Simon Harris (Wicklow, Fine Gael)
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It will become a requirement under EU law. It is included in the 1963 Companies Act. When we published the ICAV, we did not include the true and fair test because, up to this point, undertakings for collective investment in transferable securities, UCITS, and alternative investment funds, AIFs, about which we are talking in relation to ICAVs have had not had to meet it. While it has been applicable in the 1963 Companies Act for companies, we did not apply it to the ICAV because, up to this point, UCITS and AIFs have not had to apply it in this country.

The true and fair concept is defined as a general rule of conduct or principle - the belief that businesses and organisations shall, truthfully, fairly or accurately present information on their financial conditions and operating results. "True and fair" means that the financial statements are free from material misstatements and faithfully represent the financial performance and position of the entity. "True" suggests the financial statements are factually correct, have been prepared according to the applicable reporting framework and do not contain any material misstatement that may mislead users. Misstatement may result from material errors or omissions of transactions and balances in the financial statements. "Fair" implies that the financial statements present the information faithfully without any element of bias and reflect the economic substance of transactions, rather than just their legal form. It is not sufficient for directors or auditors to reach such conclusions solely because the financial statements are prepared in accordance with the applicable accounting standards. Auditors must consider whether the directors have fulfilled their responsibility in the preparation of true and fair financial statements when providing an audit opinion.

As Deputy Richard Boyd Barrett acknowledged, given that we are involved in global competition, it is desirable to allow the information to be presented in accordance with accounting standards that might be more familiar to investors. We do not want this to happen at the risk of the true and fair test. This is included in the 1963 Companies Act and coming down the tracks in European law and amendments to accounting and audit directives. Although there is no legal obligation on us to impose it in the ICAV Bill, taking into consideration the commentary of members on other Stages of the legislation, it is prudent and appropriate to include it.