Audit Committees for Public Interest Entities and PLCs under the Companies Act 2014

Companies meeting the definition of public interest entity (with some exceptions) have been required to have an audit committee since 2010 as a consequence of S.I. 220 of 2010 which transposed EU Directive 2006/43/EC into Irish law.   S.I. 220 of 2010, the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, was amended by S.I. 685 of 2011 in relation to its requirements for independent audit committee membership.

S.I. 220 of 2010, as amended, is not revoked by the Companies Act 2014 and so public interest entities are still required to comply with the requirements of those Regulations with regard to audit committees. 

The requirements in relation to the responsibilities of the audit committee and its composition are consistent between S.I. 220 of 2010 and section 167 of the Companies Act 2014.   

Section 1097 of the Companies Act 2014 makes it clear that the requirement to establish an audit committee under section 167 applies to any PLC that does not fall within S.I. 220 of 2010.  In that case section 167 shall apply to a PLC irrespective of the balance sheet amount or the amount of turnover of the PLC.   

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Separate requirements for audit committees under corporate governance codes

Separate completely from company law requirements, listed companies and companies voluntarily adopting the UK Corporate Governance Code continue to comply or explain against the provisions of that Code.  Similarly relevant financial services institutions refer to the Central Bank of Ireland’s Corporate Governance Code for Credit Institutions and Insurance Undertakings.

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