Under the Companies Act 2014, it became mandatory for directors of certain companies to include a compliance statement as part of the directors’ report issued with the financial statements. The companies which must include this statement are public limited companies and, private limited and limited by guarantee companies who’s turnover exceeds €25 million and have a balance sheet total in excess of €12.5 million as at the financial year end.
The compliance statement is an acknowledgement by the directors that they are aware that they are responsible for ensuring that the company is in compliance with applicable, relevant laws such as tax laws. The directors must confirm within the statement that they have completed the following to fulfil that responsibility:
An appropriate compliance policy statement has been drafted to ensure the company is in compliance with its legal obligations
Reasonable appropriate structures, arrangements are in place to ensure that the company remains in compliance with its obligations
A review of the appropriateness of the policy and arrangement was conducted during the financial year
The Companies Act 2014 does allow the directors to explain why one, two or all of the above measures was not satisfied at the time of the statement.
Non-compliance of this section of the Company Act 2014 is a category 3 offence which can mean a prison term of 6 months and/or fines of up to €5,000 for each director.