Companies Act 2014 FAQs

    I. Commencement

  1. When will the accounting and auditing requirements in Part 6 of the Companies Act 2014 come into effect?
  2. II. Financial statements and directors’ reports

  3. Are there any changes to the requirements relating to statutory financial statements and directors’ reports arising from the commencement of Companies Act 2014?
  4. Do these changes relate only to financial statements and directors’ reports for financial years beginning on or after the Companies Act 2014 commencement date of 1 June 2014?
  5. Are there any changes in the Companies Act 2014 with regard to abridged financial statements?
  6. Can abridged financial statements be filed under the Companies Act 2014 even where the statutory financial statements were prepared under previous Companies Acts?
  7. Under the Companies Act 2014, can my company revise financial statements that are incorrect?
  8. Under the Companies Act 2014, do all companies have to prepare a Directors Compliance Statement?
  9. III. Statutory audit and audit exemption

  10. Are there significant changes to the requirements for the statutory auditor’s report on statutory financial statements in the Companies Act 2014?
  11. Does my company now qualify under the Companies Act 2014 to be exempt from having an audit?
  12. Are there any changes in the Companies Act 2014 relating to reporting on abridged financial statements?
  13. Are there any changes in the Companies Act 2014 to the various reports that have been required from the statutory auditor in the past, other than the statutory auditor’s report itself?
  14. IV. Company types and conversion

  15. Does my company have to convert to a new type of company under the Companies Act 2014?
  16. What are the transitional arrangements under the Companies Act 2014?
  17. V. Directors and company secretarial

  18. I have been told that the Companies Act 2014 includes a whole new set of duties on directors. Is this the case?
  19. How many directors must a company have under the Companies Act 2014?
  20. Are directors of companies registered under the Companies Act 2014 required to be resident in Ireland?
  21. How has the Companies Act 2014 dealt with transactions with directors or connected persons and providing financial assistance for the purchase of its own shares?
  22. What is the meaning of ‘connected persons’ under the Companies Act 2014?
  23. Are there specific qualifications required under the Companies Act 2014 to be a company secretary?
  24. Are all companies now permitted under the Companies Act 2014 to dispense with the holding of an annual general meeting, and if, so, are there specific conditions attaching?
  25. VI. Other

  26. I am a director of a company limited by guarantee with no share capital. How will the Companies Act 2014 affect my company?

    I. Commencement

  1. When will the accounting and auditing requirements in Part 6 of the Companies Act 2014 come into effect?

    With limited exceptions, by virtue of the Companies Act 2014 (Commencement) Order 2015 (S.I. No. 169 of 2015).PDF all sections of the Act came into operation on 1 June 2015. The abovementioned exceptions are set out in the Companies Act 2014 Commencement. This means that, aside from those exceptions, the requirements of Part 6 in relation to statutory financial statements, statutory audit, audit exemption etc, apply to financial statements and directors’ reports approved on or after 1 June 2015.

    The limited exceptions are commenced with respect to financial years beginning on or after 1 June 2015.

  2. II. Financial statements and directors’ reports

  3. Are there any changes to the requirements relating to statutory financial statements and directors’ reports arising from the commencement of Companies Act 2014?

    While Companies Act 2014 was primarily a consolidation of the provisions of previous Companies Acts, members should note that there are a number of changes to the requirements relating to both statutory financial statements and directors’ reports. Please refer to Technical Release TR 02/2015 - Companies Act 2014 Financial reporting and related issues.PDF for details of changes.

  4. Do these changes relate only to financial statements and directors’ reports for financial years beginning on or after the Companies Act 2014 commencement date of 1 June 2014?

    No. The requirements relating to statutory financial statements and directors’ reports are contained in Part 6 (along with provisions relating to audit, audit exemption etc). With limited exceptions, the provisions of Part 6 commence for financial statements and directors’ reports approved on or after 1 June 2015. Please see the response to question 1 above and the Companies Act 2014 Commencement highlighting those exceptions, i.e. provisions which only commence with respect to financial years beginning on or after 1 June 2015.

