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Europe > Ireland > Corporate > General > Article > Directors Compliance Statements Companies Act 2014

Article: Directors Compliance Statements - Companies Act 2014

The Companies Acts 2014 places an obligation on directors of certain companies to prepare compliance statements in order to acknowledge their responsibility for complying with all relevant obligations under the Act and provide confirmation that certain obligations have been fulfilled. Directors of relevant companies are also required to provide a satisfactory explanation if such obligations have not been fulfilled (this “comply or explain” principle has been a feature of corporate governance for companies with a main market listing for some time).

For the purposes of the compliance statement, Relevant Obligations are those obligations where a failure to comply would constitute a category 1 or category 2 offence (see below), a serious Market Abuse offence or a serious Prospectus offence.

This obligation will apply on or after 1 June 2015 and will apply to the following-

  • public limited companies (other than investment companies); and
  • private limited companies limited by shares or by guarantee in each year in which the particular company has a balance sheet total exceeding €12.5 million and turnover exceeding €25 million.

Directors are now required to carry out the following three tasks-

  • Prepare a company compliance statement;
  • Put in place appropriate arrangements or structures to ensure compliance; and
  • Conduct a review of any such arrangement or structures that have been put in place.

In carrying out any of the above tasks the directors are entitled to rely on the advice of employees or consultants who they believe have sufficient knowledge in relation to the company.

The Companies Act 2014 sets out four categories of offence as follows:

  •  Category 1 offence – punishable on indictment by 10 years in jail or a maximum fine of €500,000. (e.g. offences serious failures or breaches relating to the obligation to keep adequate books of account)
  • Category 2 offence – punishable on indictment by 5 years in jail or a maximum fine of €50,000 (e.g. breaches of the new sections dealing with the prohibition on loans to directors or connected persons)
  • Category 3 offence – punishable on summary conviction by 6 months in jail and/or fine of €5,000 (e.g. failure to include an acknowledgment that the directors are responsible for securing compliance with its relevant obligations); and
  • Category 4 offence – punishable on summary conviction by a fine of €5,000 (encompasses minor breaches (e.g. failure to provide a copy of the constitution of the company when requested by a shareholder).

If your company is one to which this new obligation applies you should obtain from your legal advisors assistance in the preparation of a company compliance statement and advice on appropriate arrangements and structures to ensure your company is compliant with its obligations.

For further information on the above topic contact Enda Newton or Brid McCoy of the AMOSS Corporate Department.

Last Update: 2015-Jun-10 Enda Newton - AMOSS Solicitors
The contents of this page do not constitute legal advice or create an attorney- client relationship with the contributor. Do not apply anything you read here without contacting a professional.
Author: Enda Newton
Law Firm: AMOSS Solicitors
Address: Warrington House
Mount Street Crescent
Dublin
Ireland
Telephone: +35312120400
Website: www.amoss.ie