www.pwc.ie/people Irish Companies Developments in Governance & Compliance
Speakers Introduction CRO in 2017 Managing the changes in Governance & Compliance Panel discussion Close / networking drinks Alan Bigley Maureen O Sullivan, Registrar of Companies Ruairí Cosgrove, Director, Entity Governance & Compliance Department Maureen O Sullivan Ruairí Cosgrove Harry Harrison Efe Okome 2
Introduction Alan Bigley Partner 3
CRO Update Maureen O Sullivan Registrar of Companies 4
CRO IN 2017 M A U R E E N O S U L L I V A N, R E G I S T R A R O F C O M P A N I E S
OVERVIEW Brief review of Transition Period for Companies Act 2014 Conversions to new company types Change of name to include suffix Automatic conversions and change of name Mandatory E-Filing Mandatory e-filing will commence for 4 more Forms New requirements for e-filing of Annual Return Beneficial Ownership S.I. 560 of 2016 Establishment of central register 6
CONVERSION APPLICATIONS Conversion Type 2015 2016 TOTAL N1 Conversion to LTD 6,228 37,370 43,598 N2 Conversion to DAC 146 1,708 1,854 N3 Change of name 371 4,247 4,618 6,745 43,325 50,070 7
CONVERSIONS RECEIVED IN DUBLIN 30 TH NOVEMBER 8
THE LAST CONVERSION CERTS ARE POSTED 16 TH DECEMBER 9
MANDATORY ELECTRONIC FILING Currently only for Registration of Charges (Forms C1, C1a, C1b and external company equivalents F1, F1a and F1b) From 1 st June 2017 it will be mandatory to file the following forms electronically B1 Annual Return B10 Change of Director/Secretary or in their particulars B2 change of registered office B73 change in annual return date Paper forms filed after that date will be returned 10
E-FILING OF ANNUAL RETURNS As well as filing the B1 electronically: Financial statements will have to be uploaded using the pdf upload facility in CORE The filing fee will have to be paid electronically using a customer account or credit/debit card Cash/cheque payments will not be accepted for filing Annual Returns The option of using a ROS signature continues to be available Signature pages will continue to be accepted Signature pages will have to be received in CRO within 28 days of capturing B1 Financial statements must be uploaded before the signature page is received in CRO 11
AWARENESS CAMPAIGN Information campaign currently underway Direct emails to companies Letters to companies who haven t registered an email address on CORE Radio ads Newspaper ads Website www.cro.ie E zine subscribe at www.cro.ie/publications/newsletter Youtube channel https://www.youtube.com/channel/uckvqn- QKT1bRaSmL3SPAJDg Be ready for 1 st June, register now on www.core.ie 12
REGISTER OF BENEFICIAL OWNERSHIP Anti money laundering measure Required under the 4 th Anti Money Laundering Directive Central Register to be established by June 2017 Companies Industrial & Provident Societies Trusts ICAVs CRO is likely to host the central register for companies and industrial and provident societies 13
OBLIGATIONS ON COMPANIES AND I&PS Statutory Instrument S.I. 560 of 2016 sets out requirements for companies and industrial and provident societies Take all reasonable steps to obtain and hold adequate, accurate and current information in respect of its beneficial owners The information required is Name, date of birth, nationality and residential address of each beneficial owner A statement of the nature and extent of the interest held by each beneficial owner This information must be kept in the company s own Beneficial Ownership Register, as well as Date on which a person was entered in the register Date on which the person ceased to be a beneficial owner 14
CENTRAL REGISTER Four aspects to implementation Awareness campaign for companies and I&Ps Receipt of information on the register Availability of information What if information is not given to the register? Companies and I&Ps will be obliged to file the information from their registers with the central register This obligation will come through a further S.I. from D/Finance 15
ARRANGEMENTS Information will be filed online through a dedicated portal not through CRO or CORE Filing will be free Register will open on 26 th June and there will a 3 month period in which to file without being in breach of the statutory duty to file Next steps: Finalise design of portal and filing facility Awareness campaign Decisions to be made around access to the information and compliance measures 16
REQUESTS FOR INFORMATION For general queries on the Directive and SI 560 contact the Department of Finance at: aml@finance.gov.ie 17
Managing changes in Governance & Compliance Ruairí Cosgrove Director, Entity Governance & Compliance Department 18
Agenda Adoption of Compliant Constitutions Mandatory E-Filing requirements points to be aware of Complying with UBO requirements An update on Companies (Accounting) Bill 2016 Directors Compliance Statement Other points of interest 19
Adoption of Compliant Constitutions 20
