S.I. No. 396/1993 - European Communities (Accounts) Regulations, 1993

S.I. No. 396 of 1993.

EUROPEAN COMMUNITIES (ACCOUNTS) REGULATIONS, 1993.

I, RUAIRÍ QUINN, Minister for Enterprise and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to the provisions of Council Directives 90/604/EEC^(1) and 90/605/EEC^(2) of 8 November 1990 and Article 11 of Council Directive 89/666/EEC^(3) of 21 December 1989 hereby make the following Regulations:

PART I PRELIMINARY AND GENERAL

1 Citation and construction.

1.

1. (1) These Regulations may be cited as European Communities (Accounts) Regulations, 1993.

• (2) These Regulations shall be construed as one with the Companies Acts.

2 Application.

2.

2. (1) Parts I and II of these Regulations shall come into operation on the 1st day of January 1994.

• (2) Part III of these Regulations shall apply to accounts prepared for financial years commencing on or after 1 January 1994.

• (3) Part IV of these Regulations shall apply to directors' reports attached to balance sheets for financial years commencing on or after 30 June 1993.

3 Interpretation.

3.

3. (1) In these Regulations, unless the context otherwise requires—

"the Companies Acts" means the Companies Act, 1963 , and any enactment to be construed as one with that Act;

^(1)O.J. No. L317, 16-11-1990, pp. 57-59.

^(2)O.J. No. L317, 16-11-1990, pp. 60-62.

^(3)O.J. No. L395, 21-12-1989, pp. 36-39.

"Member State" means a State which is a member of the European Communities;

"partnership" has the same meaning as in the Partnerships Act, 1890;

"limited partnership" means a partnership to which the Limited Partnerships Act 1907, applies;

"the 1992 Group Accounts Regulations" means the European Communities (Companies: Group Accounts), Regulations, 1992;

"the 1986 Act" means the Companies (Amendment) Act, 1986 ;

"undertaking" has the same meaning as in the 1992 Group Accounts Regulations.

• (2) In these Regulations, unless the context otherwise requires, a reference to a Part is to a Part of these Regulations, a reference to a Regulation is to a Regulation of these Regulations, a reference to a paragraph is to the paragraph of the Regulation and a reference to a subparagraph is to the subparagraph of the paragraph in which the reference occurs.

PART II IMPLEMENTATION OF COUNCIL DIRECTIVE 90/604/EEC

4 ..

4.

4. Section 8 of the 1986 Act is hereby amended—

( a ) in subsection (2) (a), by the substitution, for "£1,250,000", of "£1,500,000".

( b ) in subsection (2) (b), by the substitution, for "£2,500,000",. of "£3,000,000".

( c ) in subsection (3) (a), by the substitution, for "£5,000,000",. of "£6,000,000".

( d ) in subsection (3) (b), by the substitution, for "£10,000,000",. of "£12,000,000".

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5.

5. (1) The documents to be delivered to the registrar of companies under section 7 or 18 of the 1986 Act or Regulation 39 of the 1992 Group Accounts Regulations or Regulation 20 of these Regulations, as the case may be, may have the money amounts referred to therein expressed in European currency units, in addition to their expression in the currency in which the documents concerned were drawn up.

• (2) Where a company avails itself of the option in paragraph (1), the exchange rate used shall be that prevailing on the date of the balance sheet, and that rate shall be disclosed in a note to the accounts.

• (3) In this Regulation, "European currency unit" has the meaning assigned to it by Regulation (EEC) No. 3180/78,^(4)as amended by Regulation (EEC) No. 2626/84,^(5) and by Regulation (EEC) No. 1971/89.^6

PART III IMPLEMENTATION OF COUNCIL DIRECTIVE 90/605/EEC

6 ..

6.

6. This Part shall apply to the following undertakings:

• (1) Unlimited companies and partnerships where all the members thereof who do not have a limit on their liability are

( a ) companies limited by shares or by guarantee, or

( b ) bodies not governed by the law of the State but equivalent to those in paragraph (a), or

( c ) any combination of the types of bodies referred to in subparagraphs (a) and (b), and

• (2) Unlimited companies and partnerships where all the members thereof who do not have a limit on their liability are

( a ) (i) unlimited companies or partnerships of the type referred to in paragraph (1) that are governed by the laws of a Member State, or

• (ii) bodies governed by the laws of a Member State that are of a legal form comparable to those referred to in paragraph (i), or

^(4)O.J. No. L379, 30-12-1978, p.1.

