Companies (Statutory Audits) Act 2018

PART 1 Preliminary and General

1. Short title, collective citations, construction and commencement

1. (1) This Act may be cited as the Companies (Statutory Audits) Act 2018.

(2) The Industrial and Provident Societies Acts 1893 to 2014 and section 54 (in so far as that section relates to the definition of “Act of 1893”) and sections 55 to 61 and 68 may be cited together as the Industrial and Provident Societies Acts 1893 to 2018 and shall be read together as one.

(3) The Friendly Societies Acts 1896 to 2014 and section 54 (in so far as that section relates to the definition of “Act of 1896”) and sections 62 to 67 may be cited together as the Friendly Societies Acts 1896 to 2018 and shall be read together as one.

(4) The Ministerial and Parliamentary Offices Acts 1938 to 2009, the Oireachtas (Ministerial and Parliamentary Offices) (Amendment) Act 2014 and section 69 may be cited together as the Ministerial and Parliamentary Offices Acts 1938 to 2018.

(5) The Seanad Electoral (Panel Members) Acts 1947 to 2015 and section 70 may be cited together as the Seanad Electoral (Panel Members) Acts 1947 to 2018.

(6) The Electoral Acts 1992 to 2016 and sections 71 and 73 may be cited together as the Electoral Acts 1992 to 2018 and shall be read together as one.

(7) The Credit Union Acts 1997 to 2012 and section 72 may be cited together as the Credit Union Acts 1997 to 2018 and shall be read together as one.

(8) This Act shall come into operation on such day or days as the Minister for Business, Enterprise and Innovation may by order or orders appoint either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes and different provisions.

2. Definition

2. In this Act, “Principal Act” means the Companies Act 2014.

3. Repeals and revocations

3. (1) Each of the following provisions of the Principal Act is repealed:

(a) section 344;

(b) section 935A;

(c) section 935B;

(d) section 935C;

(e) section 935D;

(f) section 936;

(g) section 941A;

(h) subsections (4) and (5) of section 996;

(i) subsections (7) and (8) of section 1220;

(j) subsections (3) and (4) of section 1277;

(k) section 1441;

(l) section 1448.

(2) Section 72 of the Industrial and Provident Societies Act 1893 is repealed.

(3) Section 30 of the Friendly Societies Act 1896 is repealed.

(4) Paragraph (c) of section 3(1) of the Friendly Societies (Amendment) Act 1977 is repealed.

(5) Regulation 6 of the Friendly Societies Regulations 1988 (S.I. No. 74 of 1988) is revoked.

(6) Subject to section 1462 and Chapter 22 of Part 27 of the Companies Act 2014, the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 (S.I. No. 312 of 2016) are revoked.

PART 2 Amendment of Principal Act

4. Amendment of section 2 of Principal Act

4. Section 2 of the Principal Act is amended, in subsection (1)—

(a) by the deletion of the definition of “2016 Audits Regulations”,

(b) by the substitution of the following definition for the definition of “statutory auditor”:

“ ‘statutory auditor’ means an individual or a firm (within the meaning of Part 27) that stands approved as a statutory auditor or statutory audit firm, as the case may be, under Part 27, and includes a firm registered in accordance with section 1465;”,

and

(c) by the insertion of the following definitions:

“ ‘public-interest entity’ has the meaning given to it by Part 27;

‘Regulation (EU) 2016/679’ means Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016[^4] on the protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC (General Data Protection Regulation);”.

5. Amendment of section 35 of Principal Act

5. Section 35 of the Principal Act is amended, in subsection (7), by the substitution of “section 1535(2) or (3)” for “Regulation 93(2) or (3) of the 2016 Audits Regulations”.

6. Amendment of section 322 of Principal Act

6. Section 322 of the Principal Act is amended, in subsection (4), by the substitution of “Part 27” for “the 2016 Audits Regulations”.

