The Companies Accounting Act 2017 and your Unlimited Company

By Philip Hayden, 1st Nov 2017

The introduction of the Companies Accounting Act 2017 has seen some significant changes in the type of unlimited company structures that can avail of non-filing of financial statements. The essence of this move is, to remove a loophole that enables an unlimited company to enjoy the protection of limited liability. This can occur by virtue of having limited liability companies in place as part of a shareholding structure.

This move will affect all unlimited company types but, with the most significant applying to the companies set out by the act as below:

i.)   has been a subsidiary undertaking of an undertaking which was at that time limited,
ii.)  has had rights exercisable in respect of it by or on behalf of 2 or more undertakings which were at that time limited, being rights which if exercisable by one of the undertakings would have made the ULC a subsidiary undertaking of it, or
iii.)  has been a holding company of an undertaking which was at that time limited.

A simple rule of thumb with the above, is that any unlimited company that during a particular financial year is connected to a limited liability entity or venture as part of a group structure will now be required to file financial statements. This will impact financial years that commence on or after the 1st of January 2017, as such, will likely come into effect for 2018 or 2019 when filing.

There are some caveats to the enforcement of this filing requirement. Several specific unlimited type companies will have differing rules based on the unlimited company type they are, e.g. non-designated unlimited companies or public unlimited companies. In addition, the above rules will not apply to the ‘complete’ unlimited group – in other words, if all entities in a group are standard unlimited in company type then the option for non-filing will remain.

It is also worth noting, that an exemption has been granted under this act which applies to unlimited holding companies with a limited liability subsidiary in its structure. This means that companies with this company type in their subsidiary structure will continue to avail of non-filing until the financial year commencing on or after the 1st of January 2022.

Another impact of the Companies Accounting Act 2017 on unlimited companies, is the removal of the mechanism to remove the suffix (e.g. ABC Unlimited Company) from a company name. While this will not affect existing exemptions, no further applications for this to take place will be accepted.

For more information on the impact of the Companies Accounting Act 2017 on your unlimited structure, filing of accounts or any other element of the Companies Accounting Act, feel free to contact Company Bureau on +353 1 6461625 or send any enquiry you may have to formations@companybureau.ie.