Options for companies yet to complete their Directors’ Compliance Statement preparations
Companies with accounting periods ended 31 December 2016 which are within scope of the Directors’ Compliance Statement (DCS) obligation (see scope rules below) are advised to consider the current state of their preparations to meet the obligation. In our experience, companies that have more limited ranges of activities and/or no executive management teams (as is the case with many Section 110 companies) have tended to be later in assessing their DCS requirements and taking appropriate action.
However, the good news is that, for those in-scope companies that did not complete DCS preparations before year end, actions can and should now be taken that may allow for a generally favourable compliance statement.
It is important to note that any penalties for non-compliance with the Directors’ Compliance Statement obligation would be imposed on the directors.
What companies are ‘in-scope’?
Companies that are in scope of the DCS obligation are Irish incorporated companies which are:
While the 2014 Act gives the Minister for Finance the power to make regulations to exclude S.110 companies, no such regulations have been made to date. Therefore, in-scope S.110 companies are obliged to include the specified statement in their Directors’ Report.
The ‘relevant obligations’ covered by the Directors’ Compliance Statements consist of significant obligations under Irish company law obligations, the company’s obligations under all Irish tax laws (including corporation tax, capital gains tax, VAT, stamp duty, income tax, withholding taxes, capital acquisitions tax, tax information reporting and other statutory provisions relating to tax), in addition to the more significant obligations under Irish company law, market abuse law and prospectus law.
Time-critical requirement
In making the Directors’ Compliance Statement, directors of in-scope companies are required to confirm that a review has been conducted during the financial year of the compliance arrangements for meeting the company’s relevant obligations. For companies that prepare their financial statements for the calendar year, the first review of the company’s arrangements for securing compliance should have been undertaken before the end of 2016. If no review was conducted during 2016, the directors will have to explain why not, in the DCS for the accounting period. Clearly, such an explanation will read more benignly if the directors can confirm that a review of the compliance arrangements was conducted before the signing of the financial statements for the period.
What other matters must the Directors’ Compliance Statement cover?
Apart from commenting on the required review of compliance arrangements, the directors must also:
How can EY help?
EY has broad experience assisting a range of companies in meeting their obligations under Section 225 Companies Act 2014.
We tailor our advice to the particular size and complexity of the particular company’s range of operations.
We have developed ‘quick-start’ Directors’ Compliance Statement documentation, which can help any company, including a Section 110 company and its corporate service providers, to prepare efficiently for the directors’ assessment of compliance arrangements and their making of the required compliance statement.
In addition, we can help to identify documentation already in existence which can be used as an element of the DCS documentation and suggest options for meeting any remaining DCS requirements.
