Directors' Compliance Statement in Ireland: When Section 225 Applies

The directors' compliance statement is a requirement in section 225 of the Companies Act 2014 that applies to larger companies. In short, directors of a company that meets the size tests must include a statement in their directors' report about how the company secures compliance with its legal obligations. This guide sets out what the sources we opened say about when it applies and what it contains. It is general information, not legal advice. The thresholds are set in the Act and may be amended, so check the current Act.

For context on the wider framework, see our overview of directors' duties under Irish company law.

What section 225 is for

The Department of Enterprise's Company Law Review Group (CLRG) survey page on gov.ie describes the directors' compliance statement (DCS) as a statement under section 225. It says the idea was first introduced as section 45 of the Companies (Auditing and Accounting) Act 2003, which was never commenced, and that a revised text was later adopted as the current section 225. That page does not show a publication date. It also says the CLRG was assessing the DCS's effectiveness as part of a 2022 to 2024 work programme, and that the survey closed on 28 February 2023. We did not find a published outcome of that review on the pages we opened, so check for any later changes.

Which companies does it apply to?

The Companies Registration Office (CRO) page on large company financial statement requirements (last modified 31 July 2025, according to the page's metadata) says the requirement applies to relevant companies and to public limited companies, and does not apply to unlimited companies.

It gives two thresholds for the financial year. Section 225(7), as shown on the Revised Acts website, joins them with "and", so both apply:

• balance sheet total above €12,500,000; and
• turnover above €25,000,000.

The page adds that the Minister can prescribe different amounts. It refers to section 167(1) (the definition of "relevant company"), section 225(7) and section 943(1)(i). The CRO's Information Leaflet No. 36 (April 2019) gives the same two figures, but it joins them with "or" rather than "and", so it should not be relied on for the test; the Revised Acts version of section 225(7) joins them with "and". These figures come from dated pages, so check the current figure on the official page and in the Act.

The CRO page also says section 225 does not apply to certain exempted classes, including qualifying companies within the meaning of section 110 of the Taxes Consolidation Act 1997, and other classes the Minister considers unnecessary or inappropriate to regulate this way. This guide does not set out the statute's exemption list, so confirm it against the Act.

Where the statement goes

According to the CRO page, the compliance statement goes in the directors' report for the financial year that report covers. If you are mapping out what an annual report must contain, our guide to Companies Act 2014 financial reporting obligations sets out the wider picture.

What the statement must contain

As the CRO page describes it, the statement has two parts.

An acknowledgement

A statement that the directors are responsible for securing the company's compliance with its relevant obligations.

A confirmation, or reasons if not

A confirmation that the company has done three things during the period, or, if any of them has not been done, the reasons why:

• drawn up a compliance policy statement setting out the company's policies on compliance that the directors consider appropriate;
• put in place arrangements or structures that the directors consider are designed to secure material compliance with the company's relevant obligations; and
• reviewed those arrangements or structures during the financial year.

The CRO page also says the arrangements may include reliance on advice from employees or contractors with the right knowledge and experience, if the directors choose, and that arrangements are treated as adequate if they give reasonable assurance of compliance in all material respects.

What are "relevant obligations"?

The CRO page uses the term but does not define it. In the Revised Acts version of section 225, "relevant obligations" means the company's obligations under the Companies Act 2014 where a breach is a category 1 or category 2 offence (or a serious market abuse or prospectus offence), and its obligations under tax law as listed in the section. Read the Act for the full definition. The ODCE's own list of Companies Act offences (dated August 2020) names section 225 as "Directors' compliance statement and related statement". We did not read what the related statement covers, so we leave it aside.

Auditors and the statement

The CRO page does not say whether the auditor must review the statement. If you are an auditor or work with one, check the Act and the guidance from your supervisory body. Our guide to audit exemption for small companies is a reminder that audit status and the size tests are separate questions.

What happens if it is not done?

The CRO page says a director who fails to comply with section 225 is guilty of a category 3 offence. The CRO leaflet from April 2019 describes a category 3 offence as a summary offence only, with imprisonment of up to six months, and says failure to comply is an offence for each director in default. Section 871(3) of the Act, as shown on the Revised Acts website, provides for a class A fine, imprisonment for up to six months, or both, on summary conviction; check the current text of the Act.

Practical points for finance and governance teams

These are our own suggestions, not legal requirements:

• Our suggestion: each year, check both size tests against the latest approved figures, and check the Act for any change to the amounts.
• Our suggestion: keep a short file showing the compliance policy statement, who reviewed the arrangements, when, and what was concluded, so the confirmation in the report can be supported.
• Our suggestion: where an element was not done, make sure the draft report explains why in the words the directors agree.
• Our suggestion: involve the company secretary, finance and legal advisers early in the year-end timetable rather than at sign-off.

This applies the same way to a company based in Dublin as anywhere else in the State. Professionals should take advice for their own situation.

Learnsignal's offices are off Baggot Street in Dublin, and we offer in-person training from there. For current details, see our CPD pages.

Frequently asked questions

Which companies need a directors' compliance statement?

According to the CRO page, relevant companies and public limited companies, but not unlimited companies, subject to the size tests and any exemptions. The thresholds are in the Act and can be changed, so check the current Act.

What are the size thresholds?

The CRO page gives a balance sheet total above €12,500,000 and turnover above €25,000,000, both for the financial year. The Minister can prescribe different amounts. Check the current figure on the official page.

Where does the statement appear?

In the directors' report for the financial year, as the CRO page describes it.

Is there a penalty for not including it?

The CRO page says a director who fails to comply commits a category 3 offence. Check the Act for the current penalty.

Has the regime been reviewed?

The CLRG ran a survey on the DCS that closed on 28 February 2023. We did not find a published outcome on the pages we opened.

If your company is near either threshold, confirm the position early in the year-end process rather than at sign-off.