Company Secretarial Spring Briefing

February 2011

Course Outline

• New Company Law Legislation

• 10 things to do in 2011 in your Company Secretarial Department

Company Law Legislation

Company Law Legislation

• European Communities (Statutory Audits) Regulations 2010

• Corporate Governance Code for Credit Institutions & Insurance Undertakings

• Criminal Justice (Money Laundering & Terrorist Financing) Act 2010

• Multi-Unit Development Bill 2010

• Companies Consolidation & Reform Bill

European Communities (Statutory Audits) Regulations

Statutory Audits Regulations

• Signed into law on 20th May 2010

• Rules & obligations regarding statutory audits, statutory auditors & audit firms, the entities being audited and IAASA

• Rules applicable to all firms & further obligations on “Public Interest Entities”

Public Interest Entities

(a) companies or other bodies corporate governed by the law of a Member State whose transferable securities are

admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC,

(b) credit institutions as defined in point 1 of Article 1 of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, and

(c) insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC;

Main Provisions

• Permitting Statutory Auditors to operate as body corporate;

- deletes Sec 187(2) CA, 1963

- statutory auditors & audit firm can operate as limited companies

- Cannot be a company if firm audits credit unions, friendly or industrial and provident society

Main Provisions

• Incoming Statutory Auditor afforded access to information

• Requirements relating to signing of audit reports

- audit reports shall state individual name of auditor & be signed and dated

- financial years on or after 20 May 2010• Transparency report of Public Interest Entities

- publish within 3 months of year end or auditor on website

- Provides details of the governance structure

Main Provisions

• Removal of Auditor & Notification Obligations

- If Auditor resigns or is removed they must notify IAASA within 1 month

• Public Register of Auditors

- Maintained by CRO

- auditors to notify their institute of any changes

Main Provisions

• Independence Provisions for Auditors

- An auditor may not carry out an statutory audit if there is a relationship (direct or indirect financial, business, employment) between it & entity

- Auditor must have safeguards to mitigate threats to independence

Main Provisions

• Audit Committees for Public Interest Entities

- 2 independent directors, 1 with competence in accounting & auditing

- Responsibilities for monitoring financial reporting process, monitoring the

effectiveness of the company’s systems of control, internal audit and risk management & audit of annual accounts

Main Provisions

• Disclosure of Auditors’ Remuneration of audit & non-audit work

- audit individual accounts, other assurance services, tax advisory services, other non- audit services

• Statutory obligations regarding continuing education, professional ethics, independence and objectivity

Corporate Governance Code for Credit Institutions & Insurance Undertakings

Corporate Governance Code for Credit Institutions & Insurance Undertakings

• Central Bank issued new Corporate Governance Code on 8th November 2010

• Applies to all credit institutions & insurance undertakings licensed or authorised by Central Bank (includes reinsurers)

• Applicable from 1st January 2011, & 31 December 2011 if changes req to board

Main Provisions

• Boards must have a minimum of seven directors in major institutions and a minimum of five in all others;

• Requirements on  the role and number of independent non-executive directors;

• Criteria for director independence and consideration of conflicts of interest;

Main Provisions

• Limits on the number of directorships which directors may hold in financial and non financial companies to ensure they can comply with the expected demands of board membership of a credit institution or insurance company;

• Clear separation of the roles of Chairman and CEO; • A prohibition on an individual who has been a CEO,

director or senior manager during the previous five years from becoming Chairman of that institution;

Main Provisions

• A requirement that board membership is reviewed at a minimum every three years

• A requirement that boards set the risk appetite for the institution and monitor adherence to this on an ongoing basis; 

• Minimum requirements for board committees including audit and risk committees;

• A requirement for an annual confirmation of compliance to be submitted to the Central Bank.

Criminal Justice (Money Laundering & Terrorist Financing) Act 2010

Main Provisions

• Passed on 15th July 2010 - Transposes Third EU Money Laundering Directive

• The Bill consolidates all of Ireland’s anti-money laundering legislation in a single statute

• Increases obligations on credit & financial institutions, lawyers, accountants, estate agents, trust & company service providers, tax advisors & others

Designated Person

• “a credit or a financial institution unless specifically excepted, an auditor, external accountant or tax advisor, a relevant independent legal professional, a trust or company service provider, a property service provider, a casino, a person who directs a private members club at which gambling activities are carried out, a person trading in goods in respect of transactions involving the receipt of cash of at least €15,000”

“Trust & Corporate Service Providers” - TSCP

• any person whose business involves forming companies; acting as a director or secretary of a company under an arrangement with a person other than that company; arranging for another person to act as director or secretary of a company, as a partner of a partnership or trustee of a trust, acting or arranging for another person to act as a nominee shareholder for a person other than a listed company; or providing a registered office, business address, correspondence or administrative address or other related services

“Trust & Corporate Service Providers” - TSCP– any person whose business involves forming companies;

acting as a director or secretary of a company under an arrangement with a person other that that company; arranging for another person to act as director or secretary of a company, as a partner of a partnership or trustee of a trust, acting or arranging for another person to act as a nominee shareholder for a person other than a listed company; or providing a registered office, business address, correspondence or administrative address or other related services

Main Provisions

• The definition of money laundering has been widened to include the proceeds of any criminal conduct.

• The terminology of ‘know your customer’ (KYC) has been replaced with ‘customer due diligence’ (CDD).

