Recent comments by the CEO of America’s biggest bank suggest AGMs are losing power and relevance. David W Duffy delves into the details Annual general meetings (AGMs) are crucial in corporate governance. They are a legal necessity and provide a valuable opportunity for shareholders to speak to leaders. These days, however, criticism is surfacing in some companies that AGMs are becoming a nuisance. Activist pressure So, what exactly is turning the tide on AGMs and their perceived value? In short, the activist pressure exerted recently at some very high profile AGMs.  At Disney’s most recent AGM in early April, for example, shareholders were encouraged to vote in favour of a proposal that would see the entertainment giant pay for services for people choosing to detransition. The Disney proposition had no material impact on the company’s strategy, and JPMorgan Chase Chief Executive Jamie Dimon took issue.  According to Fortune, Dimon claimed that AGMs were falling victim to “spiralling frivolousness”, dominated by lobbyists, activists and interest groups, which bear little relation to the company’s strategic direction.  There’s no “right or wrong” for a statement like this; it is really just a measure of whether or not other corporate leaders agree.  The leaders of some companies could easily agree with Dimon, especially those at the helm of companies whose AGMs are rife with debate. In companies where AGMs are quieter – sometimes to the point of formality – leaders may not need to worry. Importantly, board members and other stakeholders must remember that anything is possible at an AGM. They could, for example: serve as a hotbed for debate; become a forum for topics considered politically charged (anything from geopolitics to religion to social issues to climate change); feature shareholder proposals put forward solely to make a point, win support or express anger; or seem like a waste of time to corporate leaders because of all the above.  None of this is a given, however. It is far more likely in bigger, global companies – household names consumers feel are so big that their impact stretches beyond their mission statement. In these scenarios, stakeholders generally want the company to take a stance on every political issue, and shareholder proposals at AGMs are part of this. Are AGMs fit for purpose? The threat of any of the above scenarios may mean that some companies’ AGMs are not fit for purpose. It depends on the goals of the people who attend. Companies can’t just get rid of AGMs, however.  AGMs are a cornerstone of business. They often serve as the one opportunity many small shareholders have to speak to the company’s leaders – and, by law, this chance must always be available.  An organisation considering changing its AGM must first examine its articles of association. These are usually where AGM rules like voting procedures and scheduling are found. Beyond this, there may be wiggle room. AGM options It is advisable that leaders and participants accept that the AGM will be active, full of differing opinions and multiple proposals that go nowhere, making it feel like a distraction. If you approach the situation with this prepared mindset, you might find it easier to register the elements of impactful processes beneath the noise.  It’s also advisable to get proactive about issues. You may be better prepared if you anticipate the problems that shareholders are likely to raise and discuss them at the executive and board levels. In the process, you could gain critical insights that shape your understanding of shareholder opinions and frame a more robust conversation. However, if an organisation still wants to change their AGM – and the articles of association allow it – boards can change things like length, the requirement for in-person attendance and the time balance between corporate leaders and shareholders. It must be noted, though, that if a board changes any of these elements, it may appear to be attempting to be creating barriers to debate and shareholders might not respond well. The bright side Many companies have seen their AGMs dominated by activist noise in recent years. While this issue can be addressed by making changes, the bottom line is that the AGM as a concept is here to stay. Organisations should view the “noise” as an invitation to develop relationship management skills and stay on top of emerging trends. These are hugely important for good corporate leaders, and a busy AGM could be the time to flex those muscles. David W Duffy is a founder of the Corporate Governance Institute