^(5)O.J. No. L247, 16-9-1984, p.1.

^(6)O.J. No. L189, 4-7-1989, p.1.

( b ) any combination of the types of bodies referred to in subparagraph (a) and subparagraphs (a) and (b) of paragraph (1).

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7.

7. (1) Subject to these Regulations, the 1986 Act shall apply to an undertaking to which this Part applies as it applies to companies to which that Act applies.

• (2) Notwithstanding section 1 (1) of the 1986 Act, the term "company" in that Act shall include an unlimited company to which this Part appies and the term "private company'' shall include such unlimited companies that are not public companies.

• (3) Subject to these Regulations, the 1986 Act shall be applied to partnerships to which this Part applies as though those partnerships were companies formed and registered under the Companies Acts with any modifications necessary to take account of the fact that such partnerships are unincorporated.

8 ..

8.

8. (1) Save as otherwise provided, in these Regulations the term "partner" shall not include a limited partner.

• (2) The compliance by a limited partner with Regulations 16 (2) (b) and 22 (1) shall not constitute taking part in the management of the partnership business for the purposes of section 6 (1) of the Limited Partnerships Act, 1907.

9 ..

9.

9. (1) Subject to these Regulations, the 1992 Group Accounts Regulations shall apply to an undertaking to which this Part applies that is a parent undertaking as they apply to the parent undertakings referred to in Regulation 5 (3) of those Regulations.

• (2) In the case of a partnership to which this Part applies the partners shall prepare the group accounts referred to in Regulation 5 (1) of the 1992 Group Accounts Regulations and in the case of such partnerships any reference to group accounts prepared by the company shall be construed as a reference to group accounts prepared by the partners.

• (3) Subject to these Regulations, the 1992 Group Accounts Regulations shall be applied to partnerships to which this Part applies a though those partnerships were companies formed and registered under the Companies Act with any modifications necessary to take account of the fact that such partnerships are unincorporated.

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10.

10. (1) Every balance sheet and profit and loss account of a partnership to which this Part applies shall be approved by the partners and shall be signed on behalf of the partners by two of the partners authorised by the partners to do so.

• (2) In the case of a partnership to which this Part applies any reference in the 1986 Act to Section 156 of the Principal Act shall be construed as a reference to paragraph (1).

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11.

11. Without prejudice to the generality of Regulation 3 (2) of the 1992 Group Accounts Regulations and save as otherwise provided in these Regulations, any reference in the 1986 Act or in the 1992 Group Accounts Regulations to directors shall, in the case of a partnership to which this Part applies, be construed as a reference to the partners of such partnerships and any duties, obligations or discretion imposed on or granted to such directors shall be deemed to be imposed on or granted to such partners.

12 Annual Accounts of Partnerships.

12.

12. (1) In the case of a partnership to which this Part applies, the partners shall, at some date not later than 18 months after the appropriate date and subsequently once at least in every calendar year, so however that not more than 15 months shall elapse between the preparation of the account, draw up a profit and loss account for the period, in the case of the first account, since the formation of the partnership, and in any other case, since the preceding account.

• (2) The partners shall cause to be made out in every calendar year a balance sheet as at the date to which the profit and loss account is made up.

• (3) In the case of such partnerships the reference in section 3 of the 1986 Act to balance sheets and profit and loss accounts shall be construed as a reference to balance sheet and profit and loss accounts drawn up pursuant to this Regulation.

• (4) For the purposes of this Regulation the "appropriate date" shall be;

• (i) in the case of the partnership formed before the commencement of these Regulations, the date referred to in Regulation 2 (2), and

• (ii) in the case of a partnership formed after the commencement of these Regulations, the date of the formation of the partnership.

13 ..

13.

