For some larger companies and groups, it makes good business sense to avoid having to publicly file their accounts.

This involves adopting a corporate structure that sees the business move from limited company status to unlimited company status.
Alan Browning discusses the issues involved.

For a number of years now, we have seen many sectors of industry adopt a corporate structure that enables them to avoid the obligation to publicly file accounts. Many of the larger Irish-owned and multinational groups adopt such a corporate structure for reasons of confidentiality.

In order to put such a structure in place, it would be necessary to ensure that the existing company, a limited company, converts to unlimited status. The Companies (Amendment) Act 1986 required private limited companies to file their accounts with the Companies Registration Office (CRO) but it did not apply this requirement to unlimited companies. However, the introduction of the European Communities (Accounts) Regulations 1993 changed this by requiring certain unlimited companies and partnerships to file accounts. The Regulations require an unlimited company to file accounts with the CRO where an unlimited company's shareholders are limited companies or their immediate shareholders are unlimited but their shareholders are limited companies.

Converting a limited company to unlimited status which has individuals as members will avoid having to file accounts. However, this could expose the owners of the company to personal liability for the debts of the company were it to enter insolvent liquidation. It is therefore important that any non-disclosure structure also effectively ring-fences the potential liabilities associated with unlimited companies.

We have put various structures of this nature in place by incorporating a new limited company which acquires the shares from the owners of the existing limited liability company. In turn, we put in place two non-EU-incorporated companies, one being a limited liability company and the other being unlimited, between the new holding company and the original limited liability company. The non-EU limited company would own the non-EU unlimited company, and both in turn would own the original limited liability company.

By having a non-EU limited liability company holding an interest in the original limited liability company, it ring-fences the unlimited liability and stops it from reaching the individual members when both the original limited liability company and the new holding company are converted to unlimited status.

Although the structure enables both the new holding company and the original limited liability company to avoid filing accounts, both must still file a special auditors' report. Section 128(6B) of the Companies Act 1963 (as amended) requires an auditors' report to be annexed to the annual return by certain companies that are otherwise exempt from filing accounts with their annual return.

We have significant experience in putting non-disclosure structures in place and if you are considering this as an option, we would be delighted to discuss this with you.

LK Shields Solicitors is one of the leading law firms in Ireland. Founded in 1988, today we number some 23 Partners, 70+ fee earners and 130 staff. Our principal areas of practice include corporate, litigation and dispute resolution, commercial property, intellectual property and technology, financial services, employment, pensions and employee benefits.

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