7. Amendment of section 336 of Principal Act

7. Section 336 of the Principal Act is amended—

(a) in subsection (2)(a), by the substitution of “identify” for “include an introduction identifying”,

(b) in subsection (9A)(b), by the substitution of “his or her” for “his, her or its” in each place where it occurs, and

(c) by the insertion of the following subsection after subsection (9A):

“(10) The Supervisory Authority may prescribe additional requirements, by reference to auditing standards within the meaning of section 1461, in relation to the content of the statutory auditors’ report for all undertakings, or a class of undertakings, only—

(a) if those requirements are necessary in order to give effect to legal requirements in the State relating to the scope of statutory audits, or

(b) to the extent necessary to add to the credibility and quality of the report.”.

8. Amendment of section 337 of Principal Act

8. Section 337 of the Principal Act is amended, in subsection (2), by the substitution of “Part 27” for “the 2016 Audits Regulations” in each place where it occurs.

9. Amendment of section 346 of Principal Act

9. Section 346 of the Principal Act is amended, in subsection (2)(a), by the substitution of “56 days” for “28 days”.

10. Amendment of Principal Act - substitution of sections 363 and 364

10. The Principal Act is amended by the substitution of the following sections for sections 363 and 364:

“Audit exemption (non-group situation) not available in certain cases

363. (1) Subject to subsection (2) and notwithstanding that section 358 is complied with, a company is not entitled to the audit exemption referred to in that section in respect of its statutory financial statements for the 2 financial years immediately succeeding a financial year (in this section referred to as the ‘relevant financial year’) where the company failed to deliver to the Registrar, in compliance with section 343, the company’s annual return to which the statutory financial statements or (as appropriate) abridged financial statements for the relevant financial year are annexed.

(2) Subsection (1) shall not apply in the case of an annual return of a company which is the company’s first annual return referred to in section 349.

Audit exemption (group situation) not available in certain cases

364. (1) Subject to subsection (3), in this section a reference to a relevant body is a reference to the holding company or any other member of the group.

(2) Subject to subsection (4) and notwithstanding that section 359 is complied with, a holding company and the other members of the group are not entitled to the audit exemption referred to in that section in respect of their statutory financial statements for the 2 financial years immediately succeeding a financial year (in this section referred to as the ‘relevant financial year’) where any relevant body failed to deliver to the Registrar, in compliance with section 343, the annual return of that relevant body to which such body’s statutory financial statements or (as appropriate) abridged financial statements for the relevant financial year are annexed.

(3) There shall not be reckoned as another member of the group for the purposes of this section (other than for the purposes of the expression ‘other members of the group’ in subsection (2)) a subsidiary undertaking that is not a company registered under this Act or an existing company and the construction provided for by subsection (1) (of references to each of the relevant bodies) shall be read accordingly.

(4) Subsection (2) shall not apply in the case of an annual return which is a relevant body’s first annual return referred to in section 349.”.

11. Amendment of section 380 of Principal Act

11. Section 380 of the Principal Act is amended—

(a) in subsection (5), in paragraph (iii), by the substitution of “the relevant provisions (within the meaning of section 900)” for “the 2016 Audits Regulations”, and

(b) by the insertion of the following subsection after subsection (5):

“(6) A contractual clause which has the effect of restricting the choice by the general meeting of shareholders or members of a company pursuant to this Part to certain categories or lists of statutory auditors as regards the appointment of a particular statutory auditor to carry out the statutory audit of that company shall be prohibited and shall be void.”.

12. Amendment of section 390 of Principal Act

12. Section 390 of the Principal Act is amended by the substitution of “Part 27” for “the 2016 Audits Regulations”.

13. Amendment of section 394 of Principal Act

13. Section 394 of the Principal Act is amended, in paragraph (a), by the substitution of “Part 27” for “the 2016 Audits Regulations”.

14. Amendment of section 865 of Principal Act

14. Section 865 of the Principal Act is amended, in subsection (2)—

(a) by the substitution, in paragraph (r), of “section 1460(3);” for “section 1460(3).”, and

(b) by the insertion of the following paragraphs after paragraph (r):

“(s) section 1487(4);

(t) section 1488(3).”.

