Financial statement, companies act, the companies act 2014


Companies Act 2014 in force for directors’ and statutory financial statements being signed from 1 June 2015


The order to commence the Companies Act 2014 has been signed into law. As expected the Act comes into force for financial statements approved on or after 1 June 2015, with six exceptions. The law in respect of Audit Committees; Directors’ Compliance Statements’; Disclosure of directors’ gains on exercise of share options; Disclosure of payments to connected persons; List of persons who were directors at any time during the financial year; and Statement by directors confirming auditors made aware of all relevant information, rather than commencing on 1 June will commence for accounting periods commencing on or after 1 June 2015.

Financial statements, companies act, the companies act 2014

What should you do now?

To the extent that time and resources permit, completing and having the Board approve any outstanding statutory financial statements on or before 31 May next will mean that a special exercise to ensure that the Directors’ Report and Financial Statements comply with the requirements of the Companies Act 2014 (as opposed to current law comprising the more familiar Companies Acts 1963 to 2013) can be avoided. Where this cannot be avoided, finance teams will need to familiarise themselves with and make the many, somewhat detailed, changes so that the directors’ report and statutory financial statements are compliant with the Companies Act 2014. As well as terminology and format changes to the face and changes and additions to the notes to the accounts, directors’ reports, directors’ responsibility statements; and auditors’ reports will also require changing to reflect the various detailed requirements mandated in Companies Act 2014.

Directors in particular should note that it is a category 2 offence under the Act to approve statutory financial statements without first being satisfied that the financial statements give a true and fair view and otherwise comply with the Companies Act 2014 requirements. Category 2 offences carry a fine up to €50,000 and a 5 year term in jail or both.

Where a company has a loan either to or from a director, it should be noted that if it is not in writing or if its terms are ambiguous then the terms set out in law apply from 1 June in any civil proceedings regarding the loan. Accordingly, a director borrowing from a company without the loan agreement being in writing or being ambiguous incurs interest at the “appropriate rate” which the Companies Act 2014 initially sets at 5%. Also, if the terms in law apply, a loan by a director to a company is deemed not to carry interest or to be a loan or a quasi-loan and to rank sub-ordinate to all debt in the company. So, it makes sense to ensure that all director and their connected person loans (including quasi loans) are clearly documented as to repayment terms; interest rate and security before 1 June or as soon as possible thereafter.

While a 30th of April year end reporter has just under a year to prepare, if your year end is 31 May 2015, you should note that if you wish to be able to report full compliance for the 2016 financial year with the Audit Committee and Directors’ Compliance Statement requirements, you only have the remainder of this month to prepare for and complete the required processes and procedures for compliance. Likewise those with 30 June year ends only have this month and next. The Audit Committee requirement extends the law on this matter beyond public interest entities to include private companies with turnover greater than €50m and total assets greater than €25m – these thresholds apply on a single company and on a group basis. The directors’ compliance statement requirement applies to all PLCs (except investment companies) but not to S110 vehicles or unlimited companies. Private companies with turnover greater than €25m and total assets greater than €12.5m are also caught.

Financial statements, companies act, the companies act 2014

Further information

If you require further information on this matter contact your Deloitte partner or one of our specialists:

  • Mary Shier – to confirm you have the optimal corporate structure and align your company constitution with the requirements of the Act;
  • Ailbhe Moynihan – for help in applying the Directors’ Compliance Statement law to your particular circumstances
  • Oliver Holt – in relation to the impact of the Companies Act 2014 on financial statements being approved by directors on or after 1 June 2015
Financial statements, companies act, the companies act 2014
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