Directors of certain types of companies are required to include a compliance statement in their Directors’ Report accompanying the company’s financial statements, acknowledging their responsibility for securing the company’s compliance with “relevant obligations” under the Companies Act 2014 (the “Act”) and confirming certain other matters[1].
What companies does it apply to?
Headline Points
Closer Look
Relevant Obligations
Examples of where such obligations are breached are (amongst others):
All obligations of a company under Irish tax law constitute relevant obligations, with such obligations not being limited to Category 1 and 2 offences.
In-scope companies will need to identify the relevant obligations applicable to the company and then formalise and document the appropriate arrangements and structures designed to secure material compliance with those obligations.
Compliance Policy Statement
The compliance policy statement tends to be a relatively concise document confirming the company’s commitment to complying with its obligations. It should set out the company’s policies respecting compliance with its relevant obligations. As a company policy, it should be disseminated throughout the company so that its employees are familiar with its content and that they understand that in discharging their functions in the company, they must always do so having regard to the company’s policies on compliance.
The compliance policy statement should be read in conjunction with the specific arrangements and structures that are in place (referred to below) in respect of the company. As previously mentioned, if the compliance measures are not taken, the directors must explain why not in their statutory report.
Having in place appropriate arrangements or structures etc.
The most onerous aspect of the directors’ compliance statement is the requirement to confirm that there are in place appropriate arrangements or structures that are, in the directors’ opinion, designed to secure material compliance with the company’s relevant obligations. In practice, these arrangements and structures may be expressed as a series of controls. This includes reliance on the advice of suitably qualified employees or advisers before proceeding with a course of action.
Actions for in-scope company to take
Affected companies should put in place formal arrangements and structures to allow their directors stand over, and be comfortable with, the compliance policy statement. Specific legal, accounting and tax advice may be required in ensuring compliance with the relevant laws, and on-going monitoring of a company’s relevant obligations will be necessary in the context of entering into transactions or taking other actions.
Considerable management time will be required to be invested in this process at the outset, particularly where no formal arrangements are already in place. Once the process is carried out properly the first time round, subsequent compliance statements will be far more streamlined.
What we can do
For further information, please contact Simon Mahon Darragh O’Dea Brian O’Neill
[1] Section 225 of the Companies Act 2014