance statement in their annual report (the “Corporate Governance Statement”) in respect of each financial year end. The Corporate Governance Statement must contain certain prescribed information which is set out in the Regulations.
- The Corporate Governance Statement must be audited by the auditors of the company. The auditors of the company are obliged to verify that the company has prepared the Corporate Governance Statement in accordance with the requirements of the Regulations.
- All Irish companies (listed and unlisted) are required to disclose all off-balance sheet arrangements including their financial impact in notes to the annual and consolidated accounts.
- Companies will be required to provide information in the notes to the accounts of the company in relation to the nature and purpose of off-balance sheet arrangements, where the risks or benefits arising from such arrangements are deemed material and the disclosure of such risks or benefits is necessary for assessing the financial position of the company.
- All Irish companies (listed and unlisted) will also be subject to disclosure of “related party transactions” in certain circumstances.
- The right of companies to use fair value rules has been extended to additional financial instruments under the Regulations.
On 2 March 2010, the European Communities (Directive 2006/46/EC) Regulations (S.I. 83 of 2010) (the “Amending Regulations”) were signed into law. The Amending Regulations clarified a number of issues in relation the existing Regulations and also made certain changes to the confirmation required to be provided by the auditors in respect of the Corporate Governance Statement.