The Proposed Companies (Accounting) Act 2016
The proposed Companies (Accounting), Act 2016 is expected to make some changes in Irish company law. These changes have been expected almost since the Companies Act 2014 became effective on 1 June 2015. Publication of this new company law has been delayed by the formation of the new Government. We understand that legislators are actively working on the new law at present.
We covered the new company law as well as its potential impact on current accounting practice in FRS 102 and with the proposed FRS 105 accounting standards, at our public seminar on Monday 27 June 2016 at the Talbot Hotel, Stillorgan, County Dublin. More seminas will take place in 2016 and 2017. see our CPD Courses page for details.
Among the changes expected in the new law are:
Increased thresholds for company sizes
The new Act will trigger an increase in the accounting disclosure thresholds for company sizes. The existing size thresholds are shown in brackets.
- Small Company – a turnover of €12m (€8.8m), 50 employees with a balance sheet of €6m (€4.4m);
- Small Group – a turnover of €12m (€8.8m) net or €14.4m gross, 50 employees with a balance sheet of €6m (€4.4m) net or €7.2m gross. The reference to the term ‘gross’, is before taking account of any consolidation adjustments;
- Medium Company – a turnover of €40m (€20m), 250 employees with a balance sheet of €20m (€10m).
Micro Companies and Directors Remuneration
One of the key features of the new Bill is that micro companies (those with turnover of less than €700,000, among other criteria) will be exempt from Sections 305 to 312 of the Companies Act, 2014 which require disclosure of directors’ remuneration and certain loan arrangements.
This is likely to appeal to many company directors who wish to keep their remuneration and loan arrangements private. Those companies classified as ‘small’ will still be required to disclose directors’ remuneration and loan details in their financial statements. Certain ineligible entities cannot be micro companies and these include financially regulated entities like investment intermediaries.
In addition, directors of micro companies will not have to a file director’s report.
Medium Sized companies
Medium sized companies will have to file full financial statements as Section 354 of CA 2014 will be deleted from Irish company law. At present they do not need to disclose certain matters including their turnover.
The commencement date of the new law is not yet certain and it remains to be seen what precise changes the law will introduce.