15. Amendment of section 869 of Principal Act

15. Section 869 of the Principal Act is amended—

(a) in subsection (1)—

(i) in paragraph (b), by the deletion of “or”,

(ii) in paragraph (c), by the substitution of “876;” for “876.”, and

(iii) by the insertion of the following paragraph after paragraph (c):

“(d) Part 27.”,

and

(b) in subsection (2), by the insertion of “or Part 27,” after “or 876,”.

16. Function imposed on Registrar under section 930D

16. Part 15 of the Principal Act is amended, in Chapter 1, by the insertion of the following section after section 899:

“899A.Section 930D makes additional provision with regard to the performance of functions by, amongst others, the Registrar.”.

17. Amendment of section 900 of Principal Act

17. Section 900 of the Principal Act is amended—

(a) in subsection (1)—

(i) by the substitution of the following definition for the definition of “recognised accountancy body”:

“ ‘recognised accountancy body’ means a body of accountants recognised under section 930 for the purposes of the relevant provisions;”,

and

(ii) by the insertion of the following definitions:

“ ‘applicable provisions’, in relation to a Part 27 function and a recognised accountancy body, means, in addition to the provision of this Act that confers that function—

(a) any other provisions of this Act or of a statutory instrument made under this Act,

(b) the provisions of any section 931 notice given to the body that are relevant to that function,

(c) the provisions of Regulation (EU) No 537/2014 that are relevant to that function, and

(d) the provisions of any rule, guideline, term or condition, relevant obligation, or direction, referred to in section 906 that are relevant to that function,

in accordance with which that function shall be performed by that body;

‘Audit Directive’ has the meaning assigned to it by Part 27;

‘court’ means the High Court;

‘firm’ has the meaning assigned to it by Part 27;

‘monetary sanction’—

(a) in relation to a specified person who falls within paragraph (a) of the definition of ‘specified person’, means the monetary sanction referred to in section 934(8), and

(b) in relation to a specified person who falls within paragraph (b) of the definition of ‘specified person’, means the monetary sanction referred to in section 934C(2)(g);

‘Part 27 function’ means a function conferred on a recognised accountancy body by a provision of Part 27 or of Schedule 19 or 20;

‘public notice of relevant sanction imposed’, in relation to a specified person, means the publication in accordance with section 934F(1) of the specified person’s particulars referred to in that section together with the other related particulars referred to in that section;

‘Regulation (EU) No 537/2014’ has the meaning assigned to it by Part 27;

‘relevant body’ has the meaning assigned to it by section 933(1);

‘relevant contravention’ means—

(a) a breach of the standards of a prescribed accountancy body by a member of that body, or

(b) a contravention by a statutory auditor of a provision of—

(i) section 336 or 337,

(ii) Part 27, or

(iii) Regulation (EU) No 537/2014;

‘relevant decision’, in relation to a specified person, means—

(a) a decision under section 934(8) or (9) that a specified person has committed a relevant contravention,

(b) if, in consequence of a decision referred to in paragraph (a), the Supervisory Authority decides under section 934(8) or (9) to impose a relevant sanction on the specified person, the decision to impose that sanction, or

(c) both such decisions;

‘relevant director’ means a director or former director of a public-interest entity;

‘relevant provisions’ means the provisions of—

(a) this Chapter,

(b) Part 27, and

(c) Regulation (EU) No 537/2014;

‘relevant sanction’—

(a) in relation to a specified person who falls within paragraph (a) of the definition of ‘specified person’, means a sanction referred to in section 934(8), and

(b) in relation to a specified person who falls within paragraph (b) of the definition of ‘specified person’, means a sanction referred to in section 934C(2);

‘section 931 notice’ shall be read in accordance with section 931(2);

‘section 933A agreement’ shall be read in accordance with section 933A(2);

‘section 934E agreement’ shall be read in accordance with section 934E(1);

‘specified person’, in relation to a relevant contravention, means—

(a) if the relevant contravention falls within paragraph (a) of the definition of ‘relevant contravention’, the member or former member concerned of the prescribed accountancy body, and

(b) if the relevant contravention falls within paragraph (b) of the definition of ‘relevant contravention’, the statutory auditor or former statutory auditor concerned;”,

and

(b) by the deletion of subsection (3).

