The European Union (Qualifying Partnerships: Accounting and Auditing) Regulations 2019 (the “2019 Regulations”) came into effect recently and apply for financial years on or after 1 January 2020.

The purpose of the 2019 Regulations is to apply the provisions of Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, to certain types of partnerships and limited partnerships. The 2019 Regulations extend the scope of partnerships caught beyond those in the 2014 Act and the European Union (Accounts) Regulations 1993 (“1993 Regulations”) and revoke the 1993 Regulations (except so far as they relate to a qualifying partnership’s financial years commencing before 1 January 2020).

The 2019 Regulations apply to (1) a partnership, all of the members of which are, or (2) a limited partnership, all of the general partners of which are:

(i) limited companies

(ii) designated ULCs, (an unlimited company that is a designated ULC under the 2014 Act)

(iii) partnerships other than limited partnerships, all of the members of which are limited companies or designated ULCs

(iv) limited partnerships, all of the general partners of which are limited companies or designated ULCs

or

(v) partnerships, including limited partnerships, the direct or indirect members of which include any combination of undertakings referred to in clauses (i) to (iv), such that the ultimate beneficial owners of the partnership enjoy the protection of limited liability.

Also now within the scope of the filing obligations is any Irish or foreign undertaking that is comparable to such limited company, designated ULC, partnership or limited partnership. Previously, the 1993 Regulations, and consequently the filing obligations, did not apply for example where a partnership had a member which was an unlimited company incorporated in a non-EU country notwithstanding that its shares are held by a limited company incorporated outside the EU.

Other key points to note are summarised as follows:

• Part 4 of the 2019 Regulations sets out the details of the application of the provisions of the 2014 Act, regarding filing of financial statements, provisions in relation to annual return and audit, to the qualifying partnerships under the 2019 Regulations.
• Under the 2019 Regulations the provisions regarding financial statements, annual return and audit do not apply to qualifying partnerships that are either a credit institution or an insurance undertaking.
• Regulation 7 of the 2019 Regulations provides that Part 6 of the 2014 Act applies to a qualifying partnership as if it were a company formed and registered under the 2014 Act. This is subject to any modifications necessary to take into account that the qualifying partnership is unincorporated. The annual return which the partnership is required to make under Regulation 21 of the 2019 Regulations is the Irish Companies Office Form P1.
• The 2019 Regulations provide that where a qualifying partnership has debentures admitted to trading on a regulated market in an EEA state, it must include a corporate governance statement in its directors’ report.
  Under the 2019 Regulations, if the qualifying partnership is involved in mining, quarrying or logging and meets other criteria in the legislation then it must comply with obligations to prepare a report on payments to governments. In addition, the 2019 Regulations apply the EU (Disclosure of Non-Financial and Diversity information by certain large undertakings and groups) Regulations 2017 to qualifying partnerships that fall within the scope.
• The 2019 Regulations provide for offences for their breach. For example, if a qualifying partnership fails to comply with provisions regarding financial statements, the qualifying partnership commits an offence. Where it is proven that the offence was committed with the consent, connivance or through wilful neglect of a member of the qualifying partnership or a director of such a member (or a person purporting to act in either such capacity ) that person is also guilty of an offence. The penalties are severe, ranging from fines or imprisonment of between 6-12 months for summary conviction to fines of up to €50,000 or up to 3 years imprisonment on conviction on indictment.

Conclusion

The 2019 Regulations broaden the scope of partnerships to which the provisions concerning Financial Statements, Annual Return and Audit in Part 6 of the Companies Act 2014 (“2014 Act”) apply. Many more partnerships will now be required to file financial statements and make them publicly available. Clients and practitioners need to consider partnerships in which they are involved or on which they advise to see whether the filing obligations set out in the 2019 Regulations apply to them or to their clients.