Small and Medium Companies: Disclosures, Exemptions, etc.

Part 6 – Financial Statements, Annual Return and Audit

Under what conditions will a company qualify to be treated as a small or medium company? The conditions are set out in Section 350 and they are not new – they are an amended re-enactment of Section 8 of the C(A)A 1986. The only difference is that the qualifying conditions have been increased in the 2014 Act.

The qualifying conditions for a small company are (and two out of three of these conditions must be met):

  1. The company’s turnover must not exceed €8.8m.
  2. The company’s balance sheet total does not exceed €4.4m.
  3. The average number of employees in relation to that financial year is not more than 50.

The qualifying conditions for a medium company are (and two out of three of these conditions must be met):

  1. The company’s turnover must not exceed €20m.
  2. The company’s balance sheet total does not exceed €10m.
  3. The average number of employees in relation to that financial year is not more than 250.

There is certain information that small and medium companies need not include in their directors’ report. They do not need to give information about the use of financial instruments, or an analysis of key performance indicators, for that period. That rule is set out here (Section 351).

The exemptions in relation to annexing certain information to the annual return can be found here (Section 352).

How the abridged financial statements of a small company may be extracted from the company’s statutory financial statements is set out here (Section 353). The same, in relation to a medium company, can be found here (Section 354). This information used to be found in Sections 10, 11 and 12 of the C(A)A 1986.

Abridged financial statements delivered to the CRO must have a special report of the statutory auditors which contains a statement from them that, in their opinion, the directors are entitled to submit abridged financial statements. This rule is set out here (Section 356).

If the company is a subsidiary of an EEA State holding company, it is exempted from the requirement to annex financial statements to its annual return. Certain conditions, however, must be complied with for this to be true, and they are set out here (Section 357).