13. (1) Subject to paragraphs (3) to (6), the provisions of sections 10, 12 (1) and 18 of the 1986 Act applicable to a company qualified to be treated as a small company shall apply mutatis mutandis to a partnership to which this Part applies in respect of any financial year of the partnership if, in respect of that year and the financial year of the partnership immediately preceding that year, the partnership satisfies at least two of the conditions specified in subsection (2) of section 8 of the 1986 Act, as amended by Regulations 4.

• (2) Subject to paragraphs (3) to (6), the provisions of sections 11, 12 (2) and 18 of the 1986 Act applicable to a company qualified to be treated as a medium sized company shall apply mutatis mutandis to any partnership to which this Part applies in respect of any financial year of the partnership if, in respect of that year and the financial year of the partnership immediately preceding that year, the partnership satisfies at least two of the conditions specified in subsection (3) of section 8 of the 1986 Act, as amended by Regulation 4.

• (3) Subject to paragraph (4), in determining whether a partnership to which this Part applies is qualified to be treated in the same manner as a small company or a medium sized company subsections (4) to (12) of section 8 and section 9 of the 1986 Act shall apply.

• (4) In the case of partnerships to which this Part applies the references in subsections (7) and (8) of section 8 of the 1986 Act to incorporation shall be construed as references to the formation of such partnerships and a reference in those subsections to the commencement of the said section 7 shall be construed as a reference to the date referred to in Regulation 2 (2).

• (5) In the case of partnerships to which this Part applies the statement required by section 18 (2) of the 1986 Act shall be in a position on the balance sheet immediately above the signatures required by Regulation 10.

• (6) In the case of partnerships to which this Part applies the copy of the report of the auditors referred to in subsection (5) of section 18 shall be certified by two of the partners to be a true copy of such report.

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14.

14. (1) In the case of a partnership to which this Part applies, there shall be attached to every balance sheet drawn up pursuant to Regulation 12, a report of the partners containing the following information:

( a ) a fair review of the development of the business of the partnership and of its subsidiary undertakings, if any, during the financial year ending with the relevant balance sheet date;

( b ) particulars of any important events affecting the partnership or any of its subsidiary undertakings, if any, which have occurred since the end of that year;

( c ) an indication of likely future developments in the business of the partnership and any of its subsidiary undertakings, if any;

( d ) an indication of the activities, if any, of the partnership and any of its subsidiary undertakings, if any, in the field of research and development, and

( e ) an indication of the existence of branches (within the meaning of Council Directive 89/666/EEC^(3)) of the partnership outside the State and the country in which each such branch is located.

• (2) The said report shall be signed on behalf of the partners by two of the partners authorised by the partners to so do.

• (3) Section 13 of the 1986 Act shall not apply in the case of a partnership referred to in paragraph (1) and a reference in the 1986 Act to the report of the directors of a company shall in the case of such partnerships be construed as a reference to the report of the partners prepared pursuant to this Regulation.

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15.

15. Where, in the case of a partnership to which this Part applies, the partners decide to give the information specified in subsection (1) of section 16 of the 1986 Act, as amended by Regulation 44 of the 1992 Group Accounts Regulations, by way of a separate statement in accordance with subsection (3) of that section, the said statement shall be signed on behalf of the partners by two of the partners and a copy of that statement, certified by two of the partners to be a true copy of such a statement shall be returned to the registrar with the accounts for that particular financial year.

16 ..

16.

16. (1) Subject to paragraph (2), section 17 of the 1986 Act, as substituted by Regulation 45 of the 1992 Group Accounts Regulations, shall apply to a partnership to which this Part applies as it applies to a private company.

• (2) In the case of a partnership to which this Part applies;

( a ) the reference in section 17 to the provisions of section 7 shall be construed in accordance with Regulation 20 (4), and

( b ) paragraph (a) of subsection 1 of the said section 17 shall not apply but all the partners including, in the case of a limited partnership, a limited partner must declare, in writing, their consent to the exemption in respect of a financial year before the partnership can stand exempted from the requirement in respect of that year, and

( c ) the notification procedure referred to in subsection (1) (b) of the said section 17 shall not apply, but a certified copy of the guarantee referred to in that subsection in respect of a financial year must be forwarded to all the partners including, in the case of a limited partnership, a limited partner before the partnership can stand exempted from the requirement in respect of that year, and

( d ) paragraphs (d) and (f) of subsection (1) of the said section 17 shall not apply but the partners shall, in respect of each financial year for which it avails of the exemption, return to the registrar, in lieu of the accounts referred to in Regulation 20:

• (i) a notice stating that the partnership has availed of the exemption under the said section 17,

• (ii) the declarations referred to in paragraph (h) in respect of that financial year,

• (iii) a certified copy of the guarantee referred to in paragraph (c) for that financial year,

• (iv) the group accounts of the parent undertaking audited in accordance with Article 37 of the Seventh Council Directive.^(7)

17 Group Accounts of Partnerships to which this Part applies.

17.

