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Q3 Corporate Governance Update


Tuesday, June 18, 2019

1. Register of Beneficial Ownership (RBO) – important update

Central Register of Beneficial Ownership 

Since our Q4 2018 bulletin (click here) the Department of Finance has finalised the legislation (the “2019 Regulations”) paving the way to set up the Irish central register (“Central Register”), which will house details of each Irish corporate and legal entity’s beneficial ownership.

What has changed?

The 2019 Regulations require all companies and legal entities to make filings in relation to their beneficial ownership with the Central Register. This filing requirement will go live on 22 June 2019.

If details of your beneficial ownership change over time, you are obligated to file and update the Central Register with each and every change.

Details on the Central Register 

Relevant entities in existence on 22 June 2019 will have 5 months to start reporting to the Central Register (i.e. by November 22 2019).

  1. Appointment of the Registrar – The Registrar of Companies has been appointed to maintain the Central Register.
  2. Unrestricted Access to the Register – Unrestricted access to the Central Register will be granted to An Garda Siochana, FIU Ireland (Ireland’s Finance Intelligence Unit), the Revenue Commissioners, the CAB, and any such competent authorities, as well as any inspector appointed under the Companies Act 2014 to investigate the ownership of a company.
  3. Access by designated persons (i.e. banks etc.) / the public – Designated persons / the public will be able to access certain information on the Central Register (the name, month and year of birth, country of residence, nationality and statement of the nature and extent of interested held/controlled by each beneficial owner). The Registrar may charge a designated person or member of the public a fee for inspecting the Central Register.
  4. Website – the Central Register’s website (accessible here) has just gone live and provides further information for entities.

PPS Numbers (important) 

The PPS number of each beneficial owner must be provided (if they have one) when making the filing with the Central Register. If the person in question is not Irish resident, or otherwise does not have a PPS number, they may need to apply for a PPS number – NOTE: this position is subject to confirmation by the Companies Registration Office (the “CRO”) at the time of writing.

Penalties

The 2016 regulations provided for sanctions for failing to comply with the requirement to establish and maintain an RBO. In addition to the existing sanctions, the 2019 Regulations have added that a relevant entity that:

  • fails to obtain and hold information on its beneficial owners;
  • fails to maintain its RBO; and
  • fails to include information on its beneficial owners in its RBO

are liable for a €5,000 fine on summary conviction and may also be liable to a fine not exceeding €500,000 if convicted on indictment.

2. Companies (Amendment) Act 2019 – amendment to filing of annual returns

The Companies (Amendment) Act 2019 (the “Act”) was passed into law on 11 April 2019. The Acts sole purpose is to amend section 343 of the Companies Act 2014 by bringing about a change in the annual return filing requirements for Irish Companies. It is expected that the Act will be commenced in the Summer of 2020.

The Act was passed in order to reduce the administrative burden placed on companies by simplifying procedures to make it easier for a company to satisfy its filing obligations with the CRO.

The Act has replaced the previous two-step procedure for a company in filing an annual return with the CRO (where each step had to be undertaken within a maximum period of 28 days). The Act has combined these two periods to provide a single one-step with a 56-day grace period given to companies to e-file the annual return, upload the company’s financial statements and deliver the signature pages to the CRO.

While the new single one-step process does not give companies more time to file an annual return with the CRO, it is seen as a very welcome change in making it easier for companies to meet their annual return deadlines.

3. Charities Governance Code

The Charities Governance Code (the “CGC”) issued under section 14(1)(i) of the Charities Act 2009, aims to encourage and facilitate the better administration and management of charitable organisations.

The CGC provides the minimum standards of governance that must be met by the managers or controllers of a charity as set out in the six ‘principles, namely: –

  1. Advancing its charitable purpose;
  2. Behaving with integrity;
  3. Leading people;
  4. Exercising control;
  5. Working effectively; and
  6. Being accountable and transparent.

Each of the six principles of governance come with additional standards that more complex charities must align with involving the creation of detailed plans, policies and procedures, and the maintenance of written records and registers.

It is intended that 2019 will be a year of learning and preparing for Charities with 2020 being the first year that registered charities shall be expected to comply with the CGC. Registered charities will then be expected to report on their compliance to the CGC from 2021.

4. Industrial and Provident Societies (Amendment) Bill 2018

An industrial and provident society (“IPS”) is a legal entity for a trading business or voluntary organisation and is most popular in the agriculture and food industry, and for trade unions.

The IPS (Amendment) Bill is aimed at following the lead of other European countries by simplifying the process of establishing an IPS and seeking to level the playing field in Ireland. Supporters of the IPS model claim that these types of organisations do not fare well in Ireland as compared to other countries in the EU.

The most significant changes introduced by the IPS (Amendment) Bill 2018 are threefold, namely:

  • reducing the requisite membership criteria from seven members to three members;
  • enabling electronic filing and registration, (as already available to other types of bodies corporate); and
  • allowing for audit exemptions for IPSs in Ireland.

 

Can we help?

If you have any queries on any of the above, or would like to know more please contact our Head of Company Secretarial Patrick Butler.

 


Author

Patrick Butler

Company Secretary


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