With the first reporting deadline for CESOP around the corner, it is critical that your company is fully prepared, writes Emma Broderick From 2024, all European Union (EU) payment service providers (PSPs) will be required under legislation to record and report transactional data in excess of 25 cross-border payments quarterly. This includes banks, electronic money institutions and other regulated payment institutions. The information given will be stored in a centralised European database – the Central Electronic System of Payment (CESOP) – and all information will be made available to anti-fraud experts. This has been brought in to help combat e-commerce VAT fraud. The first reporting deadline is 30 April 2024, meaning payment service providers have less than two weeks to file the report. Here are five key points to consider when helping payment service providers. The Central Electronic System of Payment (CESOP) report must be filed in the country where the PSP provides a payment service according to the payment license. For many providers offering payment services in multiple countries under an EU passport, a CESOP report must be filed in each country. Registration is required in most countries, but the manner of registration differs. In some countries, the PSP must apply to access the CESOP portal, while tax registration is required in other countries. Sometimes, the PSP must apply for a certificate. Unfortunately, in a few countries, it is necessary to have all three. The CESOP registration for Irish-resident PSPs can be completed using the online system operated by the Revenue Commissioners (Revenue). Revenue has also developed a Non-Resident Registration app for PSPs resident outside Ireland. In some cases, filing the CESOP report requires the use of special software, an electronic certificate, special encryption or an electronic signature. For example, in the Netherlands, you must have a public key infrastructure (PKI) government certificate and access to the Digipoort bestandsuitwisseling FTP. In Ireland, a PSP can engage the services of an intermediary to prepare and file the CESOP report without the PSP having to use any further technical tools. That is also the case in many other countries. There is a standard XML format for preparing and filing the CESOP report, but a specific heading is required in several countries. Revenue will have guidance on the headings needed for Ireland. The data in the CESOP report must comply with the CESOP requirements. There are various ways to check this. The European Commission website has a CESOP validation module, for example. However, please be aware that the European Commission has recently released new explanatory notes on the requirements of the file. The explanatory notes state that PCPs must consolidate all transactions for a single account under the same payee. Reporting per payment instead of per payee results in an incorrect report. Next steps We recommend PSPs establish the countries in which a CESOP report must be filed as soon as possible. If those countries require registration, it is important to do this immediately to meet the 30 April deadline. Although the market has asked for this, there is currently no general extension, which means many countries will continue to maintain the 30 April deadline. It is a good idea to test the data that will be filed to avoid it being rejected or returned with error messages. Emma Broderick is a Director with KPMG

Ireland’s placement in this year’s PwC Private Business Attractiveness Index has been helped by our start-up ecosystem and talent but challenges remain in other areas, writes Colm O’Callaghan Ireland ranks ninth among 33 EMEA countries as a location for private businesses to thrive, according to this year’s PwC Private Business Attractiveness Index. This is higher than Ireland’s 2022 ranking in 14th place, but below last year’s ranking in seventh place.   The index ranks the relative attractiveness of the environment and conditions needed for private businesses to thrive based on ten categories. These include: Macroeconomics. Private business landscape. Tax and regulatory environment. Sustainability and climate. Social responsibility and governance. Public health. Education. Skills and talent. Technology and infrastructure. Start-up ecosystem. While sustainability and climate, social responsibility, governance and public health all impact this year's rankings, three categories correlate highly with the countries’ overall ranking. These are private business landscape, technology and infrastructure, and start-up ecosystem. Virtually all jurisdictions in the higher positions perform strongly in these areas, more than making up for their lower scores in other categories. Conversely, tax and regulatory regimes and macroeconomic data categories – or even GDP per capita – have less bearing on the overall performance in the index. The index confirms that countries need to focus continually on the fundamentals that support an attractive environment for businesses in order to encourage and attract entrepreneurs and business founders. Trends in Ireland Several positives are driving Ireland’s attractiveness as a place for private businesses to thrive: It is in sixth place for ‘start-up ecosystem’; It is in ninth place for ‘education, skills and talent’; and It is in tenth place for ‘tax and regulatory environment’, up from 20th in 2021. Some concerning trends have outweighed these positives this year, however. Ireland’s ranking for ‘macroeconomics’ has fallen to sixth place this year, down from first last year. This is a significant slide, much of it stemming from the cost of living crisis and the fact that rising costs in the private business sector were most keenly felt in 2023. In this regard, Ireland ranked 30 out of 33 for the cost of electricity and 29 out of 33 for the cost of living metrics, impacting its overall macroeconomic standing. Ireland also scores 13th place and eighth, respectively, for ‘sustainability and climate’ and ‘social, responsibility and governance’. Ireland's overall fall by two positions to ninth place in this year’s index reflects the intense pressure some private businesses are under and the urgent need for continued support for this important sector of our economy.  