Companies (Accounting) Act 2017

Payments to governments

87. The Principal Act is amended by the insertion of the following Part after Part 25:

“PART 26

Payments To Governments

CHAPTER 1

Preliminary

Interpretation

1449. (1) In this Part—

‘consolidated payment report’ has the meaning assigned to it by section 1451;

‘entity payment report’ has the meaning assigned to it by section 1450;

‘equivalent reporting requirements’ means third country reporting requirements assessed as equivalent to the requirements of Chapter 10 of the Accounting Directive in accordance with Article 46 of that Directive;

‘logging undertaking’ means an undertaking which undertakes in primary forests the activity referred to in Section A, Division 02, Group 02.2 of Annex I to Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 20064 establishing the statistical classification of economic activities NACE Revision 2 as set out in Table 1 of Schedule 18; and ‘logging company’ shall be read accordingly;

‘mining or quarrying undertaking’ means an undertaking which performs any activity involving the exploration, prospection, discovery, development, and extraction of minerals, oil, natural gas deposits or other materials, within the activities listed in Section B, Divisions 05 to 08 of Annex I to Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 20065 establishing the statistical classification of economic activities NACE Revision 2 as set out in Table 2 of Schedule 18; and ‘mining or quarrying company’ shall be read accordingly;

‘payment’ means an amount paid, whether in money or in kind, for relevant activities, where the payment includes any of the following:

(a) production entitlements;

(b) taxes levied on the income, production or profits of companies, excluding taxes levied on consumption such as value added taxes, personal income taxes or sales taxes;

(c) royalties;

(d) dividends, other than dividends paid by an undertaking to a government as an ordinary shareholder of that undertaking, where—

(i) the dividend is paid to the government on the same terms as to other ordinary shareholders, and

(ii) the dividend is not paid in lieu of production entitlements or royalties;

(e) signature, discovery and production bonuses;

(f) licence fees, rental fees, entry fees and other considerations for licences or concessions;

(g) payments for infrastructure improvements;

‘primary forest’ has the same meaning as it has in Directive 2009/28/EC of the European Parliament and of the Council of 23 April 20096 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC;

‘project’ means operational activities that—

(a) are governed by—

(i) a single contract, licence, lease, concession or similar legal agreement, or

(ii) multiple contracts, licences, leases, concessions or similar legal agreements that are substantially interconnected,

and

(b) form the basis for payment liabilities with a government;

‘relevant undertaking’ means an undertaking within the meaning of

‘ineligible entity’; and ‘relevant company’ shall be read accordingly;

‘relevant activities’ means—

(a) the activity specified in Table 1 of Schedule 18 in primary forests, or

(b) any activity involving the exploration, prospection, discovery, development, and extraction of minerals, oil, natural gas deposits or other materials, within the economic activities specified in Table 2 of Schedule 18;

‘substantially interconnected’ means forming a set of operationally and geographically integrated contracts, licences, leases or concessions or related agreements with substantially similar terms that are signed with a government, giving rise to payment liabilities.

(2) A word or expression that is used in this Part and is also used in Chapter 10 of the Accounting Directive has, unless the context otherwise requires, the same meaning in this Part as it has in Chapter 10 of the Accounting Directive.

CHAPTER 2

Obligation to prepare payment reports

Obligation to prepare entity report on payments to governments

1450. Subject to sections 1454, 1455 and 1456, the directors of a company which is a large company or a relevant company shall, where such company is—

(a) a mining or quarrying company, or

(b) a logging company,

prepare and make available to the public each year a report on payments made to governments for each financial year (in this Part referred to as the ‘entity payment report’).

Obligation to prepare a consolidated payment report

1451. (1) Subject to subsection (2) and sections 1454, 1456 and 1457, the directors of a holding company which is a large company or a relevant company shall—

(a) if the holding company is obliged to prepare group financial statements in accordance with section 293, and

(b) if the holding company or any of its subsidiary undertakings is—

(i) a mining or quarrying undertaking, or

(ii) a logging undertaking,

prepare and make available to the public each year a consolidated report on payments made to governments for each financial year of the holding company (in this Part referred to as a ‘consolidated payment report’).