  5. Are there any changes in the Companies Act 2014 with regard to abridged financial statements?

    Please refer to section 9 of Technical Release TR 02/2015 - Companies Act 2014 Financial reporting and related issues.PDF for details of the abridged financial statements regime under the Companies Act 2014, including the types of company that are permitted to annex abridged financial statements to the annual return.

  6. Can abridged financial statements be filed under the Companies Act 2014 even where the statutory financial statements were prepared under previous Companies Acts?

    Yes. Regulation 5 of the Companies Act 2014 (Commencement) Order 2015 (S.I. No. 169 of 2015).PDF provides for the abridgement, under the Act, of statutory financial statements prepared under previous Companies Acts.

  7. Under the Companies Act 2014, can my company revise financial statements that are incorrect?

    Yes. An innovation of the Companies Act 2014 is that it permits the revision of defective financial statements. Sections 366 to 379 set out requirements for the preparation, approval, audit and filing of revised financial statements or revised directors’ reports. The CRO sets out the procedures for filing the revised financial statements. Section 4 of Technical Release TR 05/2015.PDF provides some further information on the voluntary revision of financial statements.

  8. Under the Companies Act 2014, do all companies have to prepare a Directors Compliance Statement?

    No. The Companies Act 2014 requires the directors of all PLCs (other than investment companies) and LTDs, DACs and guarantee companies that reach prescribed thresholds (balance sheet in excess of €12.5 m and turnover exceeding €25m) to prepare a statement of compliance with company and tax law to be included in the directors’ report and to ensure that the company adopts appropriate compliance measures. Unlimited companies are not subject to this requirement.

    This requirement is discussed in section 5 of Technical Release TR 02/2015.PDF.

  9. III. Statutory audit and audit exemption

  10. Are there significant changes to the requirements for the statutory auditor’s report on statutory financial statements in the Companies Act 2014?

    In broad terms, the Companies Act 2014 has retained the requirements of previous Companies Acts as to the matters on which the statutory auditor is to report and the contents of the statutory report. There are some changes, however, in the terminology used in, and focus of, a statutory auditor’s report – see Technical Release TR 03/2015 - Companies Act 2015 Implications for statutory auditor’s reports on statutory financial statements.PDF for further details. Also see here to download illustrative examples of auditors reports.DOCX.

  11. Does my company now qualify under the Companies Act 2014 to be exempt from having an audit?

    Where the qualifying conditions and other requirements are met (e.g. timely filing of annual returns), the following types of company can avail of audit exemption:

    • A company limited by shares (‘LTD’)
    • A designated activity company (‘DAC’)
    • A guarantee company (‘CLG’)
    • A private unlimited company (‘ULC’)

    In addition, the Companies Act 2014 now provides for companies that are members of groups and dormant companies to avail of audit exemption, subject to certain conditions.

    For details on the audit exemption provisions contained in the Companies Act 2014, please refer to Technical Release TR 06/2015 - Companies Act 2014 Audit Exemption.PDF

    You can find more about the audit exemption here.

  12. Are there any changes in the Companies Act 2014 relating to reporting on abridged financial statements?

    Please see section 3 of Technical Release TR 03/2015 - Companies Act 2015 Implications for statutory auditor’s reports on statutory financial statements.PDF for the changes in reporting on abridged financial statements. These include that where, under previous Companies Acts, two reports were required (under section 18(3) and 18(4) of the 1986 Act), a single report is now required under section 356. Appendix 3 to TR 03/2015 contains an illustrative report on abridged financial statements.DOCX. Also see here for more information on abridged financial statements.

  13. Are there any changes in the Companies Act 2014 to the various reports that have been required from the statutory auditor in the past, other than the statutory auditor’s report itself?