In recent years, private businesses have had to deal with the pandemic followed by a period of steep inflation, high interest rates, electricity price rises and other cost pressures, often while working with restrained cash flows. Private businesses now face further cost pressures ranging from an increased minimum wage, pension auto-enrolment and employer PRSI hikes all coming together. It is good news that the Minister for Finance has announced that the interest rate on tax debt (frozen since the pandemic) has been cut to zero and that the Revenue Commissioners has indicating that it will take a flexible approach to the repayments. However, new and creative long term solutions may still be needed to help businesses service or repay the debt due while continuing to grow.  A key driver of Government over the next 12 to 24 months must be simple, clear and longterm policy measures aimed at supporting private businesses and further encouraging entrepreneurship and innovation. In particular, Ireland needs to do more to help support indigenous private businesses to become world leaders in their sector. Supporting businesses to invest in their finance teams and performance-led transformation could, for example, help them scale and internationalise faster. Business owners could also be given access to the reduced 10 percent rate of Entrepreneur Relief on the payment of a salary instead of having to sell their business. This would encourage the retention of businesses in the private sector and help to create more world-leading companies in Ireland under private ownership. Overall, if the Government can introduce a clear, simple and stated policy to help private businesses flourish and grow, doing so could make a long-term contribution to Ireland’s economy and naturally hedge our dependency on foreign direct investment. Colm O'Callaghan is a partner with PwC Private

Navigating capability issues in the workplace demands both empathy and procedural diligence. Gemma O’Connor explores how to address poor performance fairly Your employees are human; just like anyone, their work performance may dip occasionally. If this becomes an ongoing issue, an informal chat with the employee can often help shed light on what may be affecting their ability to complete their duties. Once the cause is identified and the employee receives suitable support, their performance will hopefully improve. After this, no further action will be necessary. However, if this informal approach does not work, it may be time to address the employee’s capability to do their job. What is capability? Capability in the context of employment law refers to an employee's skill, aptitude, health or any other physical/mental quality that allows them to complete their duties. Employment law recognises that employers may need to dismiss staff who no longer have the capability to complete their work. To understand whether an employee's poor performance may be due to their capability, you must ascertain if it is the case that they cannot do the work versus will not do the work. The latter may fall under the category of conduct. Capability policy A capability dismissal may be lawful if an employee does not have the capability, competence or qualifications to perform the work they are employed to do. A capability policy clearly outlines how the business will address capability issues that arise in the workplace. To do this, you will need to take steps to support your employees in working effectively. An informal discussion with the employee will often prevent the need for formal disciplinary action. A mutually agreed performance management solution should be explored first to help the employee overcome any capability issues. Performance-related capability dismissal The procedure to establish the basis for the dismissal must comply with the rules of natural justice and the terms of your written disciplinary procedures. In competency cases, you must outline the nature of the performance issues you need the employee to improve on. To determine whether a dismissal related to employee competency is fair, management should ask themselves if the employee is incapable of carrying out the job, and if so, do they have reasonable grounds to support that belief? Before moving to dismiss on the grounds of competence, you must first highlight the performance issues to the employee and grant them an opportunity to improve. With the right training and support, the employee may turn things around. Medical capability dismissal In many cases, the incapability of an employee to continue performing their job may result from ill health. Even if the