Minister Mary Mitchell O’Connor welcomes the enactment of the Companies (Amendment) Act 2017 into law
The Act is a practical and proportionate response to the needs of business
Minister for Jobs, Enterprise and Innovation, Mary Mitchell O’Connor, has today welcomed the enactment of the Companies (Amendment) Act 2017.
This Act prolongs an important cost saving measure, used by companies that are based in Ireland while listed in the US, for an additional 10 years. This measure exempts certain companies from having to prepare two separate sets of financial statements, based on the same financial information but according to two different accounting standards.
The exemption was first introduced in 2009 and is currently set out in section 279 of the Companies Act 2014. It is time bound and was due to end on 31 December 2020. Last summer, the Minister asked the Department to review the exemption and the deadline. Subsequently, in April of this year, the Minister introduced draft legislation in the Seanad to extend the deadline by an extra 10 years. As a result of the enactment of that legislation this week, the deadline will now be 31 December 2030.
Welcoming the enactment of the Companies (Amendment) Act 2017, the Minister said “This Act is a practical and proportionate response to the needs of business. It will ensure that the affected companies will not have to introduce new accounting systems or prepare 2 sets of financial statements, using 2 different accounting standards, but based on the same financial information. I believe that would be unnecessary duplication and could be expensive. At the same time, the Act recognises the need for appropriate transparency of corporate financial information by providing that only companies that have been using US accounting standards for their financial statements up to now can continue to do so. This ability to compare annual information over time is important for users of financial statements.
I would like to acknowledge the cooperation of my Oireachtas colleagues, both independent and across parties, who worked with me in getting this Act through in just under 2 months. As a result, we have been able to give legal certainty to the businesses affected in good time, so that they can plan appropriately and avoid unnecessary expense. ”
Notes for Editors
The Companies (Amendment) Act 2017 (No. 13 of 2017) was signed into law by the President on Wednesday 7 June 2017. It amends section 279 of the Companies Act 2014 to extend the deadline in that section and to close off the facility for companies that register in Ireland after the commencement of the Act.
Companies that are registered in Ireland must prepare and file financial statements according to one of two accounting standards, depending, in particular, on whether they are listed on a regulated market in the EU or not. The two standards are the International Financial Reporting Standards (IFRS) and the Irish Generally Accepted Accounting Practices (Irish GAAP).
There are some companies that are registered in Ireland but listed on a stock exchange in the USA, such as the New York Stock Exchange. These companies are regulated in the USA by the Securities and Exchange Commission (the SEC) and are required by the SEC to prepare and file their financial statements according to US GAAP. These companies are not listed on a regulated market in the EU.
Section 279 of the Companies Act 2014 allows such companies to prepare and file their financial statements in Ireland using US GAAP, provided they meet certain criteria and comply with the Companies Act. Without the facility, these companies would be required to prepare and file financial statements using two different accounting standards, namely US GAAP and either IFRS or Irish GAAP, in respect of the same financial years.
This facility was introduced in 2009, extended in 2012 and re-enacted as section 279 of the Companies Act 2014.
Section 279 is a temporary measure and is due to end on 31 December 2020. The Companies (Amendment) Act 2017 extends that deadline by a further 10 years, to end on 31 December 2030. The Act also adds the criterion that, in order to avail of section 279 in future, a company must have been incorporated in Ireland before the commencement of the Act.
The Act requires the Minister for Jobs, Enterprise and Innovation to sign a Commencement Order before the Act comes into operation.