Sinead Floody, 26th February 2019 (Updated 25th March 2019)
The Companies (Amendment) Bill 2019 “the Bill” was published in January this year. The Companies (Amendment) Act 2019 was signed into law on 11th April 2019 but has not officially commenced yet. This legislation will amend Section 343 of the Companies Act 2014, bringing about a change in annual return filing for Irish Companies. Some consider this change to be minor however this change is very relevant when it comes to filing annual returns. This change in legislation is particularly useful for Irish Company Secretaries, Directors, Accountants & Auditors, Registered Agents and other persons responsible for filing annual returns for Irish Companies. As expected, there was little objection to this piece of legislation, and it passed through the various stages in the Dáil and Seanad very quickly. The Act will come into force when an order is made by the Minister for Business, Enterprise and Innovation and the Companies Registration Office (CRO) enforce it or update their systems.
What exactly is Changing?
The Bill proposes to change the required time limit for submission of an annual return to the Companies Registration Office (CRO). The current legislation states that an annual return must be filed with the CRO within 28 days of the Annual Return Date (ARD) under Section 343 Companies Act 2014. When the annual return has been electronically filed, the financial statements and signature pages can be submitted to the CRO a further 28 days later. The current system is often coined a “two-step process” where a 56-day grace period is offered.
The Bill proposes to change the ARD filing to a “one-step, 56-day process” where a 56-day grace period is given to companies to electronically file the annual return, upload their financial statements and deliver any signature pages to the CRO. This does not give companies more time to file their annual return with the CRO, it merely cuts out the extra step and makes the process easier for companies to meet their deadline.
Companies will no longer have to take note of two dates; i.e. the final date to electronically file and the final date to submit accounts and signatures pages. Instead, companies will just have to note that the final date to submit all elements of the annual return is 56 days after the ARD. The Bill will amend Section 343 to allow for a 56-day grace period and will delete Section 344 of the Companies Act 2014. Section 344 of the act deals with the filing of the annual return by electronic means. As the CRO introduced mandatory e-filing in June 2017, this section of the act is no longer required.
How will this Change be Implemented?
The CRO recently advised stakeholders that a new filing software system would be implemented in early 2020, replacing/updating the CORE platform. They envision that a further 18 CRO forms will be made electronic and the new system will cater for the “one step, 56-day process” for filing annual returns. The CRO also mentioned that implementation of this new system will give scope to allow digital signatures on forms, where currently physical signatures are strictly required. This will speed up many of the CRO processes and encourage compliance with the Companies Act 2014. The CRO will have to wait for the Bill to become law before the new system can be implemented.
What are the implications for my Irish Company?
This proposed change in legislation will make the annual return filing process more simplified as there will be just one deadline date to take note of. At the moment, if the first 28-day deadline is missed, the annual return is deemed late. If the first 28-day deadline is met but the second 28-day deadline is missed, the annual return is also deemed late. The consequences of missing either of these deadlines can result in substantial penalty fees which increase daily, along with loss of audit exemption for the next two years, which affects companies who otherwise could claim Small or Dormant Company Audit Exemption. These consequences are a costly burden for any Irish Company, in particular start-ups and small businesses.
This change in legislation will be beneficial for Irish Companies as it will make the process for annual return filing more simplified. We will provide further updates where required.
Please see our annual returns blog here for more information or call our Company Secretarial team on 00353 1 6461625 for assistance with filing an annual return.
Contact us now for further details