Companies must disclose in the notes to their accounts, details of their holdings of any class of shares representing 20% or more in entities which are not their subsidiary. This is a substantial interest as defined. The note to the financial statements must distinguish between subsidiary undertakings and undertakings by way of a substantial interest.
The note must give details of
- the name and registered place of office, principal place of business and identity of each class of shares held in each subsidiary undertaking and undertaking of substantial interest;·
- the identity of each class of shares held and the proportion of the nominal value of the allotted shares in the subsidiary undertaking or undertaking of substantial interest of each such class represented by the shares of that class held by the company;
- the aggregate amount of net assets of each subsidiary undertaking and undertaking of substantial interest at the year end;
- the profits or losses of the subsidiary undertaking and undertaking of substantial interest.
The notes shall contain particulars regarding each undertaking of which the company is a member having unlimited liability unless the information is not material to the true and fair view given by the financial statements of the company. The information required is
- the name and registered office;
- its principal place of business, if none its registered office; and
- the legal form of the undertaking.
Comparative information for the previous year is not required
The information on related undertakings set out above need not be given in the following circumstances
- in respect of subsidiary companies / undertaking of a company, if the company prepares group financial statements and either the subsidiary undertaking is consolidated in the statutory financial statements prepared by the company or the interest of the company in the equity shares of the subsidiary undertaking is included in or in a note to the company’s statutory financial statements by way of the equity method of accounting,
- in respect of a subsidiary undertaking of a company, if the company is exempt from the requirement to prepare group financial statements because it is relying on the consolidated accounts of a higher holding undertaking and either the subsidiary undertaking is consolidated in the consolidated accounts of the higher holding undertaking, or the interest of the company in the equity shares of the subsidiary undertaking is included in or in a note to the higher holding undertaking’s consolidated accounts by way of the equity method of accounting;
- in respect of an undertaking of substantial interest, if the interest in the equity shares of the undertaking of substantial interest is included in or in a note to the company’s statutory financial statements by way of the equity method of accounting;
- the subsidiary undertaking or the undertaking of substantial interest is not required to publish its financial statements, and the interest held in the equity shares of the subsidiary undertaking or the undertaking of substantial interest does not amount to at least 50 percent of all such interests; or
- in relation to any undertaking, the information is not material to the true and fair view given by the statutory financial statements
If the directors of a company form the opinion that the number of undertakings in respect of which the company is required to disclose information above is such that compliance with the provisions would result in a note to the statutory financial statements of excessive length, the information need only be given in such note in respect of
- the undertakings whose assets, liabilities, financial position, profit and loss, in the opinion of the directors, principally affected the amounts shown in the company’s statutory financial statements, and
- undertakings excluded from the consolidation.
If this exemption is used, a note is required to this effect and certain other information is required to be annexed. The information may be annexed to the accounts filed in the CRO.
Failure to comply is category 3 offence on the part of the company and any officer in default.
The financial statements must include a note setting out the average number of employees employed in the financial year and the average number within each category of persons employed by the company in that year. It is to set out the aggregate wages and salaries paid or payable in respect of those persons, social insurance costs, retirement benefit costs, and other compensation costs.
In relation to the above aggregate amounts, there shall be shown the amount capitalised into assets and the amount treated as an expense or loss for the financial year. The categorisation of persons employed is to be determined by the directors having regard to the manner in which the company’s activities are organised.
Where a company prepares group financial statements, those statements shall have the above information in respect of the company and the subsidiaries included in the consolidation taken as a whole.
Retirement benefit costs include the costs of establishing a retirement benefits scheme for current and former employees, amounts set aside for the future payment of retirement benefits directly, and any retirement benefits paid directly by the company to such persons without first being so set aside.
