The Companies Act 2014 Ireland

Key Contact: Ruairí Mulrean Telephone: +353 1 638 5844 Email: rmulrean@lkshields.ie

Exclusions and exemptions relating to the filing of financial statements


Part 6 of the Companies Act 2014 (the “Act”) contains a number of exceptions and exemptions relating to the preparation of financial statements that can be availed of by companies if certain criteria are satisfied.

Holding companies will qualify for an exemption from filing group financial statements if at the financial year end, and at the one immediately prior to that financial year, the holding company and all of its subsidiaries taken as a whole satisfy at least two of the following three conditions:

  • the balance sheet total of the holding company and its subsidiary  undertakings taken as a whole does not exceed €10 million;
  • the amount of the turnover of the company and its subsidiary undertakings taken as a whole does not exceed €20 million; and
  • the average number of persons employed by the holding company and its subsidiary undertakings taken as a whole does not exceed 250 people.

These thresholds represent an increase from those currently in force.

Small and medium size companies, who satisfy the necessary conditions, will be able to avail of certain exemptions from public disclosure of financial information in certain circumstances. Such companies are permitted to file abridged financial statements in certain circumstances. The Act outlines the criteria in order to qualify as a small or medium sized company.

In order to qualify as a small size company, a company must meet two of the following criteria in a financial year:

  • turnover not greater than €8.8 million;
  • balance sheet not greater than €4.4 million;
  • average number of employees not exceeding 50.

In order to qualify as a medium size company, a company must meet two of the following criteria in a financial year:

  • turnover not greater than €20 million;
  • balance sheet not greater than €10 million;
  • average number of employees not exceeding 250.

The thresholds for medium size companies represent an increase from the current position while the small company criteria represent a re-statement of the new criteria adopted in 2012.

It should be noted subsidiary undertakings are exempted under the Act from the requirement to annex financial returns to their annual return if their holding company gives a guarantee over their liabilities for that year.

The Act carries forward the existing provisions relating to audit exemption subject to some slight changes. The Act proposes to extend audit exemption in certain situations to: (a) holding companies and its subsidiaries; (b) companies limited by guarantee (subject to certain thresholds and criteria); and (c) dormant companies.

The extension of the audit exemption to group situations is a significant development. In order to avail of this exemption, the company must be a small company or must be a group of companies that, taken together, fall below the threshold requirements for a small company. However, if 10% or more of the members of the company request that an audit take place, then the exemption may not be availed of.

As is currently the case, public limited companies, public unlimited companies and companies with securities listed on a regulated market in an EEA state will be prohibited from availing of audit exemption. Finally in order to avail of an audit exemption, it is essential that a company file its annual return on time (or in the case of a group claiming exemption, that the annual returns of all the companies are filed on time).

Author:

For further information, you can contact Ruairi Mulrean at rmulrean@lkshields.ie.

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