18. Amendment of section 904 of Principal Act

18. Section 904 of the Principal Act is amended, in subsection (1), by the substitution of the following paragraph for paragraph (e):

“(e) oversee statutory auditors and the conduct of statutory audits in accordance with the relevant provisions and perform functions under those provisions in relation to such oversight.”.

19. Amendment of section 905 of Principal Act

19. Section 905 of the Principal Act is amended, in subsection (2)—

(a) by the substitution of the following paragraph for paragraph (a):

“(a) grant recognition to bodies of accountants for the purposes of the relevant provisions,”,

(b) in paragraph (d), by the substitution of “paragraph (a)(ii) or (iii) or (b)(ii) of the definition of ‘approved investigation and disciplinary procedures’ in subsection (1) of that section” for “subsection (1)(a)(ii) or (iii) or (1)(b)(ii) of that section”,

(c) by the substitution of the following paragraph for paragraph (e):

“(e) impose under section 933 sanctions on prescribed accountancy bodies in relation to enquiries referred to in paragraph (d),”,

(d) by the insertion of the following paragraphs after paragraph (e):

“(ea) conduct under section 933 enquiries into whether a recognised accountancy body has complied with the applicable provisions in performing a Part 27 function,

(eb) impose under section 933 sanctions on recognised accountancy bodies in relation to enquiries referred to in paragraph (ea),”,

(e) in paragraph (f), by the insertion of “by a member of that body” after “body”,

(f) by the insertion of the following paragraphs after paragraph (f):

“(fa) undertake under section 934 investigations into possible contraventions of a provision of section 336 or 337, Part 27 or Regulation (EU) No 537/2014 by a statutory auditor,

(fb) impose under section 934 sanctions on members of prescribed accountancy bodies and statutory auditors for relevant contraventions committed by such members,”,

(g) by the substitution of the following paragraph for paragraph (g):

“(g) supervise how each recognised accountancy body monitors its members and statutory auditors for which the recognised accountancy body has responsibility by virtue of performing a Part 27 function,”,

(h) by the deletion of paragraph (h),

(i) in paragraph (i), by the substitution of “Part 27” for “the 2016 Audits Regulations”,

(j) by the deletion of paragraph (l),

(k) in paragraph (ma), by the substitution of “Part 27” for “the 2016 Audits Regulations”,

(l) in paragraph (n), by the substitution of “Part 27 and Regulation (EU) No 537/2014, the performance of (and, where permitted by that Part, that Regulation or any other Part of this Act (including this Part), perform)” for “the 2016 Audits Regulations and Regulation (EU) No 537/2014, the performance of (and, where permitted by those Regulations, that Regulation or this Act, perform)”, and

(m) by the insertion of the following paragraph after paragraph (n):

“(na) enable, by virtue of recognition under section 930 or a section 931 notice, functions under paragraph (n) to be performed by recognised accountancy bodies,”.

20. Amendment of section 906 of Principal Act

20. Section 906 of the Principal Act is amended—

(a) in subsection (4)—

(i) in paragraph (b), by the substitution of “2003),” for “2003) or section 931 to the recognition of that body, or”,

(ii) by the insertion of the following paragraphs after paragraph (c):

“(d) a recognised accountancy body to comply with a section 931 notice that is relevant to the body’s recognition under section 930 or to the performance of a Part 27 function by the body, or

(e) a relevant body to comply with a direction given to it by the Supervisory Authority under section 934A(2) or 934C(5),”,

and

(iii) by the substitution of “, obligation or obligations, notice or direction” for “or obligation or obligations”,

and

(b) in subsection (5)(c), by the substitution of “Part 27” for “the 2016 Audits Regulations”.