I want to mention two topics that I see impacting the
Corporate Governance of Irish companies in 2023.
The first is the Corporate Sustainability Reporting Directive, or the CSRD.
The CSRD was published in the official Journal of the European Union,
on 16 December 2022, and it entered into force 20 days after that.
Member states now have a period of 18 months to transpose the CSRD into national law.
The CSRD was first proposed by the European Commission as one of a number of measures
designed to assist in achieving the EU's sustainable growth objectives.
It aims to develop a harmonized EU-wide framework for the reporting of relevant,
comparable, and reliable sustainability information.
Non-financial reporting requirements were first imposed on large public
interest undertakings in 2014, by the Non- Financial Reporting Directive, or the NFRD.
The NFRD was introduced to enhance the consistency and comparability of
non-financial information disclosed throughout the EU.
However, it fell short of achieving the primary function of corporate reporting,
namely to enable stakeholders to make informed decisions in order to
protect their interests, make investment decisions, or hold
companies publicly accountable.
The CSRD seeks to address these shortfalls;
and it seeks to do so by extending the scope of undertakings subject to reporting
requirements, widening the types of sustainability topics required to be
reported on, harmonizing the sustainability reporting requirements,
and providing an assurance framework.
The CSRD will drastically change the sustainability reporting landscape in the EU.
Organisations of all shapes and sizes need to take action to prepare for this impact.
At Mason Hayes and Curran, we're already working with many of our clients to assist
them in developing a roadmap towards sustainability reporting.
The second topic that I'd like to move on to is the question of public
access to company information.
And this topic arises in the context of a recent Judgment of
the European Court of Justice that has made it harder to get information
about the ownership of companies.
The ECJ has ruled that the unfettered right of public access to the personal information
of individuals who ultimately own or control companies incorporated in EU member states
is incompatible with the European Charter of Fundamental Rights.
Irish law, which transposes EU anti-money laundering measures, gives the public an
unqualified right to access the name, month and year of birth, and country of residence
of the individuals who own and control Irish companies on the payment of a fee.
The only exception made is for minors, where the applicant for information must
show why their request is in the public interest.
The right of access to this information, without having to explain or show why the information
is requested has now been ruled by the ECJ to be invalid.
Now, the judgment does recognize that there are good reasons for
information on beneficial ownership of companies to be collected.
For example, the combating of money laundering and terrorist financing.
However, the Court has also stated that this must be balanced against an
individual's right to a private life, and the protection of personal data.
The court has suggested that any person wishing to access the data must
actually demonstrate a legitimate interest.
In the light of this judgment, a similar provision in Irish law, or the extension
of the Legitimate Interest Test, which presently applies to the beneficial
ownership of trusts, looks likely.
And we are watching the progress of this matter with interest.
Particularly because of the importance of ensuring a specific and broad definition
of legitimate interest, so that those that require access to this information for
things like: exposing corporate conduct, sanctions evasion, profiteering from
state contracts, or conflicts of interest can continue to do so.
As we always do, we will continue to keep everyone updated as this topic progresses.