    Apart from the statutory auditor’s report, a statutory auditor continues to be subject to a reporting obligation to report to the Director of Corporate Enforcement (‘DOCE’) – under section 393 a statutory auditor makes a report to the DOCE where “in the course of, and by virtue of, carrying out an audit of the financial statements of a company”, the statutory auditor forms the opinion that there are reasonable grounds for believing that the company or an officer of agent of the company has committed a category 1 or category 2 offence under the Companies Act 2014. For more details, please refer to Technical Release TR 04/2015 - Companies Act 2014 A statutory auditor’s duty to report to the Director of Corporate Enforcement.PDF. Also see here for more information on auditors’ duty to report to the Director of Corporate Enforcement.

    The Act continues to require the preparation of various reports by a statutory auditor, such as the special auditor’s report on abridged financial statements, a report on a company’s ability to make a distribution etc. Certain new requirements for reports by a statutory auditor have also been introduced, for example under the Summary Approval Procedure relating to otherwise restricted transactions (e.g. a transaction with a director or a connected person). Please see Technical Release TR 05/2015 - Companies Act 2014 Reports by the statutory auditor under the Companies Act 2014 (other than the statutory auditor’s report).PDF.

  14. IV. Company types and conversion

  15. Does my company have to convert to a new type of company under the Companies Act 2014?

    During the transition period, directors of existing private limited companies will have to make a decision as to which of the new company types to adopt. Existing private companies that take no action during the 18 month transition period will automatically convert to a LTD company (though during the transition period such companies will be deemed to be DACs - see Table 1: Which company type to choose.PDF).

    Public Limited Companies (‘PLCs’), unlimited companies and guarantee companies (‘CLG’) do not need to convert. Unlimited companies and guarantee companies do, however, need to change the suffix to their names. See link to Company Types and Conversion.

  16. What are the transitional arrangements under the Companies Act 2014?

    The transition period is an eighteen month period that applies to private companies that existed on the commencement date of 1 June 2015. During this period companies will need to decide whether to convert to a company limited by shares (‘LTD’), a designated activity (‘DAC’) or one of the other company types available under the Act. If a private limited company is not converted to a type of company recognised under the Act the company will automatically and by default become a LTD - see Table 1: Which company type to choose.PDF and Table 2: Timeframe for Conversion.PDF.

    For more FAQs see the Companies Registration office webpage.

  17. V. Directors and company secretarial

  18. I have been told that the Companies Act 2014 includes a whole new set of duties on directors. Is this the case?

    The Companies Act 2014 includes in statute fiduciary duties of company directors which were previously recognised only in common law. Section 228 sets out eight duties of directors, of which six are derived from common law and two from previous Companies Acts. For more details, please see the attached information Codification of Directors, Duties under the Companies Act 2014.

  19. How many directors must a company have under the Companies Act 2014?

    Under the Companies act 2014, every company is required to have 2 directors except a company limited by shares (‘LTD’) which is permitted to have a single director.

    Private companies limited by shares incorporated under the previous Companies Acts cannot take immediately advantage of the single-director option, as they operate as a designated activity company for the duration of the transition period (1 June 2015 to 30 November 2016) or until such time as the company converts to an LTD.

    All other types of company must have two directors, e.g. public limited companies (‘PLCs’), designated activity companies (‘DACs’), guarantee companies (‘CLGs’) and unlimited companies.

  20. Are directors of companies registered under the Companies Act 2014 required to be resident in Ireland?

    No, however every company should have an EEA (European Economic Area) resident director (section 137). An alternate director is insufficient to meet the requirements of the section. There are exceptions:

    • The requirement does not apply to a company which has a bond (€25,000) in place.
    • The residency requirement does not apply to a company which has a certificate under section 140. This certificate, made after application on a form B67, is in respect of a company having a real and continuous link with one or more economic activities that are being carried on in the State.

    For further information in relation to the requirement that at least one of the directors of a company be EEA-resident, see CRO Information Leaflet No. 17, - Requirement to Have an EEA-resident director.PDF.

  21. How has the Companies Act 2014 dealt with transactions with directors or connected persons and providing financial assistance for the purchase of its own shares?

