The closing date for submissions from stakeholders and interested parties on all the proposals is 5pm on 9th June 2023.
The document seeks responses on the following proposals regarding audit exemption:-
- Should the audit exemption regime for small and micro companies be amended to provide for a two-step graduated regime to deal with late filing, rather than automatic loss of audit exemption for two years?
The two-step regime would operate as follows:
-On the occasion of the first instance of late filing, filing fees would be incurred and there would be no loss of audit exemption;
-If there was a further instance of late filing within the following five- year period, late filing fees would be incurred and the entitlement to audit exemption would be lost for the following two financial years, with the company required to file audited financial statements for these years.
- To enhance the deterrent effect where failure to deliver an annual return in the prescribed form and containing the prescribed information is an offence, it is proposed to disapply section1(1) of the Probation of Offenders Act 1907 in prosecutions for non-filing. This amendment would remove the possibility where, in lieu of being convicted of an offence, the Court can instead request that a contribution to a charity be made.
We would welcome this change as the punishment for missing a deadline by a day means a huge imposition of an audit for 2 years or applying to the District Court for an extension.The new proposal still retains the integrity of the register and the importance of filing annual returns on time. We would question the 2-year audit requirement if a company files late again in a 5-year period as an auditor will have to examine the activities of the company and report any offences to the CEA in the first year of the audit. However, we also recognize that there must be a significant punishment if the company files late more than once in a 5-year period. Otherwise, the company will have to apply to the District Court for an extension of time for the late return and explain to the Judge for the reason for missing another filing deadline.
Other Company Law administrative proposals:-
- To include a provision allowing for the strike-off of a company for failure to file details of a Company Secretary with the Registrar.
- To provide additional grounds for involuntary strike-off of companies by permitting the Registrar of Beneficial Ownership to request that the Registrar of Companies strike-off a company for its failure to comply with the obligation to provide a statement detailing the beneficial owners.
This is a welcome proposal however it would be important that all companies that are struck off and reviewed as it can be seen as a way out of liquidating a company to have it struck off involuntarily and the company and its activities reviewed by a liquidator or the CEA.
SME companies and practitioners should be happy with the proposed changes and hopefully it will be passed quickly into law and reduce the number of District Court applications that are made on an annual basis.
NB: The content of this article is provided for information purposes only and does not constitute legal or other advice
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