Company law enforcement has a new face and a new regime, with the appointment of Paul Appleby as the Director of Corporate Enforcement and the enactment of the Company Law Enforcement Act, 2001 (CLEA). Part 6 of the Act contains provisions expressly designed to improve compliance with filing annual returns and accounts.

The Act contains express provisions for imposing different fees for documents dependant on when they are filed. From 1 January, a filing fee of €30 applies to an annual return filed with accounts. The accounts that are attached to the annual return should not be more than nine months old. The penalty for filing late is €100 plus €3 per day thereafter.

Under the current regime, 77 days are allowed for delivery of the annual return to the Companies Registration Office; on day 78, the filing penalty becomes due. The new Act changes this and with effect from 1 March 2002, an annual return date (ARD) will be introduced for each company. The ARD is a specific date in every year to which a company will be obliged to make up its annual return.

After 1 March 2002, a company must file its annual return with accounts no later than 28 days after the date to which the annual return has been made up to. The ARD will be determined by reference to the anniversary of the company's most recent annual return date. Where a company has not filed an annual return and it is in existence prior to 1 March 2002, the ARD will be six months after the anniversary of incorporation.

The ARD for a company incorporated after 1 March 2002 will also be six months after the anniversary of incorporation, but no accounts will have to be annexed to this particular annual return.

A company will be able to extend its ARD by up to six months on any one occasion during the first 12 months after the commencement of the relevant section of the Company Law Enforcement Act, 2001 on 1 March 2002. The optimum ARD dates for companies will, of course, be nine months after the year-end of the company.

In support of the new filing requirements and penalties referred to above, the Registrar of Companies has been granted greater powers. The Company Law Enforcement Act, 2001 provides that a certificate from the Registrar detailing the facts as to filing or non-filing will be admissible in court as proof. In addition, where the Registrar has reasonable grounds for believing that a person is in default of filing an annual return or similar document required under the Companies Acts, he may serve a notice on the company or its officers. The notice will request them to remedy the default and pay a prescribed amount. If this is done during the period specified in the notice, then prosecution of the person to whom the notice is delivered will not be instituted.

The Company Law Enforcement Act, 2001 has also increased the maximum fine for all summary offences under the Companies Acts to €1,905 and the term of imprisonment on conviction on indictment has been increased to five years. In addition, where the Companies Acts provide that an officer of a company is in default and shall be liable to a fine or penalty, the officer shall be presumed to have permitted a default by the company unless he can establish that he took all reasonable steps to prevent it.

In summary, the Company Law Enforcement Act, 2001 aims to impose much stricter compliance requirements on the filing obligations of companies and has given the Director of Corporate Enforcement considerable powers to ensure that company law compliance is strictly adhered to. Companies and their officers will therefore need to be far more vigilant about Companies Registration Office filings if they are not to incur penalties and prosecution.

Spring 2002.

For further information please contact Alan Browning.