Development of policy, preparation and drafting of legislation in relation to the financial reporting of companies; the negotiation of EU proposals on this area of company law and the transposition of EU law into domestic law.
Companies (Accounting) Act 2017
The Companies (Accounting) Act 2017 was enacted in May and all but section 80 was commenced on 9 June 2017.
This Act transposes the EU Accounting Directive (2013/34/EU) and makes a number of changes to the existing financial reporting requirements of Irish companies. In particular, it simplifies financial reporting for small companies. It also introduces a new category of company, the "micro company" and provides for reduced financial reporting obligations on such companies.
The Act also increases the thresholds for the “small company” category so that more companies will qualify as small in future and become eligible for cost saving provisions such as the audit exemption.
Apart from the changes in financial reporting for small and very small companies, the Act also raises the size threshold for medium sized companies and groups. The Act also introduces new reporting requirements for certain companies that are active in extractive industries and obliges some unlimited companies, funds and investment companies to file financial statements in the Companies Registration Office.
The Act applies to financial statements in respect of financial years beginning on or after 1 January 2017. In the case of certain companies, some of its provisions can be applied to financial years beginning before this date.
The European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 were signed into law on 30 July 2017 and came into operation on 21 August 2017.
The Regulations, which transpose EU Directive 2014/95/EU, require certain specified large companies such as banks, insurance undertakings and listed companies with more than 500 employees to annually disclose certain company information of a non-financial nature. That information includes environmental matters, social and employee related issues, respect for human rights and bribery and corruption matters. The Regulations also require large listed companies to report annually on the diversity policy applied in respect of the board of directors.
The Regulations apply to financial years beginning on or after 1 August 2017.
Proposal for an EU Directive regarding disclosure of income tax information by certain undertakings and branches
The European Commission adopted in 2016 a Proposal for a Directive to amend the Accounting Directive and to provide for disclosure of income tax information by certain undertakings and branches on a country by country basis (COM(2016) 198). This Proposal would apply to large multinational corporations operating in the EU and with a consolidated net turnover of more than €750 million a year. Such corporations will be obliged to publish annually information on the profit made and taxes paid in each EU Member State on a country by country basis. A similar ‘country by country’ breakdown of this information will be published with respect to activity in specified tax jurisdictions outside the EU, while aggregate figures will be provided for other tax jurisdictions.
The proposed Directive is under negotiation between the European Parliament, Council and the Commission.
Companies (Amendment) Act 2017
The Companies (Amendment) Act 2017 was signed on 7 June and commenced on 18 July 2017.
The Act amends section 279 of the Companies Act 2014. Section 279 allows certain US-listed holding companies registered in Ireland to use American accounting standards, known as US Generally Accepted Accounting Principles (US GAAP), when preparing and filing their financial statements.
The 2017 Act extends the deadline in section 279 to 31 December 2030. Secondly, the Act provides that companies incorporating in the State after the date of commencement will not be eligible to avail of section 279.