Details of authorised and allotted share capital and of share capital movements shall be set out in notes to the account. They shall set out
- the number and aggregate nominal value of the shares comprised in the authorised capital;
- where shares of more than one class have been allotted, the number and aggregate nominal value of shares of each class allotted;
- in respect of each class of allotted share capital, the amount that has been called upon those shares and has been fully paid;
- an analysis of allotted and called up share capital by class between shares presented as share capital, and shares presented as a liability; and
- details of treasury shares.
In the case of redeemable shares, particulars of the redemption rights must be set out together with details of any premium payable.
If the company has allotted shares during the financial year, information must be given on
- the reason for making the allotment;
- the classes of shares allotted;
- in respect of each class of shares, the number allotted, their aggregate nominal value and the consideration received by the company for the allotment; and
- whether the shares are represented as share capital or as a liability.
In relation to contingent rights to the allotment of shares, particulars are to be given of
- the number, description and amount of the shares in relation to which the right is exercisable;
- the period during which it is exercisable; and
- the price to be paid for the shares allotted is to be set out.
Where the company is a holding company, the number, description and nominal value of shares in the company held by a subsidiary undertaking or their nominees and consideration paid for those shares shall be disclosed in the notes to the financial statements of the company. This does not apply to shares held as nominee, personal representative or as trustee.
The financial statements shall show the aggregate amount of financial assistance provided by the company in the financial year to which statements relate, that is permitted, including the aggregate amount of outstanding loans, guarantees and securities.
It shall disclose separately the aggregate of the amount of money provided, in that year, by the company in accordance with an employee share scheme or otherwise advanced to an employee for the purpose of the purchase of shares.
Where a company prepares group financial statements, those group financial statements shall contain the information required to be disclosed above in respect of the company and its subsidiary. The company and group financial statements shall show for the financial year and the immediately preceding financial year, the corresponding amounts required to be shown in the statements for the previous year.
A company shall disclose in the notes to its accounts, the accounting policies adopted by it in determining the amounts and items to be included in its profit and loss account and balance sheet. An equivalent provision applies to group accounts.
The nature and purpose of any arrangement of a company that is not included in its balance sheet and the financial impact on the company of those arrangement shall be provided in the notes to the statutory financial statements, if the risks or benefits arising from such arrangements are material and in so far as the disclosure of such risks or benefits is necessary for assessing the financial position of the company. An equivalent obligation applies in respect of group accounts.
Where a company or a nominee of a company holds shares in the company or an interest in such shares, such shares or interest shall not be shown as an asset. The consideration paid for such shares, or interest shall be shown as a deduction from the company’s capital and reserves so that the distributable profits are reduced. Accordingly, they shall be shown in the company’s group financial statements, as a deduction from group capital and reserves.
Where a company, or nominee of the company, holds shares in its holding undertaking or an interest in such shares, the profits of the company available for distribution shall be restricted by the amount of the consideration paid for such shares.
In the case of a holding of shares in a company, whether held directly or held by a nominee, the consideration paid for shares shall be shown in the holding company’s group financial statements, as a deduction from group capital and reserves.
The notes to the company’s financial statements and group financial statements where applicable shall give separately for the shares referred to above, the number and aggregate nominal value of the shares and any applicable restrictions on profits available for distribution as apply above. Where more than one class has been acquired, the number and aggregate nominal value of each class and particulars of any restriction on profits available for distribution shall be set out.
Misc Small Group Disclosures I
Schedule 4A sets out the disclosure requirements for small companies opting into the group companies regime. They are equivalent to that of a single entity, but with additional disclosures as required for group companies which follow from practical or structural issues arising in relation to a group.
The accounting policies must state the basis under and on which foreign operations in a different currency are included in the group financial statements. The functional currency is the currency of the primary economic environment in which the entity operates from an income and expenditure perspective. It is relevant whether they determine their own functional currency.