(2) This section shall not apply to the directors of—

(a) a holding company of a small group, except where any group undertaking is a relevant undertaking, or

(b) a holding company of a medium group, except where any group undertaking is a relevant undertaking.

CHAPTER 3

Content of payment reports

Content of entity payment report

1452. (1) A company shall in respect of its entity payment report, for each financial year, include the following in relation to its relevant activities:

(a) the government to which each payment has been made, including the country of that government;

(b) the total amount of payments made to each government;

(c) the total amount per type of payment made to each government;

(d) where those payments have been attributed to a specific project, the total amount per type of payment made for each such project and the total amount of payments for each such project.

(2) Where a company makes a payment that is not attributable to a specific project, it shall not be necessary in the entity payment report to allocate it to a specific project.

(3) A company shall not be required to include a payment in the entity payment report if—

(a) it is a single payment of an amount less than €100,000, or

(b) it forms part of a series of related payments within a financial year where the total amount of that series of payments is less than €100,000.

(4) Payments, activities and projects shall not be artificially split or aggregated to avoid the application of this Part.

(5) The disclosure of payments shall reflect the substance, rather than the form, of each payment, relevant activity or project concerned.

(6) Where payments in kind are made to a government, the entity payment report shall state the value of such payments in kind and, where applicable, the volume of those payments in kind, and the directors shall provide supporting notes to explain how the value of such payments in kind has been determined.

Content of consolidated payment report

1453. (1) A holding company shall in respect of its consolidated payment report, for each financial year, include the following information in relation to its relevant activities:

(a) the government to which each payment has been made, including the country of that government;

(b) the total amount of payments made to each government;

(c) the total amount per type of payment made to each government;

(d) where those payments have been attributed to a specific project, the total amount per type of payment made for each such project and the total amount of payments for each such project.

(2) A consolidated payment report shall include—

(a) any payments resulting from the relevant activities of a mining or quarrying undertaking, and

(b) any payments resulting from the relevant activities of a logging undertaking.

(3) Where an undertaking makes a payment that is not attributable to a specific project, it shall not be necessary in the consolidated payment report to allocate it to a specific project.

(4) A company shall not be required to include a payment in the consolidated payment report if—

(a) it is a single payment of an amount less than €100,000, or

(b) it forms part of a series of related payments within a financial year whose total amount is less than €100,000.

(5) Payments, activities and projects shall not be artificially split or aggregated to avoid the application of this Part.

(6) The disclosure of payments shall reflect the substance, rather than the form, of each payment, relevant activity or project concerned.

(7) Where payments in kind are made to a government, the consolidated payment report shall state the value of such payments in kind and, where applicable, the volume of those payments in kind, and the directors shall provide supporting notes to explain how the value of such payments in kind has been determined.

(8) In this section, ‘relevant activities’, in relation to a holding company, means the activities of—

(a) the holding company, and

(b) any subsidiary undertaking included in the group financial statements of the holding company prepared in accordance with section 293.

CHAPTER 4

Payment reports: Exemptions and exclusions

Exemption from preparation where certain payments included in consolidated payment report of holding company or higher holding undertaking

1454. (1) The directors of a company that is a subsidiary or a holding company shall be exempt from preparing an entity payment report if any payments to governments made by the company are included in the consolidated payment report prepared by the holding company in accordance with section 1451.

(2) The directors of a company that is a subsidiary or a holding company shall be exempt from the requirement to prepare an entity payment report under section 1450 or, in the case of a holding company, a consolidated payment report under section 1451 if—

(a) any holding undertaking or higher holding undertaking of the company is subject to the provisions implementing Chapter 10 of the Accounting Directive in a Member State other than the State, and

(b) any payments to governments made by the company are included in the consolidated report drawn up by that holding undertaking.

Exemption from preparation where company is subject to equivalent reporting requirements

1455. The directors of a company shall be exempt from preparing an entity payment report if—

(a) the company is subject to equivalent reporting requirements, and

(b) the payments to governments made by the company are included in a report prepared in accordance with equivalent reporting requirements.