    The Summary Approval Procedure (SAP) in sections 200 to 211 governs both transactions with directors (previously section 31 to 34 of the 1990 Act) and financial assistance for the purchase of own shares (section 60 of the 1990 Act). The SAP for these two types of transactions involves a special resolution being passed by the members not more than 12 months prior to the commencement of the activity and a declaration of solvency being made by a majority of the directors at a directors’ meeting not more than 30 days before the meeting of the members to pass the resolution. The contents of such a declaration are specified in section 203 and section 210 states that the Court may declare that a director is personally liable for all or any of the debts or other liabilities of the company, should the Court deem that the declaration was made without the director(s) in question having had reasonable grounds to do so. An Independent Person’s report under section 208 is not required in either case.

    See Technical Release TR 05/2015 - Companies Act 2014 Reports by the statutory auditor under the Companies Act 2014 (other than the statutory auditor’s report).PDF for further details.

  22. What is the meaning of ‘connected persons’ under the Companies Act 2014?

    Section 220 clarifies that, in addition to spouses, civil partners, parents, siblings and children of directors being defined as connected persons, children of a director’s civil partner who are ordinarily resident with the director and the civil partner will also be considered to be connected persons.

    In addition to a body corporate being connected with a director if it is controlled by that director, it is now provided expressly that a body corporate will be connected with a director if it is controlled by another body corporate that is, in turn, controlled by that director. Section 220 further clarifies that a “person” includes a “body corporate” which acts as trustee of a trust where the principal beneficiary of that trust is the director, the spouse (or civil partner) or any children of that director or any body corporate which that director controls.

  23. Are there specific qualifications required under the Companies Act 2014 to be a company secretary?

    Section 129 provides that the directors of a company have a duty to ensure that the person appointed as company secretary has the skills or resources necessary to discharge her or her statutory and other duties.

    A director may act as company secretary, subject to the proviso that where a company only has one director, that director may not hold the office of company secretary.

  24. Are all companies now permitted under the Companies Act 2014 to dispense with the holding of an annual general meeting, and if, so, are there specific conditions attaching?

    No, the relief from the requirement to hold an AGM under section 175(3) is only available to a single member company (as defined in section 196) and to a multi-member private company limited by shares (‘LTD’).

    For multi-member LTDs, all the members entitled to attend and vote can sign a written resolution:

    • Acknowledging receipt of the financial statements that would have been laid before the AGM in lieu of an AGM
    • Resolving all such matters as would have been resolved at that meeting
    • Confirming no change is proposed in the appointment of the person (if any) who, at the date of the resolution, stands appointed as statutory auditor of the company
  25. VI. Other

  26. I am a director of a company limited by guarantee with no share capital. How will the Companies Act 2014 affect my company?

    An existing company which is limited by guarantee, and does not have a share capital, is deemed under section 1189 to be a company limited by guarantee (‘CLG’).

    A CLG will continue to have a two document constitution, including a memorandum and articles of association and must have at least two directors and must hold an AGM unless it is a single member company.

    Some of the changes in the Companies Act 2014 relating to guarantee companies are:

    • They can be incorporated with just one member (formerly seven)
    • There is no limit on the number of members (other forms of private companies have a limit of 149 members)

    Section 1173 of Part 18 applies the requirements of Parts 1 to 14 to CLGs, subject to any modifications contained in Part 18.

    Name Change for CLG

    There is a requirement for a CLG to have the company type added to the end of the company name, i.e. “Company Limited by Guarantee” or “Cuideachta faoi theorainn Ráthaíochta” must form the end of the company name. There is a Transition Period, until 30 November 2016, during which guarantee companies which were incorporated under previous Companies Acts can continue to use limited/teoranta in their name. If the company does not change the name of the company and submit an amended constitution using Form N3, the Registrar of Companies will change the name of the company and issue a new certificate of incorporation at the end of the Transition Period.

    Audit Exemption

    Audit exemption is available to CLGs under the Companies Act 2014, with the caveat that any member can serve notice in writing on the company stating that the member does not wish the audit exemption to be available to the company in a financial year specified in the notice.

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