The Companies (Accounting) Act 2017 was signed by the President on 17th May 2017 and will come into operation on 9th June 2017. The Act will apply to financial periods beginning on or after 1 January 2017 for financial statements and other reports.
Section 14 of the Act provides for early adoption by the directors of a company of certain specified provisions (set out in Section 14(4)), mainly to do with financial statements for financial years beginning on or after 1 January 2015.
The main purpose of the Act is to transpose the EU Accounting Directive introducing the Micro Company; extend the definition of a designated ULC and some amendments to the Companies Act 2014.
The majority of the Act is concerned with the amending Part 6 of the Companies Act 2014 regarding the disclosure requirements and layout of the financial statements. The following are the main accounting changes:-
The Act introduces the new Micro Company and amends the size requirements for company types. To qualify for a category, a company must not exceed 2 out of 3 thresholds:
|Micro company||Small company||Medium |
|Balance sheet total||€350,000|
|Average No. Employees||10|
* The old thresholds are indicated in the brackets.
The Micro Company introduces a simplified financial statements and disclosure requirements. Particularly the exemption from disclosure directors’ remuneration in the financials statements and from preparing a directors report.
Group financial statements
The exemption from preparing group financial statements will only apply to micro and small companies.
Abridged Financial statements
Medium companies are now required to file full financial statements. Only micro and small companies will be permitted to file financial statements.
Other accounting changes
- Consideration paid to or received by third parties for providing director services must now be disclosed
- The guarantee provided by a parent company with regard to the liabilities of its subsidiary will be required to cover commitments entered into it by its subsidiary
New Definition of ULC
The Act expands the definition of a designated unlimited company increasing the number of private unlimited companies (“ULC”) that will be required to file financial statements with the Companies Registration Office. The new definition will apply to financial years commencing on or after 1st January 2017.
Unlimited companies and in particular existing Non Filing Structures should examine the definition of a designated ULC and apply the provisions to the company and if necessary the group and determine whether it will deem to be a designated ULC and will be required to file financial statements for financial years commencing after 1st January 2017. An unlimited holding company that has a limited liability undertaking will be exempt until January 2022.
Many of the non-filing structure that have been in place will now have to file financial statements at the CRO for the first time and its important these companies consider these new provisions as soon as possible and understand the impact on the company’s disclosure requirements.
6 month Annual Return and audit exemption
The fixes the issue regarding the late filing of the 6 month annual return and the ability to avail of the audit exemption for the first financial statements
Unlimited Company Suffix Exemption
The Companies (Accounting) Act 2017 removes the option for an unlimited company to apply for a suffix exemption.
This Act does not affect any exemption already granted by the Minister. Only DACs/CLGs can apply for further exemptions.
Payments to third parties for services of directors
Consideration paid to, or receivable by, third parties for making available the services of any person as a director of the company or any of its subsidiaries or otherwise in connection with the management of the company’s affairs must be disclosed in the financial statements.
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