Home Knowledge Corporate Developments

Corporate Developments

June 21, 2010

The past six months have seen the enactment of two pieces of company legislation of relevance to international businesses with Irish operations.

The negative sentiment expressed by the Obama regime towards tax domiciles such as Bermuda and the Cayman Islands has proven opportunistic for Ireland.  There has been a growing number of redomiciles out of off-shore jurisdictions to Ireland, including recent moves by insurance companies Willis, XL Re and American Indemnity.  The central thrust of the Companies (Miscellaneous Provisions) Act 2009is to ease the passage of migrating companies to an Irish regime.  The legislation includes that on a transitional basis (up to 31 December 2015), groups controlled out of Ireland which had been using US GAAP in the preparation of accounts may continue this approach (i.e. no immediate requirement to use IFRS or Irish GAAP).  There are also facilitative changes around previously problematic areas – such as to allow company buyback programmes in regard to stock exchanges including NYSE or NASDAQ (previously this was restricted to the Irish Stock Exchange).

Apart from redomiciles of holding companies, the 2009 Act includes changes to assist the movement of investment fund structures to Ireland.  These measures are likely to be of particular interest to promoters of alternative investment funds.

The European Communities (Directive 2006/46/EC) Regulations 2009(commonly referred to as the “Company Reporting Regulations 2009”) has made changes in the areas of transparency and disclosure as they apply to the accounts and annual reports of mostly larger companies. 

The annual reports of Irish companies whose shares have a full listing must now include a corporate governance statement, including detail on the codes to which the company is subject and the infrastructure around these codes.  Largely, this puts the “comply or explain” regime under the FRC’s Combined Code on a statutory footing.

The 2009 Regulations include a number of technical accounting changes.  All companies are now permitted (but not required) to use fair value accounting (IAS 39/FRS 26) across a wide range of financial instruments.  Specific types of companies, including insurance undertakings, will be required to disclose in the notes to accounts off-balance sheet arrangements in all cases where there is a material risk or benefit to the company (subject to exceptions).  Similar disclosures will be needed in all cases which involve transactions between a company and related parties (again, subject to exceptions).  There have also been a small number of technical changes around the areas where exemptions are available from the requirement to prepare audited accounts.