How does the consolidation exemption work in a group of unlimited companies?

The sections on preparation of accounts & consolidation of accounts do apply to unlimited companies – s1230 of the Act lists the sections that don’t apply to ULCs, but there’s no exemptions/disapplications re preparation of accounts. On that basis, they are treated the same as other companies in terms of the requirements to prepare accounts.

The requirement to prepare group accounts is under s293 – a parent is required to prepare accounts unless it can avail of one of the exemptions. Assuming s293(1A) doesn’t apply (small group), then the only possible exemptions are:
s299 – included in larger EEA consol
s300 – included in non-EEA consol
s301 – all subs can be excluded from consol

s299 & s300 require that the intermediate parent is included in the higher consol, and from your query it appears that these lower holding companies are included in the consolidated accounts of the Irish TopCo.

Also, as you mentioned, the consol accounts should be filed to take the exemption. If this is not complied with it is a breach of company law, and it could definitely be argued that this would be an offence on the part of the directors and you would need to consider reporting to the ODCE. However, I do think it’s a grey area, in terms of whether the auditor would be required to do anything here. Once the accounts are signed, the auditor’s responsibilities end, and so if the auditor is satisfied that the intermediate hold co is included in the consol of a higher entity, and that the requirements re filing the consol are likely to be met, there is no issue with signing the report. The filing obligations would be on the directors’ heads, not the auditor. It would be a breach of director duties, but without legal advice, I wouldn’t be able to say what level of breach it would be, and to be honest, I’ve never seen CRO follow up on it. Although it might be one for the company to take legal advice on.

There can sometimes be options available under s301 – if all subsidiaries are (in aggregate) immaterial, no consolidation is required. Also, there is an “undue cost or effort” exemption there. They can be a difficult one to justify, but I’ve seen them used (rarely, granted!).

I couldn’t really find another way to avoid consolidation at the lower holdco level. My ultimate advice would be for the directors to consider legal advice.