Dominic Hannigan (Labour)

Companies limited by guarantee are regularly formed by local associations, charities, resource centres and residents' associations because it offers them a separate legal entity and identity and avoids the need to issue shares to individuals involved. Under the Companies Act, companies limited by guarantee are considered public companies, and as such, must have an annual statutory audit irrespective of the amount of annual income and expenditure incurred. The costs of such an audit can be as high as €1,700, plus VAT, and can often be the largest item of expenditure to many of these organisations.

In contrast, if the local development association were a private limited company, it would have to issue shares to its members but would be exempt from a statutory audit if its annual turnover was less than €7.3 million, its asset base less than €3.65 million and it had fewer than 50 staff members. Many small charities fit right into these criteria.

The need for an annual statutory audit is becoming increasingly prohibitive for many small charities and development associations. Will the Minister consider a change in the Companies Act whereby companies limited by guarantee with an annual income of less than €100,000 would be exempt from an annual statutory audit? Such an exemption would benefit a local small charity, residents' association or local development association by freeing up valuable income for them to pursue their main objectives. Auditors would be relieved of what is a boring and meaningless task of completing pages of audit reports to satisfy regulators that a proper and full statutory audit has taken place for a company with very a small annual income. Will the Minister consider the introduction of such an exemption?