Directors Compliance Statements in Ireland: Understanding the Basics

Directors Compliance Statements

Directors Compliance Statements are legal declarations that affirm a company's adherence to various statutory requirements. This Compliance Statement is obligatory for PLCs, along with all companies limited by guarantee, and private limited companies with a turnover exceeding €25 million and a balance sheet total of €12.5 million for the year.

The Significance of Directors Compliance Statements in Irish Company Law

Directors Compliance Statements hold immense importance as they provide transparency and accountability. They require Directors to confirm that proper systems are in place to ensure compliance with laws and regulations. This fosters trust among stakeholders and showcases a company's dedication to ethical practices.

The Directors must include in their Directors’ report an acknowledgement that they are responsible for securing the company’s compliance with the relevant obligations together with confirmation that the Directors have (or have not, in which case, the reason for that failure must be given):

• drawn up a compliance policy statement setting out the company’s policies (that are, in the opinion of the Directors, appropriate to the company) in respect of the company’s compliance with its relevant obligations; and
  
  
• put in place appropriate arrangements or structures that are, in the opinion of the Directors, designed to secure material compliance with the company’s relevant obligations; and
  
  
• conducted a review, during the financial year to which the Directors’ Report relates, of any arrangements or structures put in place to ensure material compliance with the company’s relevant obligations.      

In Summary, steps to Prepare and Implement a Directors Compliance Statement

1.  Assessment of Applicability: Determine if your company is required to submit a Directors Compliance Statement based on criteria outlined in the Companies Act 2014.
   
   
2. Gather Information: Collate relevant data including company policies, procedures, and potential risk areas.
   
   
3. Risk Assessment: Identify potential compliance risks related to financial reporting, health and safety, data protection, etc.
   
   
4. Policy Evaluation: Evaluate existing policies and procedures to ensure they align with legal requirements.
   
   
5. Control Measures: Implement measures to address and mitigate identified risks effectively.
   
   
6. Board Approval: Present the statement to the board of Directors for review, adjustments, and approval.
   
   
7. Annual Review: Regularly update the Directors Compliance Statement to reflect any changes in policies or regulations.
   
   
8. Document Retention: Keep records of previous statements to demonstrate historical compliance efforts.

By following these steps and understanding the fundamental aspects of Directors Compliance Statements, businesses in Ireland can ensure they operate within the boundaries of the law and maintain their reputation among stakeholders. Remember, these statements not only fulfil legal obligations but also contribute to fostering a culture of transparency and ethical conduct within the company.

Failure to comply with these compliance statement requirements is a category 3 offence attracting a term of imprisonment of up to six months or a fine of up to €5,000 (or both).

If you would like to learn more or need help preparing your Directors' Compliance Statement you can contact us using the form below: