The Companies Act 2014 (the "Act") has widened the number of companies that are required to set up an audit committee ("Audit Committee") under Irish law.
The requirement to have an Audit Committee under the Act applies to a financial year which commenced after 1 June 2015 and is therefore relevant for companies with upcoming accounts' filing dates.
The board of directors of companies meeting the financial criteria set out below (and PLCs) must state in their annual directors' report:
whether the company has established an Audit Committee or not; and if not, provide the reasons for not doing so. 1. Which companies must have an Audit Committee?
'Large' Irish companies are required to have an Audit Committee in place. A 'large' company is a company that, in the most recent financial year and the immediately preceding financial year:
has a balance-sheet total that exceeds 25 million; has a turnover that exceeds 50 million; and employs less than 250 people. Any company which, together with its subsidiaries, meets the criteria above, will be deemed to be a 'large' company requiring it to have an Audit Committee in place.
Subject to very limited exceptions, all public-limited companies ("PLCs") (irrespective of financial thresholds) must comply with this provision.
The board of directors of companies meeting the financial criteria (and PLCs) set out above must state in their annual directors' report:
whether the company has established an Audit Committee or not; and if not, provide the reasons for not doing so. 2. What is the required composition of an Audit Committee?
The Audit Committee must include at least one independent director who:
is a non-executive director of the company; and possesses the requisite degree of independence to be able to contribute effectively to the Audit...