Company Law Update on Changes to Company Size and Audit Exemption Criteria
These changes came into force on 1 July 2024 for accounting periods commencing on or after 1 January 2024. Companies also have the option to elect to apply the new thresholds for any financial year commencing on / after 1 January 2023.
Company Law Update on Changes to Company Size and Audit Exemption Criteria
In June 2024, Minister for Enterprise, Trade and Employment, Peter Burke, TD has signed into law the European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024, which increases the total balance sheet and turnover thresholds for 'micro', 'small', 'medium' and 'large' companies in the Companies Act 2014.
What changes are being made?
From 1 July 2024 the total balance sheet and turnover thresholds for micro, small, medium and large companies, as well as Groups as set out in the Companies Act 2014, were increased. The increase is approximately 25% to account for inflation.
These changes came into force on 1 July 2024 for accounting periods commencing on or after 1 January 2024 . Companies also have the option to elect to apply the new thresholds for any financial year commencing on / after 1 January 2023.
What impact will this change have?
As a result of these changes more companies will fall into the micro and small companies’ category, which will enable them avail of various exemptions such as the audit exemption and/or the entitlement to file abridged as opposed to full financial statements at the Companies Registration Office.
The increased number of companies that will be allowed to prepare financial statements as micro and small companies, will result in those companies benefitting from less onerous accounting requirements and disclosures.
Some companies that are currently classified as medium companies may qualify as small companies and be entitled to avail of these accounting and Companies Registration Office filing exemptions.
The changes may also result in companies falling outside the scope of reporting obligations imposed under the Corporate Sustainability Reporting Directive (CSRD).
Micro | Current | Revised |
Net Turnover not more than: | €700,000 | €900,000 |
Balance Sheet total (gross assets) not more than: | €350,000 | €450,000 |
Average number of employees not more than: | 10 employees | 10 employees |
Small | Current | Revised |
Net Turnover not more than: | €12,000,000 | €15,000,000 |
Balance Sheet total (gross assets) not more than: | € 6,000,000 | € 7,500,000 |
Average number of employees not more than: | 50 employees | 50 employees |
Medium | Current | Revised |
Net Turnover not more than: | €40,000,000 | €50,000,000 |
Balance Sheet total (gross assets) not more than: | €20,000,000 | €25,000,000 |
Average number of employees not more than: | 250 employees | 250 employees |
What impact will this change have for companies that are part of a group?
The Group audit exemption criteria has also increased which enables a company in a group structure to avail of audit exemption, provided the group qualifies.
In order for a group to qualify as a small group:
- the group must meet at least two of the three requirements (see below) in the current year and the preceding year, unless it is the holding company’s first financial year;
- no member of the group can be an ineligible entity (as per section 275 of the Companies Act 2014). Such ineligible entities include, credit institutions, insurance undertakings and entities that have transferable securities which are traded on a regulated market of any EU Member State.
Small Group Requirements | Current | Revised |
Aggregate turnover not more than: | €12m net (or €14.4m gross) | €15m net (or €18 m gross) |
Aggregate gross assets not more than: | €6m net (or €7.2m gross) | €7.5m net (or €9m gross) |
Aggregate average number of employees not more than: | 50 employees | 50 employees |
Some groups that are currently classified as medium groups may qualify as small groups and be entitled to avail of these accounting and Companies Registration Office filing exemptions.
Medium Group Requirements | Current | Revised |
Aggregate turnover not more than: | €40m net (or €48m gross) | €50m net (or €60m gross) |
Aggregate gross assets not more than: | €20m net (or €24m gross) | €25m net (or €30m gross) |
Aggregate average number of employees not more than: | 250 employees | 250 employees |
We are here to help
If you would like further information about how the amendments to size criteria, accounts filing and narrative reporting requirements might impact your business, please get in touch with your usual Azets advisor or a member of the Accounting and Business Advisory team.
