What to Do if we Missed our ARD Filing Deadline?

Q – We missed the Annual Return Date (“ARD”) filing deadline for our Company. What options do we have if we want to retain the audit exemption?

If you have missed the filing deadline the company has several options available in relation to the late annual return.

Once in 5 Years

If the company was entitled to claim the audit exemption in relation to the financial statements being filed with the late annual return, then it may file the late annual return with the audit exempt financial statements, pay the late filing penalties (€100 filing penalty and €3 per day for each day the return is late) without the loss of audit exemption. This will be its once in a 5-year period to file a late annual return without the loss of audit exemption.

If the company files late in the next 5 years, then it will lose audit exemption for the following two financial years.

District Court Application

The company could make a Sec 343 application to the District Court for an extension of time to file the late annual return (once the late annual return has not yet been filed with the CRO). However, it doesn’t make sense to make the application if the company could rely on the filing late once in a 5 -year period exemption.

The District Court would be a better option if the company has already filed late once in a 5-year period and wants to retain the audit exemption and avoid paying the late filing penalties. (This will apply for a lot more to companies in 2026 as the exemption came into force in 2025.)

The District Court only has the power to extend out the filing deadline period for a late annual return and cannot grant audit exemption where it has been lost for late filing previously.

Strike off Listed

The company will be placed on the involuntary strike off list if it does not file the late annual return within 180 days of its filing deadline. The company will then have 8 weeks to file the late return otherwise it will be struck off the Register of Companies.

If the company has received a strike off notice from the CRO it has a very short window to make the application as the company only has 56 days from the date of the notice to:

• File the outstanding annual returns, (audited) financial statements and pay the late filing penalties or
• Apply to the District Court for an extension of time to file.

Consequences of Involuntary Strike Off

Involuntary strike off is often seen as a simple option for companies that have stopped trading or has missed its filing deadline. However, directors need to be aware of their duty to act in the best interests of the Company and comply with the Companies Act 2014.

The directors of a company that is struck off the Register for failure to file annual returns and financial statements will face several risks. These include:

• Assets of the Company vest in the State

Any assets that are in the company after it is struck off are the property of the State and if the directors or members want to access these assets they will have to restore the company by way of an administrative restoration (within 12 months) or High Court Restoration (after 12 months and within 20 years). For more information on restorations click here

• Personal liability for continuing to Trade

If the directors continue to trade while the company is struck off such trade is made in a personal capacity by the directors as the company has no legal existence. So any debts incurred by company when struck off will be personal debts of the directors.

• Prosecution by the Corporate Enforcement Authority

If a company is struck off involuntarily, the details of the company will be sent to the Corporate Enforcement Authority. The CEA will review the company and may bring disqualification proceedings against the directors in accordance with Sec 842(h) Companies Act 2014. The CEA will focus on companies that had debt outstanding when the company was struck off the Register.

The CEA commented in the Sunday Business Post in July 2023 that “significant numbers” of director disqualifications when the enforcement action resumes.”

If disqualified, a director may not act as a director or having any involvement in the management of any company, together with an order for the legal costs incurred by the CEA in bringing such application and the costs incurred by him in investigating the matter. The length of the disqualification period is a matter for the Court which is typically for a 5-year period and longer if there are other breaches of the Companies Acts or the director was a director of other companies that were struck off involuntarily.

• Revenue Proceedings

The Revenue may take proceedings against the directors of companies that have been struck off if there are taxes owed to the Revenue. The directors of companies that have been struck off previously may also find it difficult to secure a tax clearance certificate if they set up a new company in the future.

• CRO proceedings

The CRO may take Court proceedings against companies that are late filing its annual return instead of striking the company off. The directors could face fines up to €5k.

Directors have a duty to act in the best interests of the company and if the company ceases to trade or cannot continue it should take the appropriate steps to dissolve the company in the most appropriate way otherwise face the risk of disqualification.

How Can CLS Help

We would be delighted to assist with making the application to the District Court. The application form may be completed on our website

If you have any queries on the process, please feel free to contact any of the team on 059-9186776 or info@clscs.ie

 

Note: The content within the newsletter is provided for information purposes only and does not constitute legal or other advice.