Exemption from preparation where holding undertaking or higher holding undertaking is subject to equivalent reporting requirements

1456. The directors of a company that is a subsidiary or a holding company are exempt from preparing an entity payment report under section 1450 or, in the case of a holding company, a consolidated payment report under section 1451 if—

(a) any holding undertaking or higher holding undertaking of the company is subject to the provisions implementing Chapter 10 of the Accounting Directive in a Member State other than the State,

(b) that holding undertaking or higher holding undertaking of the company that is governed by the laws of a Member State is subject to equivalent reporting requirements, and

(c) the payments to governments made by the company are included in a consolidated report drawn up to the same date, or an earlier date, in the same financial year, by that holding undertaking prepared in accordance with equivalent reporting requirements.

Certain undertakings exempt from inclusion in a consolidated payment report

1457. (1) Subject to subsection (2), an undertaking, including a relevant undertaking, shall not be required to be included in a consolidated payment report where—

(a) severe long-term restrictions substantially hinder the holding company in the exercise of its rights over the assets or management of that undertaking,

(b) in extremely rare cases, the information necessary for the preparation of the consolidated payment report cannot be obtained without disproportionate expense or undue delay, or

(c) the interest of the holding company is held exclusively with a view to subsequent resale.

(2) The exemptions referred to in subsection (1) shall apply only if the holding company availed of the similar exemptions available under section 303 in relation to that undertaking for the purposes of preparing its group financial statements in accordance with section 293.

CHAPTER 5

Approval and signing of payment reports

Approval and signing of entity payment reports and consolidated payment reports

1458. (1) An entity payment report prepared in accordance with section 1450 and a consolidated payment report prepared in accordance with section 1451 shall be approved by the board of directors and signed on their behalf by not less than 2 directors, where there are 2 or more directors.

(2) Without prejudice to the generality of section 11, where the company has a sole director, subsection (1) shall operate to require that director to approve and sign the entity payment report or consolidated payment report.

(3) Every copy of every entity payment report or consolidated payment report which is delivered to the Registrar or which is otherwise circulated, published or issued shall state the names of the persons who signed the payment report on behalf of the board of directors.

(4) If any copy of an entity payment report or a consolidated payment report is delivered to the Registrar or is otherwise circulated, published or issued without the payment report (the original of it as distinct from the copy) having been signed as required by this section or without the required statement of the signatories’ names on the copy being included, the company and any officer of it who is in default shall be guilty of a category 2 offence.

(5) In subsection (4), ‘officer’ includes any shadow director and de facto director.

CHAPTER 6

Publication of payment reports

Delivery of copy of entity payment reports and consolidated payment reports to Registrar

1459. (1) A company, the directors of which are required to prepare—

(a) an entity payment report in accordance with section 1450, or

(b) a consolidated payment report in accordance with section 1451,

shall deliver a copy of that entity payment report or consolidated payment report, as the case may be, to the Registrar within 11 months after the end of the financial year of the company.

(2) If a company to which subsection (1) applies fails to comply with the requirements of this section, the company and any officer of it who is in default shall be guilty of a category 3 offence.

(3) In subsection (2), ‘officer’ includes any shadow director and de facto director.

Delivery of copy of entity payment reports and consolidated payment reports prepared under equivalent reporting requirements to Registrar

1460. (1) A company, the directors of which are exempt under sections 1455 or 1456 from preparing an entity payment report or consolidated payment report, shall deliver to the Registrar a copy of any payment report or consolidated payment report prepared in accordance with equivalent reporting requirements within 28 days after such payment report is made available to the public under the equivalent reporting requirements.

(2) Where any document required to be delivered under this section is in a language other than the English language or the Irish language, there shall be annexed to the copy of that document delivered a translation of it into the English language or the Irish language, certified in the manner prescribed for the purposes of section 348.

(3) If a company to which subsection (1) applies fails to comply with the requirements of this section, the company and any officer of it who is in default shall be guilty of a category 3 offence.

(4) In subsection (3), ‘officer’ includes any shadow director and de facto director.”.

4 OJ No. L 393, 30.12.2006, p.1.

5 OJ No. L 393, 30.12.2006, p.1.

6 OJ No. L 140, 5.6.2009, p.16