Have you adopted CA2014 constitutions? One of the key provisions of Companies Act 2014 (CA2014) was the requirement for Company Directors to ensure that a new constitution was adopted by the deadline dates of: 31 August 2016 for DACs or 30 November 2016 for all other company types. To date less than 25% of companies have adopted a compliant constitution! Company compliance rates 76% 24% Compliant Non-compliant 21
Deemed Constitutions Where a company didn t file an updated constitution they now have a deemed constitution This deemed constitution will be made up of the provisions of its existing Memorandum and Articles with the exception of objects for LTD companies and/or anything which prohibits the alteration of any provisions of its M&As 22
Consequences of non compliance? A breach of CA2014 for directors is triggered (Category 4 offence in CA2014) The publicly filed constitution will not be the company s actual constitution Category 4 offence Max fine 5K The company will not pass a due diligence process Delays may arise when opening a bank account or sourcing a loan 23
What are the benefits of compliance? There are a number of benefits in adopting a new constitution as follows: The correct constitution is publicly filed ensuring clarity and transparency The adoption of a standard constitution for all group companies results in efficiencies New CA2014 innovations can be availed of (e.g. one Director company) 24
Mandatory E-Filing requirements points to be aware of 25
Mandatory E-Filing requirements Ensure that your company has registered for e-filing B77 form to be filed or CORE registration to be completed Prudent to make test submissions in advance of filing deadline date Important to know which officers will be signing the form Ensure that the effective dates are correct 26
Mandatory E-Filing requirements Ensure all hard copy forms prepared are filed before the 1 June 2017 deadline Section 357 / B1U filing position being reviewed by the CRO The submission of shareholders on computer disc position is being reviewed by the CRO Large pdf files (>5MB) of financial statements will not be able to be filed online 27
Complying with UBO requirements 28
An overview of the UBO requirements What is an ultimate beneficial owner? For corporate entities, this is the natural person who ultimately owns or controls a legal entity. A shareholding or ownership interest of 25+% meets these requirements Proposal: 10% threshold for high risk entities What are the main requirements under the EU legislation? Companies in Member States are required to obtain and hold in a central register adequate, accurate and current information about their beneficial ownership including beneficial interests. Proposal: the register should be public What information must be provided? Do any exemptions apply? The information must include the name, the month and year of birth, the nationality and the country of residence of the beneficial owner as well as the nature and extent of the beneficial interest held. Any company listed on a regulated market which ensure adequate transparency of ownership information is excluded. A UBO can avoid public disclosure of information in certain limited circumstances (eg. risk of violence, kidnapping, minors)
Issues to consider Tensions between transparency and privacy heighten sensitivity for individuals around public disclosure Public perception that offshore entities have been structured to facilitate illegal transactions Conflict of Domestic/EU regime with overseas structures and legal regimes 1 2 3 MNCs will need to understand the implications of the 4th AMLD there will be 28 UBO registers International Revenue authorities have the capacity, capability and motivation to use the information to join the dots and root out any evasion Offences under the new regulations are criminal with sanctions leading to imprisonment and fines for company officers and principle owners/controllers 4 5 6
#pwcevent What details Must be contained on the Register? Name Date of Birth Nationality Address Nature and Extent of the Beneficial Interest Date the Beneficial Owner was first added to the Register Date of Cessation of Beneficial Ownership There is also an obligation to keep this information up to date 31
What is a beneficial owner and how are they identified? A person who owns or controls in excess of 25% of the voting shares through direct Or indirect ownership UBO may also be Control by other means shareholders agreement, power to appoint senior management, exercise dominant influence Review of the register of Members (Shareholding Test) Issue a notice to any individual who may be a UBO or who may be aware of the identity of a UBO 32
What happens if an Ultimate Beneficial Owner (UBO) cannot be identified? Two Scenarios 1. There are no beneficial owners 2. There is cause to believe there is a beneficial owner but despite reasonable steps being taken, a beneficial owner cannot be identified As the register cannot be blank, under Regulation 4(4), Senior Management should be inserted on the UBO register where there is no UBO or no UBO can be identified Senior management is defined as the Directors and the CEO 33