The definition of related parties for group financial statements are defined, they include
- holders of a participating interest in the holding company or a subsidiary;
- undertakings in which the holding company or a subsidiary has a participating interest;
- directors of a holding company or of a higher holding undertaking;
Misc Small Group Disclosures II
There are provisions in relation to the consolidation of joint ventures accounts. The following must be disclosed
- management arrangements;
- the average number of persons employed;
- information in relation to any acquisition of a subsidiary undertaking in the relevant financial period;
- particulars of the name registered office of the controlling party;
- differences between consideration paid and the nominal value of the shares.
The following information is required in relation to all subsidiaries
- whether the subsidiary undertakings are included in the consolidation; if not; the reason for exclusion;
- a statement specifying whether it is a subsidiary within the definition and how it so applies; unless an exemption applies;
An exemption is applicable where the holding company holds more than half the nominal value of the shares holding voting rights which may be exercised generally or holds the majority of the shareholders or members’ voting rights, and in each case holds the same proportion as it does of voting rights.
The provisions for the approval and signing of financial statements under the small companies regime is similar to that applying generally.
Auditor’s Remuneration I
A company shall disclose in the notes to its accounts, particulars of the remuneration for all work that was carried out for the company, in respect of that financial year, by the statutory auditors. It shall also set out the remuneration for such work in the previous year. Where any part of the remuneration is in the form of a benefit in kind, the nature and estimated monetary value of the benefit must be set out.
Remuneration shall be disclosed separately for the following categories of work:
- audit of entity financial statements;
- other assurance services;
- tax advisory services;
- other audit services.
Auditor’s Remuneration II
Where the statutory auditors are a statutory audit firm, any work carried out by a partner in the firm or a statutory auditor on its behalf is deemed to be carried out by the audit firm.
A company need not make a disclosure above where
- the company is to be treated as a small company;
- the company is to be treated as a medium company, or
- the company is a subsidiary, the holding company of which is obliged to prepare a group financial statements, provided that the subsidiary is included in those statements, and information above is disclosed in the notes to the group financial statements.
Where a medium company does not make the above disclosure, it shall provide the information required above to the Supervisory Authority when requested to do so.
References and Sources
Companies Act 2014 S. 314 – S. 323 (Irish Statute Book)
Companies Act 2014: An Annotation (2015) Conroy
Law of Companies 4th Ed. (2016) Ch 18 Courtney
Keane on Company Law 5th Ed. (2016) Ch. 30 Hutchinson
Other Irish Sources
Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury
Introduction to Irish Company Law 4th Ed. (2015) Callanan
Bloomsbury’s Guide to the Companies Act 2015 Courtney & Ors
Company Law in Ireland 2nd Ed. (2015) Thuillier
Pre-2014 Legislation Editions
Modern Irish Company Law 2nd Ed. (2001) Ellis
Cases & Materials Company Law 2nd Ed. (1998) Forde
Company Law 4th Ed. (2008) Forde & Kennedy
Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy
Companies Acts 1963-2012 (2012) MacCann & Courtney
Constitutional Rights of Companies (2007) O’Neill
Court Applications Under the Companies Act (2013) Samad
Company Law – Nutshell 3rd Ed. (2013) McConville
Questions & Answers on Company Law (2008) McGrath, N & Murphy
Make That Grade Irish Company Law 5th Ed. (2015) Murphy
Company Law BELR Series (2015) O’Mahony
Companies Act 2006 (UK) (Legilsation.gov.uk)
Statute books Blackstone’s statutes on company law (OUP)
Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington
Company Law in Context 2nd Ed. (2012) D Kershaw
Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam
Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington
UK Practitioners Services
Tolley’s Company Law Handbook
Palmer’s Company Law
- Substantial Shareholdings I
- Substantial Shareholdings II
- Exemptions I
- Exemptions II
- Employee Information
- Share Capital Information I
- Share Capital Information II
- Share Capital Information III
- Group Disclosures
- Group Shares
- Misc Small Group Disclosures I
- Misc Small Group Disclosures II
- Auditor’s Remuneration I
- Auditor’s Remuneration II
- References and Sources