employer's conduct is caused by ill health, dismissal will not necessarily be unfair, although it may also mean that the employer should take greater steps to avoid dismissal than would otherwise be the case. Before dismissing someone on the grounds of medical capability, you should obtain detailed medical evidence confirming that the employee’s return to work or recovery is unlikely. A dismissal based on medical capability must follow the principles of natural justice. You should: make sure you fully possess all material facts concerning the employee’s condition; ensure the employee receives fair notice that the question of a medical capability dismissal is being considered; and provide the employee with an opportunity to prove their case; if the employee isn't capable after a medical expert deems them so, ensure you explore reasonable accommodations that could render the employee fully capable (for instance, changing hours of work, etc). Unfair dismissal laws and capability Most unfair dismissal claims arise when an employer fails to follow fair procedures prior to confirming a dismissal. The Workplace Relations Commission will examine the following questions in an unfair dismissal claim, which are also applicable in cases involving capability: Did the employer believe that the employee was guilty of misconduct as alleged? If so, did the employer have reasonable grounds to sustain that belief? Did the employer carry out as much investigation into the matter as was reasonable before dismissing the employee? If so, was the penalty of dismissal proportionate to the alleged misconduct? The best way to minimise the risk of unfair dismissal claims is to have thorough disciplinary policies and procedures in place and to follow them strictly before confirming a dismissal. Gemma O’Connor is Head of Service at Penisula Ireland

Businesses can only grow if owners are able to give time and attention to new ideas. Moira Dunne outlines how you can win back time to put towards developing your business In most businesses, the primary focus is on customer satisfaction and delivering products and services to the highest standard. To stay competitive and evolve, however, businesses must also continuously develop and improve their offerings. Coming up with new ideas to innovate isn’t a problem for many business owners who are able to carve out time to work on them – but for others, doing so can be a challenge. So, what is the best way to prioritise business ideas within the cut and thrust of a busy day, often while juggling urgent requests from important stakeholders? We know that, if we don’t develop the business, it can stagnate. This can lead to anxiety that makes us want to do everything at once, resulting in decreased productivity and little business growth. Win back time To include longer-term development activities in your schedule, you need to start working smarter to free up some time each week. There are three simple steps that can help you take back time to focus on bigger projects that can ultimately move the dial for your business. 1. Think Think about what you need to do to develop the business. Do you need a strategy? Do you need to improve your products? How can you innovate in new areas? Start capturing those great ideas that swirl around your head on paper. Then, review the list, prioritise and make a plan to deliver. 2. Understand Before you can win back time, you first need to understand where time is currently wasted. By using a simple time log template or any task tracker app, you can gain insights into your time usage. Popular apps include ToDoist.com, Monday.com or Zapier.com. This exercise can reveal patterns and trends that allow you to adjust your focus and activities to win back time – this time can then be redirected into higher-value business activities. 3. Identify Winning back time each week may require some hard decisions. Consider the following: What is the best use of your skill, knowledge and experience? Do you spend too much time on tasks that could be delegated? Do you focus on the operational work because the more strategic projects are harder to think about or work on? Are you reluctant to delegate because you don’t think tasks will be done to your standard? These are all common challenges when a business wants to grow and develop. You may decide to let go of tasks you enjoy working on. You may have to trust others within the team to step up and do the job. Be prepared to train some team members to achieve the long-term gain that benefits the business. Changes you can make today Actions you can take to win back time today will vary from business to business. Here are some for your consideration: Complete high-value tasks early in the week to give you momentum and motivation, which will also minimise the odds of getting pulled off track. Spend less time on low-value tasks by batching them together to complete at set times in the day. Leave the low-focus tasks until your low-focus time of day. Give yourself permission to say no. Protect time for high-value work by establishing routines, such as days without meetings or time blocks when you do not look at emails. Delegate or outsource what you can. Include regular reviews and feedback to ensure success. Share a document with the whole team to capture new ideas on an ongoing basis. Review this document at a set time, list and prioritise, then select the key ideas to progress. Moira Dunne is Founder of beproductive.ie

