Companies (Corporate Enforcement Authority) Act 2021
Date signed into law: 22 December 2021
The principal purpose of the act was to establish the Office of the Director of Corporate Enforcement as a standalone agency called the “Corporate Enforcement Authority”, with enhanced powers and autonomy.
Only one section of the act is not yet in force. Once commenced, section 35 will require directors to register their Personal Public Service Numbers (or prescribed identification documentation where none exists) with the Companies Registration Office ("CRO") when incorporating a new company, being appointed director to an existing company, or filing a company’s annual return. The details are to be used for validation purposes only and will not be publicly available. The Department of Enterprise, Trade and Employment had indicated its intention to commence this section by the end of Q1 2023, subject to the approval of a data sharing agreement between the CRO and the Department of Social Protection and the upgrade of the Companies Online Registration Environment ("CORE") to accept relevant details.
Latest stage: Whole act, other than s. 35, commenced 6 July 2022. We will update you as further developments occur.
IRISH PROPOSED LEGISLATION
Companies (Administrative, Governance & Insolvency Amendment) Bill
The bill proposes to give effect to outstanding Programme for Government commitments on the rights of workers as creditors, trading entities splitting operations, and transactional avoidance. The bill will be used as the legislative vehicle to address various recommendations of the Company Law Review Group in the context of insolvency and restructuring and in relation to other matters.
Latest stage: Work is underway on the bill.
Miscellaneous Provisions (Transparency and Registration of Limited Partnerships and Business Names) Bill 2023
This bill proposes to reform the Limited Partnership Act 1907 and the Registration of Business Names Act 1963, strengthening Ireland’s regulatory framework and responding to concerns raised in relation to the transparency of limited partnerships.
Latest stage: Heads of Bill are in preparation.
Industrial Development (Miscellaneous Provisions) Bill
This bill will permit IDA Ireland (Ireland's inward investment promotion agency) to establish and participate in corporate partnerships, with the sole purpose of developing critical industrial and commercial property in regional locations.
Latest stage: Heads of Bill approved 4 August 2020 and revised Heads of Bill are now in preparation.
Co-operative Societies Bill 2022
This measure aims to establish a new legislative framework for co-operative societies. It will consolidate and reform current provisions and will introduce corporate governance, financial reporting and compliance requirements similar to those applicable to companies. Entities which register under the new legislation will be required to adhere to the co-operative ethos.
The new regime will:
- simplify the procedure to establish and operate a co-operative society
- reduce the minimum number of founding members (from seven to three) and expand the categories of founding members to include bodies corporate
- permit virtual and hybrid participation at general meetings
- give co-operatives certain flexibilities in drafting their governing rules to reflect their requirements.
Latest stage: General Scheme published and pre-legislative scrutiny underway.
PRIVATE MEMBERS' BILLS
Irish Corporate Governance (Gender Balance) Bill 2021
This bill proposes to make provision for the regulation of gender balance on the boards and governing councils of corporate bodies and related matters. As it is not a government-sponsored bill, it is unlikely to progress further. The government indicated its support for the principles underlying the bill but will await the outcome of the transposition of the Directive on Gender Balance on Corporate Boards (below).
Latest stage: Dáil Éireann, Second Stage.
EU DIRECTIVES AWAITING IMPLEMENTATION
Directive on Cross-border Conversions, Mergers and Divisions
Date published: 12 December 2019
This directive, which amends Directive (EU) 2017/1132 on cross-border mergers, aims to foster cross-border mobility and:
- contains procedures for cross-border conversions (enabling limited companies to change legal form into a similar legal form of another Member State and to relocate there)
- contains procedures for cross-border divisions; and
- amends some existing rules on cross-border mergers.
While these new cross-border mobility measures will create new structuring opportunities for companies, they must be balanced against stakeholder interests.
Transposition deadline: 31 January 2023
The precise detail of transposing measures is not yet available but we expect implementation by way of regulations made under statutory instrument. Ireland, along with most other Member States, has missed the transposition deadline.
