Section 1274 of Companies Act 2014 states that for a ULC other than a designated ULC, the financial statements of the ULC do not need to be filed with the CRO. Within Section 1274 is a definition of a designated ULC.

Section 78 of Companies (Accounting) Act 2017 has amended and broadened the existing definition in Section 1274 which has effectively brought certain entities which previously escaped the requirement to file financial statements into the filing requirements. See Appendix I for the full definition of a Designated ULC.

In simple terms what this means is that the where any members of a ULC either above it or below it has limited liability at any time during the period for which the financial statements were prepared, then the financial statements of the ULC must be filed with the CRO. When looking at this one also needs to consider potential rights which are exercisable even if not exercised.

Prior to this change it was possible for certain non-filing structures as detailed in diagram 1 below to be set up which meant that the Irish ULC did not have to file the financial statements as it did not come within the remit of the definition of a designated ULC (the IOM (isle of Man) ULC was not an EU ULC – existing definition only referred to EU country) but still the ultimate parent company (ULC Irish Parent) and the Irish ULC (ULC Trade Ireland) enjoyed the protection of limited liability as there was an Irish Limited company inserted between the Isle of Man/non-EU companies and the ULC Irish Parent.

Before change in definition

ULC Trade Ireland did not have to file its financial statements as at least one member of it (i.e. IOM ULC) had unlimited liability and it was a company which was not resident in the EU.

After change in definition

ULC Trade Ireland and ULC Irish Parent must file financial statements

Another structure which is popular which will now no longer be permitted from the commencement date is a structure whereby a small percentage of a ULC was owned by an individual with the balance owned by a company. See Diagram 2 for an illustration. As one member was an individual this was not considered to be a designated ULC. Under the new definition as ULC Ireland is a subsidiary of an Irish limited company, it is considered to be a designated ULC.

FAQ-2.png

If we take the above example and this time assume that Irish Limited only owned 50% of ULC Ireland but it had a right to force the individual to sell a certain portion of his/her shares. In this instance, as Irish Ltd has rights exercisable which would result in ULC Ireland becoming a subsidiary if exercised, this is then considered a designated ULC and ULC Ireland must file financial statements.

FAQ-3.png

In this example, ULC Ireland will have to file financial statements with the CRO for periods commencing on or after 1 January 2022 as it is a holding company of limited subsidiaries.

FAQ-4.png

In this example, ULC Ireland will have to file financial statements with the CRO for periods commencing on or after 1 January 2017 because the ULC is a subsidiary of an undertaking which was at that time limited (and therefore comes within the remit of the definition of a designated ULC in Section 1274(2)(1) CA 2014). The fact that there is a natural person owning some of the shares here is irrelevant as it is a subsidiary of a limited undertaking and therefore defined as a designated ULC.

In this example, ULC IrelandFAQ-5.png will have to file financial statements with the CRO for periods commencing on or after 1 January 2017 as all of the ULC ‘s beneficial owners enjoy the protection of limited liability (although it is a ULC holding company it is also a ULC all of whose beneficial owners enjoy the protection of limited liability and therefore within the remit of S.1274(2)).

FAQ-6-768x338.png

In this example, ULC Ireland will have to file financial statements with the CRO for periods commencing on or after 1 January 2017. Despite the fact that all of the ULC ‘s beneficial owners do not enjoy the protection of limited liability (and therefore not included in the definition of a designated ULC under S.1274(2c)(v) CA 2014), the ULC is considered to be a subsidiary of an undertaking which had limited liability (i.e. Irish Ltd 2 which is a limited liability company holds a golden share in ULC Ireland which makes ULC Ireland a subsidiary of Irish Ltd 2 as stated in Section 7 of CA 2014) and therefore comes within the definition of a designated ULC under S.1274(2)(a)(i) CA 2014.

FAQ-7.png

In this example, ULC Ireland will not have to file financial statements with the CRO for periods commencing on or after 1 January 2017 as not all of the ULC ‘s beneficial owners enjoy the protection of limited liability – S.1274(2) CA 2014 only applies where all of the members of the ULC have limited liability protection or where the ULC is a subsidiary of an undertaking which is limited. Therefore this section of the legislation does not apply as here a natural person is a member and the ULC is not a subsidiary of any of the other companies.