17. Regulation 7 of the 1992 Group Accounts Regulations shall apply to a parent undertaking that is a partnership to which this Part applies as it applies to private companies under that Regulation.

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18.

18. (1) In the case of a parent undertaking that is a partnership to which this Part applies, the requirement in paragraphs (1) and (3) of Regulation 36 of the 1992 Group Accounts Regulations to have statements signed and certified by a director and the secretary shall be construed as a requirement to have such statements signed and certified by two of the partners authorised by the partners to do so.

• (2) In the case of a parent undertaking that is a partnership to which this Part applies, the statements referred to in paragraph (1) shall be returned to the Registrar with the accounts for that particular financial year.

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19.

19. In the case of a parent undertaking that is a partnership to which this Part applies, the reference in Regulation 37 of the 1992 Group Accounts Regulations to the report of the directors under section 158 of the Principal Act shall be construed as a reference to the report of the partners under Regulations 14 of these Regulations.

20 Return by Partnership of Documents to the Registrar of Companies.

20.

20. (1) Subject to Regulation 13, in the case of a partnership to which this Part applies the partners shall, under cover of the prescribed form, forward to the register of companies, within six months from the end of the financial year of the partnership, a copy of the balance sheet and profit and loss account for that financial year drawn up in accordance with Regulation 12 and each such copy shall be certified, by two of the partners authorised by the partners to do so, to be a true copy of such balance sheet or profit and loss account, as the case may be.

• (2) Where a partnership to which this Part applies is a parent undertaking whose partners are required to prepare group accounts in accordance with the 1992 Group Accounts Regulations, the partners shall forward a copy of the group accounts to the registrar at the same time as the documentation referred to in paragraph (1) and each such copy shall be certified, by two of the partners authorised by the partners to do so, to be a true copy.

^(7)Council Directive No. 83/349EEC (OJ No. L139 of 18-7-1983).

• (3) There shall be attached to the balance sheet, profit and loss accounts and group accounts referred to in paragraphs (1) and (2) a copy of the report of the auditors on and report of the partners accompanying each such balance sheet, profit and loss account or group accounts and each such copy shall be certified, by two of the partners authorised by the partners to do so, to be a true copy of each such report.

• (4) Section 7 of the 1986 Act shall not apply to a partnership to which this Part applies and a reference in that Act to a provision of the said section 7 shall be construed in the case of such a partnership as a reference to the corresponding provision in this Regulation.

• (5) Regulation 39 of the 1992 Group Accounts Regulations shall not apply to a partnership to which paragraph (2) applies.

• (6) In the case of a partnership to which this Part applies, a reference, in the 1986 Act or in the 1992 Group Accounts Regulations to the annual return shall be construed as a reference to the return made to the registrar pursuant to this Regulation and a reference to any documents to be annexed to the annual return shall be construed as a reference to the corresponding documents to be returned pursuant to these Regulations.

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21.

21. Where a document, being a balance sheet, profit and loss account, report or statement, returned to the registrar pursuant to these Regulations, is in a language other than the English language or the Irish language, there shall be annexed to each such document a translation in the English language or the Irish language certified in the prescribed manner to be a correct translation.

22 Audit Provisions.

22.

22. (1) In the case of a partnership to which this Part applies, the partners, including a limited partner, if any, shall appoint auditors who shall make a report on the accounts examined by them and on every balance sheet and profit and loss account, and all group accounts drawn up pursuant to these Regulations by the partners during their tenure of office as auditors.

• (2) A person shall not be qualified for appointment as an auditor under paragraph (1) unless he is qualified under the Companies Acts for appointment as auditor of a company.