Directive on Gender Balance on Corporate Boards
Date published: 23 November 2022
Under this directive, each Member State must decide whether to require in-scope EU registered companies with shares listed on an EU regulated market to aim, by 30 June 2026, to have:
- members of the underrepresented sex hold at least 40% of non-executive director positions ("NED Objective"); or
- members of the underrepresented sex hold at least 33% of all director positions, including both executive and nonexecutive directors ("Board Objective").
A listed company failing to meet the NED Objective or Board Objective, as applicable under national law, must adjust its board selection procedure. Member States must ensure that where listed companies are not subject, under national law, to the Board Objective, individual quantitative objectives with a view to improving the gender balance among executive directors are established.
There is no attempt to harmonise national laws on selection processes or qualification criteria. The core aim of the directive is that Member States ensure that, when listed companies are choosing between candidates for directorship positions who are equally qualified in terms of suitability, competence and professional performance, priority is given to the candidate of the underrepresented sex. Qualification and merit remain the essential criteria.
Transposition date: 28 December 2024
Directive Amending the Non-Financial Reporting Directive as regards Corporate Sustainability Reporting ("CSRD")
Date published: 16 December 2022
CSRD came into force on 5 January 2023 and domestic implementation measures are currently being formulated. This measure is designed to revise and expand the regime introduced by the EU Non-financial Reporting Directive (Directive 2014/95/EU) ("NFRD"). The directive aims to ensure that companies report reliable and comparable sustainability information. Companies in scope will have to report information on a full range of environmental, social and governance issues.
The regime will apply to:
- EU stock exchange listed companies and large companies (meeting two or more of the following criteria: a balance sheet total of €20 million, net turnover of €40 million, at least 250 employees);
- SMEs with securities admitted to trading on an EU regulated market (other than micro undertakings); and
- Non-EU companies with substantial activity in the EU (generating an annual net turnover of €150 million in the EU and with at least one subsidiary or branch in the EU).
The European Financial Reporting Advisory Group ("EFRAG") Project Task Force has submitted reporting standards to the Commission. The first set of mandatory European Sustainability Reporting Standards is due to be adopted by 30 June 2023 and second set by 30 June 2024 which will include sector specific standards.
The new reporting requirements will be phased in over stages as follows:
- From 1 January 2024 (reporting year 2025) for companies already in scope of the NFRD;
- From 1 January 2025 (reporting year 2026) for companies not currently in scope of the NFRD;
- From 1 January 2026 (reporting year 2027) for listed SMEs, small and non-complex credit institutions and captive undertakings but SMEs can opt out until 2028; and
- From 1 January 2028 (reporting year 2029) for non-EU companies in scope.
Transposition date: 6 July 2024
EU DRAFT LEGISLATION
Proposal for a Corporate Sustainability Due Diligence Directive ("CSDD")
Procedure reference: 2022/051 (COD)
Date published: 23 February 2022
This proposal establishes a corporate sustainability due diligence duty and aims to foster sustainable and responsible corporate behaviour throughout global value chains. Companies in scope must identify and, where necessary, prevent, end or mitigate adverse impacts of their activities on human rights, such as child labour and exploitation of workers, and on the environment.
The new due diligence rules will, if adopted as proposed, apply to the following companies and sectors:
a) EU companies:
- Group 1: all EU limited liability companies of substantial size and economic power (with 500+ employees and €150 million+ in net turnover worldwide).
- Group 2: Other limited liability companies operating in defined high impact sectors, which do not meet both Group 1 thresholds, but have more than 250 employees and a net turnover of €40 million+ worldwide. Rules will start to apply 2 years later than for Group 1 companies.
b) Non-EU companies active in the EU with turnover threshold aligned with Group 1 and 2, generated in the EU.
Group 1 companies would need to have a plan to ensure that their business strategy is compatible with limiting global warming to 1.5 °C in line with the Paris Agreement.
Latest stage: First reading in the Council.