How would you feel if you were legally obliged to publish your earnings on the internet?
This is a question that many small company directors will soon be asking themselves as they digest the new Companies Act 2014, which came into effect on 1 June 2015.
For the first time, the new Act compels all companies to disclose Directors’ Remuneration (ie directors’ salaries and fees), in the annual Abridged Accounts to be filed with the Companies Office.
Once filed, any member of the public can access and download a copy of the accounts for €2.50.
This should not be a major issue for larger companies where the total Directors’ Remuneration figure is shared among several directors.
However, it will come as a nasty shock to family companies with one or two directors, most commonly husband & wife. In such cases, the Directors’ Remuneration figure will clearly link to an identifiable individual or couple.
And once published, this information will be on the public record forever.
I’m amazed that the new Act provides no safeguards against the obvious privacy breach that this measure will entail for small company directors.
An exemption for companies with two or fewer directors would have been a reasonable solution. Yet no such exemption exists.
Will we soon see a stampede of small company owners fleeing the new disclosure rules and returning to sole trader status?
It would be ironic if the new Act, which was supposed to revolutionise company law and simplify company administration, ends up wrecking the entire concept of the small family company.