The Companies (Amending) Number 3 Law of 2017 was published in the Official Gazette on June 2 2017. It transposes the provisions of directive 2014/95/EU of the European Parliament and of the Council of October 22 2014 amending directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.
The objective of the law, and of the directive it transposes, is to improve companies' transparency on environmental and social matters, in order to encourage them to better manage related opportunities and non-financial risks. The ultimate aim is to promote long-term economic growth and employment. The law will also enable investors to make more informed decisions by ensuring that companies are operating on an equal footing, and presenting non-financial information in order to give a comprehensive understanding of a company's performance and the impact of its activities.
The new law applies only to public interest entities (listed companies, credit institutions and insurance undertakings) with an average number of employees exceeding 500 and which also have a total balance sheet of more than €20 million ($22.5 million) or a net turnover of more than €40 million, or both. It does not affect other companies.
For the financial year 2017 and subsequent years, companies falling within the scope of the law must compile annual reports (consolidated in the case of a group) dealing with environmental matters, social and employment matters and human rights, anticorruption and bribery issues. The reports must include a brief description of the company's business model, a description of its policy in relation to each issue, including monitoring procedures, and the outcome of the policies. The report on human rights, anticorruption and bribery issues must set out the main risk areas in connection with the company's operations, business relationships, products or services which are likely to cause adverse impacts in those areas, and explain how the risks are managed. A company that does not have policies or procedures in any of the specified areas must provide an explanation for not doing so.
The new reports are to be included in the company's management report, and the company's external auditor is required to confirm that they are complete and consistent with the financial statements.
|Elias Neocleous and Kyriacos Kourtellos|