Ruairi Bourke, Ken Casey
The European Commission’s “Action programme for reducing administrative burdens in the EU” is bearing fruit through new legislation relating to the obligation to prepare group accounts and for prospectuses.
Accounts: Until recently, a company which was a parent company was obliged to prepare both individual accounts for the company itself and consolidated accounts for its group at the end of each financial year. A new exception to this requirement has recently been introduced so that, in most cases, where a parent company has no “material” subsidiaries, that parent company is exempt from the requirement to draw up consolidated group accounts.
For these purposes, a subsidiary is not “material” if it is not material for the purpose of giving a true and fair view of the state of affairs as at the end of the financial year and the profit or loss for the financial year of the parent company and those subsidiary undertakings taken as a whole.
The new exception does not, however, apply to a parent company which:
- does not trade for the profit of its members;
- falls within certain categories of companies formed for charitable purposes; or
- is an unlimited company (unless it is an unlimited company to which Part III of the European Communities (Accounts) Regulations 1993 apply).
This change was introduced by the Minister for Enterprise, Trade and Innovation on 16 December 2010 under the European Communities (Group Accounts) Regulations 2010.
Prospectuses: EU Directive 2010/73/EU amending the existing Prospectus Directive and Transparency Directive came into force on 31 December 2010. Our August 2010 Legal News contained a description of the changes, based on the substantially final form of the Directive, and can be viewed by clicking here. Once it is implemented in Ireland, the Directive will bring about important changes for issuers of securities including a reduction in administrative burdens in some areas – such as reduced disclosure requirements for pre-emptive offers (including rights issues) and new rules permitting more companies to offer shares to employees under share schemes without preparing prospectuses.