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Insights Corporate Governance

Corporate Governance Trends to Continue in 2024

Nov 23, 2023
4 min read

Our Corporate Governance team examines some of the main legal developments from the last 12 months affecting the governance of companies in Ireland, including ESG and the requirement for Irish company directors to provide their PPS numbers when making filings to the CRO. In addition, we review the Register of Beneficial Ownership and look ahead to 2024.

New Companies Registration Office requirement

The Companies Registration Office (CRO), in June 2023, introduced a requirement for directors of all Irish companies to provide a PPS number on the filing of certain company documents. This is in an effort to, among other aims, reduce the risk of identity theft.

Where directors are not Irish taxpayers and do not have PPS numbers, they must apply to the CRO for an identified person number (IPN) by means of a Form VIF (Declaration as to Verification of Identity). This requires the director to prove their identity before a notary.

After some teething issues, the CRO recently agreed to issue IPNs in circumstances where directors have left the company and cannot be contacted and/or are not in a position to provide a PPSN.

In these cases, a Form VIFa, which is a ‘Declaration by Director or Secretary of a company seeking an IPN for a former Director of the company’ can be filed. A Form B10 also needs to be filed to support the declaration so that CRO records are up to date. This procedure can be used even if the person has or had a PPSN.

For more on this, read Directors Required to Provide PPS Numbers to the CRO

Public access to the Register of Beneficial Ownership

A decision of the CJEU in November 2022 ruled that the public access to the Luxembourg equivalent of the Irish Register of Beneficial Ownership was incompatible to a citizen’s fundamental EU right to privacy. This, and subsequent cases, ultimately led Ireland to the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) (Amendment) Regulations 2023 (SI 308 of 2023).

These Regulations introduced a “legitimate interest” test under which a person who is not otherwise entitled to view the Register must prove that:

  • The application is engaged in the prevention, detection or investigation of money laundering or terrorist financing offences
  • They are seeking to inspect the information for those purposes, and
  • The access would be regarding an entity that is connected with a person who has been convicted of money laundering or a similar offence or who holds assets in a high-risk third country

This means that, for example, a journalist investigating a story would likely not be considered to have a legitimate interest under these criteria. The closing of public access to information on the beneficial ownership of companies could therefore be seen to disincentive the investigation of, and reporting on, company ownership

You can read more about this: Encroachment of Privacy Law on Disclosure of Company Information

ESG

The much-discussed area of Environmental, Social and Governance (ESG) saw a few developments during the course of 2023. The latest of these developments may see a reduction in the number of companies ultimately affected by the Corporate Sustainability Reporting Directive (CSRD).

The CSRD is one of a number of measures designed to assist in achieving the EU’s sustainable growth objectives. It aims to develop a harmonised EU-wide framework for the reporting of relevant, comparable and reliable sustainability information. The legislation sets out parameters for certain types of companies, mainly large and listed ones, to report on non-financial, ESG matters.

The European Commission recently increased the financial thresholds above which the CSRD will apply. This means that a significant number of the approximately 50,000 companies to which the CSRD might otherwise have applied will be excluded from its scope.

Read more on this: New EU Measures Reduce the Application of the CSRD

2023 also saw the adoption of the first set of CSRD reporting standards, known as the European Sustainability Reporting Standards (ESRS). The ESRS prescribe in detail the information which needs to be reported by all companies subject to the CSRD from a general perspective and regarding specific Environmental, Social and Governance topics.

Read further information on this: Corporate Sustainability Reporting Directive: New Milestone Reached

Conclusion

Corporate governance remains a dynamic area, with many developments over the course of 2023 affecting companies of all sizes and business types. This is expected to continue in 2024, especially in the field of ESG.

For more information and expert advice on the developments highlighted, contact a member of our Corporate Governance team.

Frequently Asked Questions

What filings will the requirement for directors to have PPS numbers affect?

Incorporation form A1, annual returns on form B1 and changes to directors’ particulars on form B10, among others.

Can I no longer, as a member of the public, find out who the beneficial owners of an Irish company are?

Not unless you can demonstrate a legitimate interest in doing so.

Does the legitimate interest test apply to all information about a company?

No – the CRO’s records, which show details of directors and, on annual returns of private companies limited by shares, shareholders, continue to be open to the public on the payment of a small fee.

I am involved in a medium to large sized private company. Will CSRD apply to it?

On current indications probably not, but this is a fast-moving and topical area and things could change.

The content of this article is provided for information purposes only and does not constitute legal or other advice.



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