Publications & Insights Proposed New Financial Reporting/Disclosure Rules - Part 2
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Proposed New Financial Reporting/Disclosure Rules - Part 2

Tuesday, 06 September 2016

The first of our two-part summary of the key changes proposed by the Companies (Accounting) Bill 2016 focused on key financial disclosure requirements for unlimited companies. In Part 2, we explore some of the other changes proposed in this Bill which will impact other types of Irish companies.

The Companies (Accounting) Bill 2016 (“the Bill”) was published on 3 August 2016 and, once enacted, will make a large number of changes to the Companies Act 2014 (“the 2014 Act”) to give effect to the latest EU Accounting Directive (Directive 2013/34/EU) (“the Directive”) in Irish law.

What type of changes are proposed in the Bill?

A key change proposed by the Bill as addressed in Part 1 is expansion of the categories of unlimited companies required to publicly file financial statements with the Registrar of Companies (“CRO”) to give effect to the Directive. Click here to read Part 1.

The Bill also proposes a number of other changes to give effect to the Directive, amend Part 6 of 2014 Act (Financial Statements, Annual Returns and Audit) and introduce certain other financial disclosure requirements into the 2014 Act, some of which are outlined below.

Introduction of Micro-Company

The Bill introduces the micro-company, a new concept in Irish company law, which is subject to relaxed financial reporting/disclosure requirements. The below table sets out the minimum size threshold for micro-companies as well as the proposed increased thresholds for small and medium companies.  


(must meet any 2 of below 3 thresholds)
Small Company

(must meet any 2 of below 3 thresholds)

Medium Company

(must meet any 2 of below 3 thresholds)

Net Turnover €700,000 €12,000,000

(up from €8,800,000)

(up from €20,000,000)
Balance Sheet Total €350,000€6,000,000

(up from €4,400,000)

(up from €10,000,000)
Average number of Employees 1050

(no change)  

(no change)

Key features of the micro-company include the following:

  • Presumption that financial statements of micro-companies which comply with the “minimum requirements” of 2014 Act have given a true and fair view and new schedule added to 2014 Act dealing with format/content of micro-company financial statements.

  • Micro-companies are eligible for audit exemption

  • Micro-companies are exempt from preparing Directors’ Report.

  • Micro-companies are exempt from disclosing directors' remuneration and arrangements, transactions with directors or consideration paid to third party for services of a director in financial statements.

  • PLCs and Unlimited Companies cannot avail of the new micro-company regime.

Changes affecting Small Companies 

  • Significant increase in minimum size thresholds for small and medium companies (as per table above).  

  • Exemption from including business review in Directors’ Report.

  • Exemption from requirement to disclose number of employees employed by category. Instead companies can disclose average number employed in financial year

Changes affecting Audit Exemption 

  • New minimum size thresholds for micro-companies and small companies (as per table above) will replace the current audit exemption thresholds once the Bill enters into force.

  • This will have the effect of making more companies eligible for the audit exemption.

  • The Bill proposes amendment of 2014 Act to provide that a company which files its first Annual Return (6 month return) late can retain its audit exemption.

Other Proposed Changes

  • Proposed new disclosure requirements relating to directors’ remuneration and services including requirement for companies (other than micro-companies) to disclose payments made to third parties for services provided to a director and/or any remuneration waived by directors during a financial year.

  • Proposed amendment of 2014 Act to require Auditors to report to the Director of Corporate Enforcement where there are reasonable grounds to believe that an indictable offence under 2014 Act or offence contrary to Market Abuse, Prospectus or Transparency Directives has been committed.

  • Proposed new obligations for auditors of traded companies to provide opinion in the Auditors’ Report that the Corporate Governance Statement is consistent with statutory financial statements, that it was prepared in accordance with 2014 Act and to confirm certain related matters.

  • Proposal to add new Part 26 to 2014 Act providing for preparation and public disclosure (via filing with CRO) of the annual report on payments made to governments by large companies, large groups and public interest entities active in the mining, extractive or logging industries.

When will new rules come into effect?

As the Oireachtas is currently in recess and will not sit again until 27 Sept 2016, the timeframe for debate of the Bill and ultimate enactment is still unclear.  However, Ireland has already missed the July 2015 deadline for transposition of the Directive into Irish law so it is possible that it will be enacted without significant further delay.   

Also still unclear at this stage is the first financial year to which the new rules will be applied which could be the financial year commencing on or after 1 Jan 2016 (in line with expectation in the Directive) or the financial year commencing on or after 1 Jan 2017 (if delay in transposing Directive is taken into account).  

Next Steps for Directors?

Directors of companies affected by the new financial reporting and disclosure rules should ensure they are fully informed about the proposed changes, review corporate structures, be aware of the impact on financial statements and on eligibility for exemptions, and liaise with auditors and legal advisors.

Our dedicated team of corporate lawyers can assist you in understanding the new rules and potential impacts and in determining next steps. Please contact any ByrneWallace Corporate Partner or your usual ByrneWallace contact for further information.

Further Information

We will monitor developments and any key changes to the Bill as it goes through the legislative process and will continue to publish updates. To receive these updates, monitor the dedicated Companies Act 2014 section of our website, follow us on LinkedIn or click here to receive e-bulletins.

For further information on the accounting and audit related provisions of the 2014 Act, please download our Companies Act 2014 FAQs or our e-bulletin on Companies Act 2014 - Conversion Deadlines and Other Key Dates and Actions for 2016.

This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions.