Companies (Accounting) Act 2017- Impact on Unlimited Companies
The main purpose of the Companies (Accounting) Act 2017 (“the 2017 Act”) is to transpose the provisions of the EU Accounting Directive (2013/34/EU) into the Companies Act 2014. The 2017 Act came into force with effect from the 9th June 2017 with the new accounting requirements applying in respect of financial years commencing on or after the 1st January 2017.
Filing Financial Statements
The 2017 Act results in a number of significant changes for private unlimited companies (ULCs) and their pre-existing rights not to have to file accounts.
By way of reminder, under the Companies Act 2014 only designated ULCs were obliged to file financial statements in the Companies Registration Office (“CRO”). The effect of this was that a stand-alone ULC owned by private shareholders was not required to file company accounts and this position will continue under the 2017 Act. However it is important to note that the 2017 Act significantly widens the parameters for classification of designated ULCs the result of which is that many previously exempt ULCs will now fall within the filing regime.
Expansion of designated ULC
A designated ULC cannot rely on the exemption from the obligation to file accounts. This will now capture the below types of ULC:
- A ULC that has been a subsidiary of a limited liability undertaking wherever incorporated.
- A ULC that has been a holding company of a limited liability undertaking (“HoldCo ULCs”).
- A ULC in which two or more of the limited liability undertakings, wherever incorporated, has had rights exercisable, which if exercised by one of them would have made the ULC a subsidiary of that undertaking.
- A ULC whose members are:
- Companies limited by shares or guarantee (Irish of non-Irish)
- Unlimites companies, wherever incorporated, all of whose shareholders then have limited liability.
- General Partnerships, Irish or non-Irish, where the general partners are limited companies (Irish of non-Irish), and
- Any combination of the above, or
- A ULC that is held within a structure whereby the ultimate beneficial owners enjoy the protection of limited liability.
ULC Holding Companies
The 2017 Act provides that HoldCo ULCs will not be affected by this amendment until financial years commencing on or after 1st January 2022. After that dated it will be up to the HoldCo ULCs to ensure that they do not fall within the definition of a designated ULC if they wish to continue to be exempt from the filing obligations.
Post-2022, if a Hold Co fails to comply with its filing obligations, both it and every officer of the company who is in default can be liable to a fine not exceeding €5,000.
ULC Name Change Exemption
The 2014 Act currently provides that an unlimited company must use the words “unlimited company” or “ULC” (or the Irish equivalent) in its name. This obligation applies to both public and private unlimited companies unless the ULC has obtained an exemption under section 1237(5) of the 2014 Act not to use the words “unlimited company” in its title.
The 2017 Act removes the power of the Minister for Jobs, Enterprise and Innovation to grant such exemptions under section 1237(5).
Exemptions that have already been granted will continue in force until their stated expiration.
What can G J Moloney do for you?
G J Moloney can assist in an examination of your existing corporate structure to determine whether it falls within the scope of the expanding filing rules under the 2017 Act.