• (3) In the case of a partnership to which this Part applies the reference in section 15, section 18 (3) (b) and section 19 (2) (c) and (d) of the 1986 Act to an auditors report under section 163 of the Principal Act and the reference in Regulation 38 of the 1992 Group Accounts Regulations to an auditor's report under section 193 of the 1990 Act shall be construed as references to the auditor's report referred to in paragraph (1).

23 Unlimited Liability.

23.

23. The 1986 Act is hereby amended by the insertion after section 16 of the following new section:

"16A (1) A note shall be included in the accounts of the company annexed to the annual return stating the name, the head or registered office and the legal form of each of the undertakings of which the company is a member having unlimited liability, unless such information is of negligible importance only for the purposes of section 3 (1) (b).

• (2) Subsection 3 of section 16 shall apply to the information referred to in subsection (1) of this section."

24 Offences.

24.

24. (1) If any person, being a partner of a partnership to which this Part applies, fails to take all reasonable steps to secure compliance with a requirement of Regulations 10 (1), 12 (1) and (2), 13 (5) and (6), 14 (1) and (2), 15, 16, 20, 21 and 22, that partner and any officer of that partner who is in default, shall in respect of each offence, be liable on summary conviction to imprisonment for a term not exceeding 12 months or, at the discretion of the court, to a fine not exceeding £1,000, or to both.

• (2) In any proceedings against a person for an offence under paragraph (1) of this Regulation, it shall be a defence for a partner to prove that he had reasonable grounds to believe and did believe that a competent and reliable person was charged with the duty of ensuring that the provisions of these Regulations were complied with and that the latter person was in a position to discharge that duty, and a person shall not be liable to be sentenced to imprisonment for an offence under the said paragraph (1) unless, in the opinion of the court, the offence was committed wilfully.

• (3) If any person in any return, report, certificate, balance sheet or other documents required by or for the purpose of any of the provisions of these Regulations wilfully makes a statement false in any material particular, knowing it to be false, he shall be liable on summary conviction to imprisonment for a term not exceeding 12 months or, at the discretion of the court, to a fine not exceeding £1,000, or to both.

• (4) A partner shall be deemed to be an officer of the partnership for the purposes of section 22 of the 1986 Act and Regulation 41 of the 1992 Group Accounts Regulations.

• (5) Proceedings for an offence under this Regulation, in relation to regulations 13 (5) and (6) 15, 20, and 21 may be brought and prosecuted by the registrar of companies.

PART IV IMPLEMENTATION OF ARTICLE 11 OF COUNCIL DIRECTIVE 89/666/EEC

25 ..

25.

25. Section 13 of the Companies (Amendment) Act 1986 , is hereby amended by the insertion of the following new subsection:

• "(e) an indication of the existence of branches (within the meaning of Council Directive 89/666/EEC^(3)) of the company outside the State and the country in which each such branch is located."

GIVEN under my Official Seal, this 20th day of December, 1993.

RUAIRÍ QUINN,

Minister for Enterprise and

Employment.

EXPLANATORY NOTE.

The purpose of these Regulations is to give legal effect to Council Directive 90/604/EEC on accounting exemptions for small and medium sized undertakings, Council Directive 90/605/EEC extending the Scope of the 4th (annual accounts) and 7th (group accounts) Company Law Directives and Article 11 of Council Directive 89/666/EEC (branch disclosures).

Part I of the Regulations contains preliminary and general provisions e.g. Interpretation Provisions.

Part II of the Regulations implements Council Directive 90/604/EEC. It increases the balance sheet and turnover thresholds set out in the Companies (Amendment) Act, 1986 Act for the purpose of availing of exemptions for small and medium sized companies. It also clarifies that a company can file accounts in ECUs as well as the currency in which they are drawn up.

Part III of the Regulations implements Council Directive 90/605/EEC. It extends the scope of the 1986 Act implementing the 4th Directive and the 1992 Group Accounts Regulations to certain types of unlimited companies and partnerships.

Part IV implements Article 11 of Council Directive 89/666/EEC (the Eleventh Directive) on disclosures by branches. Regulation 25 contains the relevant provision which requires disclosure in accounts of the existence of branches.