• The level of CDD required will be determined using a risk-based approach. This can range from ‘simplified’ CDD, where there is a low risk, to ‘enhanced’ CDD, where there is a high risk of money laundering or terrorist financing.

Main Provisions

• CCD requires the identification and verification of a business relationship with a customer. This relationship should be monitored for the suspicion of money laundering and terrorist financing on an ongoing basis.

• There is an obligation to identify a ‘beneficial owner’. The designated person must ensure that they take adequate measures to understand the ownership and control structure of the client.

Main Provisions

• There is a new requirement to identify politically exposed persons (PEP) as defined in the Act.

• Designated persons are permitted to rely on third parties to meet the CDD requirements.

• Those persons who meet the definition of ‘trust and company services provider’ will need to be authorised by the Minister for Justice and Law Reform.

• Any person who directs a private members’ gaming club must register with the Minister.

Main Provisions

• Designated persons are required to report suspicions of money laundering or terrorist financing to the Gardai Siochana and the Revenue Commissioners.

• The Act provides that designated persons should have internal policies and procedures in place to provide training for staff on the legislation. They should also keep records of this for a period of five years.

• The Minister will approve Guidance Notes to be used by designated persons and which can be used as a defence in Court by the designated person in determining if a that person took all appropriate measures

Other Legislation

• Companies Consolidation & Reform Bill

- Due to be published in 2013

- Enacted in 2014

• CLRG Work Programme

- Making charging orders over shares

- Provisions on the re-use of CRO info

- Review of Public Accounts Committee report on Loss of Taxes arising from abuse of limited liability

Multi Unit Development Act 2010

• Multi-Unit Development Act

- signed into law 24 January 2011

- commencement orders due to be signed in next 4-6 weeks

- Developers will have 6 months to comply with Act

MUD Act 2010 – Main Provisions

• a multi-unit development (“MUD”) as a development being land on which there stands erected a building or buildings comprising a unit or units and that as respects such units it is intended that amenities, facilities and services are to be shared

• Establish a statutory framework to deal with the transfer of common areas to Owners Management Company (“OMC”)

MUD Act 2010 – Main Provisions

• Requirement to establish an Owner Management Company (“OMC”) for all Multi-Unit Development (“MUD”) at the expense of the developer.

• Strict conditions for the sale of units and obligation for developers to transfer ownership of common areas to OMC’s – The common areas must be transferred within 6 months of enactment of this Act

MUD Act 2010 – Main Provisions

• New Regulations for Mixed Use Multi-Unit Developments

• Automatic membership of the OMC

• 1 vote is attached to each residential unit

• Requirement to hold annual meetings and prepare annual reports to members – The format of these annual reports are defined in the Act

MUD Act 2010 – Main Provisions

• Establishment of a scheme of annual service charges & expenditure categories

• Establishment of a sinking fund within 18 months of enactment of the Act

• Making house rules

• Dispute resolution, mediation & rehabilitation of multi-unit development

• Restoration of struck off OMC’s to Register of Companies within 6 years of strike off

Other Legislation

• Swift 3000 Code of Practice For Corporate Governance Assessment

- Corporate Governance Assessment for companies, organisations & state bodies

- Review of: i)Board composition; ii) Board processes and iii) Fulfilment of board responsibilities

- Approved assessors of companies

- Prospectus providing training for assessors

- document available on www.nsai.ie

10 things to do in 2011 in your Company Secretarial

Department

10 Things To Do

1. Electronically File All Returns – 40% still manually file & Use new PDF Accounts Facility

2. Strike Off companies that are dormant or non-trading – You can form for €249!

3. Group Structures – is money being loaned to connected companies

10 Things To Do4. Non-Filing Accounts Structures – do your

clients want to keep their accounts private

5. Shareholder Agreements – New Start Up’s & Trading Companies

6. Audit Exemption – have companies come under thresholds or de-construction groups as no longer needed. Do companies have to have an audit for bank, grants, public tendering

10 Things To Do7. Company Restorations – Have companies been

struck off in last 12 months, don’t risk going to High Court

8. Write to all clients reminding them of filing obligations despite difficult circumstances

9. Review all minutes & procedures – become efficient & compliant

10.Review all Annual Returns on CRO to make sure they are “Registered”. “Received” means issues

Contact Details

Conor Sweeney – csweeney@omnipro.ie

Amy Brennan – abrennan@omnipro.ie

info@omnipro.ie

059 9183888

www.omnipro.ie

OmniPro Services

• OmniPro Corporate Consultants• Company Formation Services

• Standard Formations for €249.00 (incl VAT)• 24 Hour Turn Around• Company Secretarial Services• Annual Compliance• All Company Secretarial Special Assignments• Company Secretarial Training

• Next Door to the Companies Registration Office

OmniPro Services

• OmniPro Practice Support • Strategic Planning & Implementation

– Practice Development– Practice Sale, Purchase & Merger– In House Training– File Review Services

• HWL OmniPro– Product & Marketing Solutions to Build Business

Advisory Fees– Practice Growth Solutions

OmniPro Services

• OmniPro Education & Training– Professional CPD Seminars

• Technical CPD

• Personal Development Training for Accountants– Time management, business communication skills,

Presentation skills, team leadership, management development

• In House Training

OmniPro Contact Details

Unit 3, South Court, Block D,

Wexford Road Iveagh Court,

Business Park, Harcourt Road

Carlow Dublin 2

059 9183888 01 4110000

info@omnipro.ie www.omnipro.ie