ACT No. LIV of 2016 AN ACT to introduce amendments to the Companies Act and to other Laws and to implement Directive 2014/95/EU.

I assent.

M ARIE- L OUISE

(L.S.)

C OLEIRO P RECA

President

2nd December, 2016

ACT No. LIV of 2016

AN ACT to introduce amendments to the Companies Act and to

other Laws and to implement Directive 2014/95/EU.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows:-

(1) The short title of this Act is the Companies Act and Short title and

commencement.

other Laws (Amendment) Act, 2016.

(2) The provisions of this Act shall come into force and are to

apply to all undertakings within the scope of this Act for the

accounting periods beginning on or after 1 January 2017.

PART I

Amendments of the Companies Act

This Part amends the Companies Act, and it shall be read Amendments of

and construed as one with the Companies Act, hereinafter referred to the

Act.

as "the principal Act".

Article 3A of the principal Act shall be amended as Amendment of

article 3A of the

follows

principal Act.

(a)

in paragraph (t) thereof, for the words "hereinafter

referred to as "the Audit Regulation," there shall be substituted

the words "hereinafter referred to as "the Audit Regulation",";

and

(b) immediately after paragraph (t) thereof, as amended,

there shall be added the following new paragraph

"(u) Directive 2014/95/EU of the European

Parliament and of the Council of 22 October 2014 as

regards disclosure of non-financial and diversity

information by certain large undertakings and groups,

amending Directive 2013/34/EU of the European

Parliament and of the Council of 26 June 2013 on the

annual financial statements, consolidated financial

statements and related reports of certain types of

undertakings hereinafter in this Act referred to as the

"Transparency Directive";".

Sub-article (3) of article 179 of the principal Act shall be

amended as follows

(a)

in paragraph (b) thereof, for the words "of the nature

of any such misstatements." there shall be substituted the words

"of the nature of any such misstatements:"; and

(b) immediately after paragraph (b) thereof, as

amended, there shall be added the following proviso to the

whole sub-article

"Provided that the requirement mentioned in

paragraphs (a) and (b) shall not apply to the non-

financial information to be disclosed in accordance with

paragraphs 8 and 11 of the Sixth Schedule, but the

auditors shall check whether such information is

provided.".

Immediately after paragraph 7 of the Sixth Schedule to the

principal Act there shall be added the following new heading and

paragraphs

"Additional disclosures of non-financial information

applicable to certain large undertakings and groups

Large undertakings, as referred to in paragraph 1 of

the Third Schedule, which are public-interest entities exceeding

on their balance sheet dates the criterion of the average number

of 500 employees during the financial year shall, in addition to

the other requirements of this Schedule, include in the directors’

report a non-financial statement containing information to the

extent necessary for an understanding of the undertaking’s

development, performance, position and impact of its activity,

relating to, as a minimum, environmental, social and employee

matters, respect for human rights, anti-corruption and bribery

matters, including

(a) a brief description of the undertaking’s business

model;

(b) a description of the policies pursued by the

undertaking in relation to those matters, including due

diligence processes implemented;

(c) the outcome of those policies;

(d) the principal risks related to those matters

linked to the undertaking’s operations including, where

relevant and proportionate, its business relationships,

products or services which are likely to cause adverse

impacts in those areas, and how the undertaking

manages those risks;

(e) non-financial key performance

indicators

relevant to the particular business.

Where the undertaking does not pursue policies in relation

to one or more of those matters, the non-financial statement

shall provide a clear and reasoned explanation for not doing so.

The non-financial statement referred to in this paragraph

shall also, where appropriate, include references to, and

additional explanations of, amounts reported in the annual

financial statements.

Information relating to impending developments or matters

in the course of negotiation may be omitted in exceptional cases

where, in the duly justified opinion of the directors, the

disclosure of such information would be seriously prejudicial to

the commercial position of the undertaking, provided that such

omission does not prevent a fair and balanced understanding of

the undertaking’s development, performance, position and

impact of its activity.

