Draft published on new director obligations

Draft guidance on new obligations for company directors was published yesterday by the Director of Corporate Enforcement, Mr Paul Appleby

The Companies (Auditing and Accounting) Act, 2003, obliges certain companies to prepare a compliance policy and for their directors to sign an annual statement attesting to their company's compliance with the policy.

Mr Appleby said it would be a matter for the Minister to decide when to sign the order bringing the new regulations into effect. however, it would be prudent for all concerned to begin preparations now," he said.

The provision will apply to companies with an annual turnover of more than €15 million, of which there are between 2,000 and 3,000 in the State - approximately 2 per cent of the companies on the companies register.

Mr Appleby said the Oireachtas had decided that the threshold should be set to establish a balance between setting governance standards for company directors while not imposing a burden on directors of small and medium-sized companies.

"Clearly, when the process has been underway for a number of years, it will be open to the Government to review its impact and and a decision can be made on whether to extend or reduce its impact."

Mr Appleby agreed that the compliance policy had to do with obligations under company, tax and other laws, which are independent of the obligation to sign compliance statements .

"While the guidance will assist directors, the degree to which a company takes its legal obligations seriously is invariably contingent to a significant extent upon the board's attitude to such matters," he said. "Consequently, a compliance culture must start in the boardroom and should be reflected and evidenced in directors' own behaviour and attitudes."

Mr Appleby said that the draft guidance had been developed in in conjunction with the Consultative Committee of Accountancy Bodies Ireland, the Institute of Directors in Ireland, IBEC and the Revenue Commissioners

The Institute of Chartered Accountants in Ireland yesterday expressed concern about the amount of time allowed for responding to the draft guidance.

Interested parties have until the end of September to comment.