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Parfrey Murphy
Chartered Accountants
Lee View House
South Terrace
Cork
Ireland

T: +353 (0)21 4310266
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E-Newsletter
July 2015
Our aim is to help businesses grow, to increase their profitability, improve their cash flow and reduce their tax liabilities so that they have more disposable income. Please feel free to call us on  021 4310266 or email us at [email protected] if you wish to do business with us
COMPANIES ACT 2014 - DIRECTORS' LOAN AND UNLIMITED LIABILITY
Seamus Parfrey

By Seamus Parfrey

 LOANS TO DIRECTORS

Under the Companies Act 2014 loans, quasi-loans or other arrangements, such as entering into a transaction as a creditor on behalf of the director of the company or of its holding company, or providing guarantees or any other security in connection with a loan, quasi-loan or credit transaction, are prohibited to directors or parties connected to directors except under the following circumstances:

 

  1. The value of the arrangement is less than 10% of the company's relevant net assets as determined by its latest statutory financial statements as laid before its AGM. Where the company's net assets decrease and the loan comes to represent more than 10% of the company's net assets, then the company and the director must take reasonable steps to reduce the balances outstanding such that they are less than 10%. This must be done within two months of the director becoming aware or ought reasonably to have become aware of the position
  2. The arrangement is a reimbursement of the director's expenses which are properly incurred in the discharge of his duties as an officer of the company
  3. The arrangement is where the company enters into the transaction in the ordinary course of business and the value of the transaction is not greater nor the terms better than that which the company would offer to an ordinary person taking out the same loan
  4. The arrangement is with a group company (holding company, subsidiary or sister company)
  5. The relevant Summary Approval Procedure (SAP) is followed with regard to permitting a company to enter into a loan, quasi-loan or a credit transaction or to enter into a guarantee or provide security in connection with a loan, quasi-loan or a credit transaction to a director or persons who are connected to the director. 

 

READ MORE 

 

COMPANIES ACT 2014 - OFFENCES AND PENALTIES

By Noel Murphy

Under the Companies Act 2014 four Offence Categories have been established with associated penalties for each category.

 

Category 1 offences can result in imprisonment for up to 10 years and/or a fine of up to €500,000 on conviction on indictment or on summary conviction imprisonment for not more than 12 months and/or a fine not exceeding €5,000.

 

Category 2 offences can result in imprisonment of up to 5 years and/or a fine of up to €50,000 on conviction on indictment or on summary conviction imprisonment for up to 12 months and/or a fine not exceeding €5,000.

 

Category 3 offences are summary offences only and can result in imprisonment of up to 6 months and/or a fine not exceeding €5,000.

 

Category 4 offences are summary offences only and can result in a fine not exceeding €5,000.

 

Examples of category offences applicable are as follows:

 

Category 1

  • Failure to draw up a Directors compliance policy statement on relevant obligations
  • Committing certain offences relating to accounting records
  • Knowingly trading fraudulently.

READ MORE 

COMPANIES ACT 2014 - STRIKE OFF AND WINDING UP
By Noel Murphy

Liquidators must now be qualified to act and the Companies Act 2014 sets out the qualification provisions.

 

Voluntary strike off is now given statutory recognition and members must pass a special resolution to apply to have the company voluntarily struck off the Register of Companies in the Companies Registration Office.

 

To petition the High Court to have a company wound up, a creditor must have an undisputed debt of at least €10,000.

 


 

COMPANIES ACT 2014 - AUDIT EXEMPTION AND FINANCIAL STATEMENTS
By Seamus Parfrey


 

The audit regime has been made easier as under the Companies Act 2014 audit exemption is now available to small companies, parents and subsidiaries in small groups, companies limited by guarantee, certain unlimited companies and dormant subsidiaries.

 

The qualifying criteria for a small company are satisfied by a company in relation to a financial year in which it fulfils 2 or more of the following requirements:

 

 

 

Small Company Thresholds

 

 

 

Turnover

 

€8.8 million

Balance Sheet

 

€4.4 million

Average No. Employees

 

50

 

Unfortunately a company loses 'small' status if it does not satisfy these criteria for 2 consecutive years.

Liquidators must now be qualified to act and the Companies Act 2014 sets out the qualification provisions.

 

Parfrey Murphy
+353 (0)21 4310266
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