30 08 2017 Insights Corporate & Commercial

Companies (Accounting) Act 2017

Desk Computer People

By Colm Manning
17 May, 2017

The Companies (Accounting) Bill 2016 was last week passed by both Houses of the Oireachtas and is expected to be signed into law over the coming days as the Companies (Accounting) Act 2017 (the “2017 Act”). Once signed into law, the 2017 Act will significantly update the Companies Act 2014 (the “2014 Act”). Among the main changes introduced by the 2017 Act are:


The 2017 Act introduces a new company size – the “micro company” – to the corporate landscape.

In order to qualify as a “micro company”, a company must meet the criteria of a small company (see below for amended thresholds). Furthermore, two or more of the following criteria must be met by the company: (i) the balance sheet total must not exceed €350,000; (ii) the turnover must not exceed €700,000; or (iii) the average number of employees must not exceed 10.

Holding companies that prepare group financial statements and subsidiaries included in consolidated financial statements of holding companies are, among certain other undertakings, excluded from qualifying as “micro companies”.

If a company qualifies as a micro-company, it: (i) need not disclose remuneration paid or payable to directors; (ii) need not prepare a directors’ report; and (iii) can prepare a shortened form of financial statements.

Small and Medium Company Thresholds

The 2017 Act increases the small company and small group company qualifying thresholds by increasing: (i) the turnover ceiling from €8,800,000 to €12,000,000; and (ii) the balance sheet total from €4,400,000 to €6,000,000.

The turnover ceiling for medium-sized companies has been increased from €20,000,000 to €40,000,000 and the balance sheet total has been increased from €10,000,000 to €20,000,000.

Furthermore, the 2017 Act removes the ability of a medium-sized company to file abridged financial statements.

Nominee Director and Corporate Administration Service Providers

Under the 2017 Act, a company (save for a micro company) must disclose payments to third parties: (i) for making available to the company the services of any person as a director of the company or its subsidiary undertakings; or (ii) otherwise in connection with the management of the company’s affairs or any of its subsidiaries.

Consolidated Accounts – Parent Company Guarantee

Under the 2014 Act, a subsidiary company can file consolidated financial statements of its holding company rather than file its own financial statements, provided that the holding company gives an irrevocable guarantee. The 2017 Act provides that that parent company guarantee must cover “commitments” as well as “liabilities”, such that the parent company irrevocably guarantees all amounts shown as liabilities and commitments in the financial statements of the company for the relevant financial year.

Non-Filing Structures

The 2017 Act increases the number of private unlimited companies that are considered “designated types” and therefore makes it more difficult for private unlimited companies to manage the obligation to publicly file financial statements with the Companies Registration Office.

It is anticipated that this new filing regime will impact on financial years commencing on or after 1 January 2017. Private unlimited companies with limited liability subsidiaries will come within this new filing regime for financial years commencing on or after 1 January 2022.

Unlimited Companies – Corporate Name

The 2017 Act removes the power of the Minister for Jobs, Enterprise and Innovation (the “Minister”) to grant an exemption from the requirement that an unlimited company uses the words “unlimited company” or “UC” (or the Irish equivalent) in its corporate name. However, the removal of this Ministerial power will not affect the validity of exemptions already granted by the Minister under the 2014 Act.

Definition of Credit Institution Amended

The term “credit institution” was vaguely defined in the 2014 Act and was open to interpretation as including private limited group treasury companies and private limited companies engaged in intra-group lending. To clear up this unintended effect the definition of “credit institution” has been recast as “a company or undertaking engaged in the business of accepting deposits or other repayable funds from the public and granting credit for its own account.”

Debt Securities Issued by LTDs

The 2017 Act expressly provides that the 2014 Act restrictions on private companies limited by shares having debt securities admitted to trading or listed only applies to debt securities that are issued or listed by private companies limited by shares after commencement of the 2014 Act (i.e. 1 June 2015).

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