Points to note Best practice is to keep the UBO register with the statutory books Important that an audit trail is retained in order that it can be shown that reasonable steps have been taken to identify any UBOs Where there is a change in UBO, the register must be updated and the CRO notified Failure by a relevant entity or the recipient of a notice to comply is an offence Further guidance from the Department of Finance is due Irish Companies Developments in Governance and Compliance 34
An update on Companies (Accounting) Bill 2016 35
Update on Companies (Accounting) Bill 2016 The Bill is effecting the June 2013 EU Accounting Directive (2013/34/EU) and amending some Companies Act 2014 provisions The Bill has concluded at report and final stages in the Dáil The bill will now be presented to the Seanad Enactment appears to be imminent 36
Some of the key points within the Bill A new micro company is being introduced Increase in thresholds relating to small and medium companies Changes to the type of financial statements which need to be filed at CRO Definition of Credit Institution has been narrowed Unlimited companies with a limited parent will be required to file their financial statements at CRO Unlimited foreign companies which have a limited parent and have operations in Ireland may be required to register an External Company (Branch) and file financial statements at the CRO Exemption from use of U.C. may be restricted to five years 37
Directors Compliance Statement 38
Directors compliance statement - outline Compliance Statement Include in Directors Report Acknowledgement Responsibility for compliance Confirmation Three things specified - comply or explain Applies to all company directors 39
Measures to demonstrate compliance Three measures identified to demonstrate compliance with relevant obligations as follows: 1. preparation of Compliance Policy 2. implementation of structures which in the directors opinion are designed to secure material compliance 3. review during the relevant financial year of the structures put in place 40
Scope Covered: Irish companies PLCs Large companies: Private Limited Companies DACs Guarantee companies S110 companies Excluded: Small/medium companies Unlimited companies Investment companies Relevant Obligations Companies Act Tax law : Customs Acts Excise duties statutes Tax Acts CGT Acts VAT Acts CAT Act SDCA 41
Directors Compliance Statement Our experience during 2016 Observations No new standard of compliance No ODCE guidance Tailored response required Company Law approach Defined schedule of company law provisions Tax approach Risk based approach Needs business and tax knowledge Concerns Lack of engagement Board awareness? Resources Auditors position Benefits Tax recognised as a governance issue Risk identification and management Revenue audit ready Surprises Investment required time etc. Assumptions re. outsourced arrangements Compliance fatigue Responsible person 42
Post 31 December 2016 observations Most companies are using a standard DCS compliance wording in the Directors Report Because of time / resource pressures a number of companies complied with the DCS requirement to a low standard Where a company did not comply fully, the Directors are stating in the Directors Report that the company has adequate controls and protocols to ensure compliance with the DCS obligations 43
Actions to consider for 2017 1 Confirm if your company is in scope for DCS for 2017 2 Obtain feedback from the Directors on the appropriateness of the current policy 3 Assess whether the 2016 work completed needs enhancement 4 Plan the review element of DCS for 2017 44
Other points of interest 45
Summary Approval Procedure take up Domestic Merger Share Capital Reduction / Variation Pre-acquisition Profits June 2016 4 March 2017 June 2016 March 2017 3 June 2016 March 2017 57 172 Submissions 99 199 Submissions 2 8 Submissions June March 46
Brexit EEA Resident Director Irish incorporated companies currently require one EEA resident director or must put a bond in place. Companies relying on a UK resident director to fulfil this requirement may need to review their board composition depending on how Brexit is implemented Mergers of Irish & UK companies The Cross- Border Mergers Directive permits mergers and divisions of companies within the EU. If the UK exits the EU, the provisions contained in this Directive would no longer be available where an Irish company wished to merge with a UK company. Filing UK consolidated Financial Statements Irish companies which file the consolidated financial statement of their UK parent will not be able to do so once Britain leaves the EU 47
Key takeaways 1 Adopt a CA2014 compliant constitution if not already completed 2 Create a UBO register and await further guidance 3 Ensure preparedness for mandatory efiling 4 Directors Compliance Statement ensure review is scheduled for 2017 48
Panel discussion Led by Panel Alan Bigley Maureen O Sullivan, Registrar of Companies Ruairí Cosgrove Director, Harry Harrison, International Tax & Inward Investment Partner, Efe Okome, Accounting Solutions & Advisory Director, 49
Closing remarks Alan Bigley 50
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