The Regulations require the directors of certain large companies to include:
- in the company's directors’ report a statement containing certain non-financial information; and
- in the company’s corporate governance statement a diversity report.
The Regulations will apply to financial years beginning on or after 1 August 2017.
What companies do the Regulations apply to?
The requirement to prepare a non-financial statement applies to any company which:
- qualifies as a large company under Section 280H of the Companies Act 2014 (the 2014 Act)
- is the holding company of a group
- has an average number of employees which exceeds 500, and
- is an ineligible entity
Broadly, "ineligible entities" are companies which, for various reasons, don’t qualify for audit exemption under the 2014 Act.
The requirement to prepare a diversity report applies only to a “large traded company” ie a large company (within the meaning of the 2014 Act) that is a PLC, DAC, company limited by guarantee or a public unlimited company and has debentures (and/or, in the case of a PLC, shares) traded on a regulated market within the EEA.
The non-financial statement should include information necessary for an understanding of the development, performance, position, policies pursued, risks and impact of the company’s activity relating to the following matters:
- environmental matters
- social and employee matters
- respect for human rights
- bribery and corruption
A diversity report should include:
- a description of the diversity policy applied in relation to the company’s board of directors with regard to aspects such as age, gender or educational and professional backgrounds, and
- information about the objective, implementation and results of the diversity policy
The statutory auditors of a company to whom the Regulations apply are required to establish that the company has prepared the non-financial statement and, in the case of large traded companies, to state whether in their opinion the diversity report contains the required information.
Penalties for non-compliance
A person who fails to comply with the provisions of the Regulations shall be guilty of an offence and be liable to a class A fine (not exceeding €5,000) or to imprisonment for up to six months, or both.