The research and development tax credit encourages new ways of thinking… just not, as it seems, from everyone, writes Dr Brendan McCarthy The most recent Worldwide R&D Incentives Reference Guide from EY demonstrates how most of the 46 jurisdictions discussed in the guide give preferential tax treatment to business research and development (R&D) expenditure in broadly similar ways. Subject to maintaining detailed records, eligible companies can typically offset the credit against their other tax liabilities or claim a refund in the form of cold, hard cash. When we consider the amount of money large pharmaceutical, medical device and other similar companies are likely to invest in R&D on an ongoing basis, it should come as no surprise that this credit can often run into many hundreds of thousands of euros, facilitating even further investment in R&D by both multinational companies and SMEs year after year. Ireland remains an outlier, however, in two important respects. First, for accounting periods commencing on or after 1 January 2024, eligible companies in Ireland can now claim a credit of 30 percent (previously 25%) of qualifying R&D expenditure, payable in three annual instalments. This amount exceeds that offered by most Western countries (in some cases by double digits) and is twice that offered by New Zealand, a similarly sized economy. However, apart from the level of the credit itself, what sets the Irish regime even further apart from most other jurisdictions is the concept of ‘key employees’. Recognising the reality that it is not companies that have innovative ideas but rather the people working for them, eligible companies have a further option: they can choose to use the credit to reduce the income tax liabilities of their R&D workers. Not all workers are eligible. Irish legislation stipulates that they must spend at least half of their time working in R&D, cannot be company directors, and cannot hold more than a five percent stake in their company. In other words, they must be bona fide R&D workers and cannot have a vested interest in the idea's success. Opting to surrender the credit in this way presents a dual benefit – not only does the company stand to benefit from the R&D underway, but the wider workforce is also incentivised to continue their good work. Even the most well-meaning of provisions can have unfortunate consequences, however. Having satisfied the criteria of being a key employee, the legislation states that the individual’s effective tax rate, after claiming the credit, can be no lower than 23 percent. This stipulation inevitably favours those paying tax at the higher rates (predominantly, the more senior and thus higher-paid workers), effectively leaving those paying the lower rates (the lower-paid, junior staff) out in the cold. Research has shown that employee input, or ‘voice’, can make a positive contribution to an organisation through, amongst other things, increased innovation, the identification of new and more efficient work practices, and the early detection and prevention of problems. This is irrespective of the employee’s rank or tenure within the organisation. Yet, this same research has also shown that employees, particularly those at the most junior levels, frequently withhold their voice on a wide variety of matters. One of the primary reasons for this is an overwhelming sense of futility, fuelled by an awareness of their low rank or position and a sense of ‘it’s not my place’. The requirement that the R&D worker’s effective tax rate can be no lower than 23 percent arguably adds fuel to this fire. By favouring those on higher incomes, the message seems to be that innovative ideas from lower earners are not worth the company’s time or investment. This baffling provision is not only overtly managerially biased but is patently contra to the spirit of the legislation, the primary objective of which was the promotion of new ideas and new ways of thinking. Moreover, it is hopelessly out of date. The provisions governing the R&D tax credit were first introduced into Irish tax two decades ago. Together with one of the lowest corporation tax rates on trading profits in the world, it remains central to the country’s efforts in attracting foreign direct investment. By leading the way in championing the contribution of ‘key employees’ and recently increasing the amount of the credit from 25 to 30 percent, successive Irish governments have not only shown a continued commitment to the R&D tax credit regime but also a willingness to make adjustments to its provisions, in a more equitable pursuit of its overall objective. So, it is fair to say that the Irish R&D tax credit encourages new ways of thinking… just not, as it seems, from everyone. It’s time we gave this some thought. Dr Brendan McCarthy is Assistant Professor in Tax at the University of Limerick