What is a public interest entity (PIE) ?
As some of the key measures prescribed by the EU Audit Reform apply exclusively to PIEs, the definition of a PIE under EU law is of particular relevance:
- Entities governed by the law of an EU Member State whose transferable securities are admitted to trading on a regulated market of any Member State
- Credit institutions
- Insurance undertakings, or
- Entities designated by Member States as public-interest entities, for instance undertakings that are of significant public relevance because of the nature of their business, their size or the number of their employees; incidentally, application of this fourth criterion varies significantly across Member States.
If an undertaking is not covered by the above definition of a PIE, the new rules laid down in the EU Audit Reform do not apply.
Even though the Audit Reform has no formal extra-territorial impact on companies based outside the EU, all EU-based subsidiaries covered by the above definition of PIEs will be subject to the new EU rules. It is also worth noting that branches of non-EU banks located in most of the Member States will be treated as PIEs and will therefore be required to apply the new rules.