In requiring the disclosure of the information referred to in

this paragraph, undertakings may rely on existing national,

Union-based or international frameworks, and if they do so,

undertakings shall specify which frameworks they have relied

upon.

Undertakings fulfilling the obligation set out in

paragraph 8 of this Schedule shall be deemed to have fulfilled

the obligation relating to the analysis of non-financial

information set out in sub-article (2) of article 177.

An undertaking which is a subsidiary undertaking

shall be exempted from the obligation set out in paragraph 8 if

that undertaking and its subsidiary undertakings are included in

the consolidated directors’ report.

Public-interest

entities

which

are

parent

undertakings of a large group exceeding on its balance sheet

dates, on a consolidated basis, the criterion of the average

number of 500 employees during the financial year shall include

in the consolidated directors’ report a consolidated non-

financial statement containing information to the extent

necessary for an understanding of the group's development,

performance, position and impact of its activity, relating to, as a

minimum, environmental, social and employee matters, respect

for human rights, anti-corruption and bribery matters, including

(a) a brief description of the group’s business

model;

(b) a description of the policies pursued by the

group in relation to those matters, including due

diligence processes implemented;

(c) the outcome of those policies;

(d) the principal risks related to those matters

linked to the group’s operations including, where

relevant and proportionate, its business relationships,

products or services which are likely to cause adverse

impacts in those areas, and how the group manages those

risks;

(e) non-financial key performance

indicators

relevant to the particular business.

Where the group does not pursue policies in relation to one

or more of those matters, the consolidated non-financial

statement shall provide a clear and reasoned explanation for not

doing so.

The consolidated non-financial statement referred to in this

paragraph shall also, where appropriate, include references to,

and additional explanations of, amounts reported in the

consolidated financial statements.

Information relating to impending developments or matters

in the course of negotiation may be omitted in exceptional cases

where, in the duly justified opinion of the directors, the

disclosure of such information would be seriously prejudicial to

the commercial position of the group, provided that such

omission does not prevent a fair and balanced understanding of

the group’s development, performance, position and impact of

its activity.

In requiring the disclosure of the information referred to in

this paragraph the parent undertaking may rely on existing

national, Union-based or international frameworks, and if it

does so, the parent undertaking shall specify which frameworks

it has relied upon.

A parent undertaking fulfilling the obligation set out

in paragraph 11 of this Schedule shall be deemed to have

fulfilled the obligation relating to the analysis of non-financial

information set out in sub-articles (2), (5) and (6) of article 177.

A parent undertaking which is also a subsidiary

undertaking shall be exempted from the obligation set out in

paragraph 11 if that exempted parent undertaking and its

subsidiaries are included in the consolidated directors’ report,

drawn up in accordance with subarticles (5) and (6) of article

177 and this Schedule.".

PART II

Amendment of the Accountancy Profession Act

6. This Part amends the Accountancy Profession Act, and it Amendment of

shall be read and construed as one with the Accountancy Profession the

Accountancy

Act, hereinafter referred to as "the principal Act".

Profession Act.

7. Sub-article (1) of article 8 of the principal Act shall be Amendment of

article 8 of the

amended as follows

principal Act.

(a)

in paragraph (r) thereof, for the words "held by

auditors and audit firms." there shall be substituted the words

"held by auditors and audit firms:"; and

(b) immediately after paragraph (r) thereof, as amended,

there shall be added the following new paragraph

"(s) the establishment of non-binding guidelines on

methodology for reporting non-financial information,

including non-financial key performance indicators,

general and sectoral, with a view to facilitating relevant,

useful and comparable disclosure of non-financial

information by undertakings.".

Passed by the House of Representatives at Sitting No. 455 of the

28th November, 2016.

Ċ ENSU G ALEA

Deputy Speaker

R AYMOND S CICLUNA

Clerk of the House of Representatives

€0.72