Micro Companies
Micro companies, a subset of small companies, may adopt either the small company or micro company regime, excluding entities involved in specific activities such as financial services. The micro company regime, effective from June 9, 2017, allows for simpler financial reporting for qualifying companies.
Companies may elect to prepare accounts under International Financial Reporting Standards (IFRS) or Companies Act standards, although certain disclosures are incompatible with IFRS. The Financial Reporting Council has published standards tailored for micro entities under FRS105, ensuring compliance with EU directives.
Schedule 3B outlines the simplified balance sheet and profit and loss formats for micro companies, permitting adjustments for better presentation. Disclosure requirements include company details, accounting policies, and changes in balance sheet items.
Valuation rules under Schedule 3B permit only historical cost accounting, prohibiting fair value assessments. The Financial Reporting Council’s standards provide guidance for micro company financial reporting, accommodating the smaller scale of qualifying entities.
Disclosure requirements extend to secured creditors, guarantees, and commitments, with specific details mandated. Micro companies are exempt from preparing a directors’ report, with financial statements filed in the Companies Registration Office, including an abridged version for certain disclosures.
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