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Philip Lee Q4 Corporate Compliance Update


Monday, December 10, 2018

1. Welcome changes to audit exemption rules for late filing of an annual return

The Companies (Statutory Audits) Act 2018 (the “Act”) was passed into law on 25 July 2018, and commenced on 21 September 2018. The Act was passed in order to transpose EU audit regulation into Irish law.

Changes to the loss of audit exemption were introduced in the Act. A loss of audit exemption will now apply prospectively to unfiled annual returns / financial statements for 2 years following the year in which the annual return was not filed. Previously, a loss of audit exemption would have applied to the current year in which the annual return was not filed and also the following year.

This change is seen as a very welcome change and was introduced to make it easier for companies to prepare and budget for an upcoming audit.

2. Beginning of the end for original ink signatures?

In a much welcomed development, the Companies Registration Office (the “CRO”) are currently testing a new system whereby original ink signatures will no longer be required to be submitted for any forms filed electronically (including annual returns). This will make it much easier and more efficient to complete filings as this new system will allow scans of signatures to be simply uploaded, as opposed to the current system of posting the original signatures to the CRO.

The new system is expected to go live in Q3 2019.

3. Central Register of Beneficial Ownership update

Since 15 November 2016 all corporate and legal entities have been obliged to maintain a beneficial ownership register containing adequate, accurate and current information on their beneficial owner(s) (see our previous update here). Additional EU Directives in this area now provide for the establishment of a Central Register, which would be accessible by the public. There has been much debate across the EU over the last year around the content and level of accessibility to this register (see further information below). The Department of Finance is currently finalising the legislation necessary to set up an Irish central register, which will house details of each Irish corporate and legal entity’s beneficial ownership. The Companies Registration Office will be assigned responsibility for the establishment and maintenance of the Irish central register of beneficial ownership (the “Central Register”).

Timeline for the Central Register

It is anticipated that the enabling legislation for the Central Register will be published by the end of 2018. The CRO will then have 3 months in which to implement their system and it is expected that the Central Register will go live online in March 2019. Companies and other legal entities will then have a further 6 month period (until approx. October 2019) to file their beneficial ownership information.

Access to the Central Register

The Central Register will be accessible by the general public; however certain sensitive information like PPS numbers, addresses, and full dates of birth will not be accessible by the public. It is anticipated that the register viewable by the public will only be released after the 6 month grace period.

Organisations such as the Gardaí, banks, or other interested parties will likely have full access to all information on the Central Register (this detail is to be confirmed).

Information required for the RBO

Below is a comprehensive list of the information which corporate or other legal entities will be required to file for inclusion in the Central Register:

  • the name, date of birth, nationality and residential addresses of each beneficial owner holding >25% of it (Note: the beneficial owner must be a natural person);
  • each such person’s PPS number;
  • a statement of the nature and extent of the interest held by each such beneficial owner;
  • the date on which each natural person was entered into the register as a beneficial owner; and
  • the date on which any natural person who has ceased to be a beneficial owner ceased to be such an owner.

If (having exhausted all possible means and provided there are no grounds for suspicion by the company,) no natural persons are identified as, or there is any doubt that the persons identified are, in fact, the beneficial owners, the names of the natural person(s) who hold the position of senior managing official(s) of the company (including their date of birth, nationality and residential addresses) must be entered in the register. In this case, the company/legal entity is obliged to keep records of the actions it took to identify its beneficial owners.

4. Companies (Corporate Enforcement Authority) Bill 2018

The Minister for Business, Enterprise and Innovation, Heather Humphreys TD, announced recently that Cabinet has approved the publication of draft legislation to establish the Office of the Director of Corporate Enforcement (the “ODCE”) as a stand-alone agency to be called the Corporate Enforcement Authority.

The new Corporate Enforcement Authority is expected to strengthen Ireland’s regulatory framework for the conduct of business and white collar crime.

The General Scheme of the Companies (Corporate Enforcement Authority) Bill 2018 can be found here.

5. CRO enforcement stats 2018

In 2018 the CRO prosecuted a total of 58 companies for non-compliance with the filing of their annual returns. The CRO have reduced the amount of time that the involuntary strike off process is commenced for companies failing to file their annual return from 300 days previously to 180 days now. So in effect if a company doesn’t file their annual return within 6 months of their annual return date the company will be struck off much sooner than previously.

The CRO’s enforcement program was piloted in 2017 with 6 prosecutions which resulted in all 6 being convicted. This will be a continuing trend going into 2019 as the CRO look to clamp down on non-compliance.

It is therefore vitally important that each and every company be in compliance with their annual return filings each year.

 

Number of companies prosecuted in 201858
Number convicted in court and fined47
Number of cases struck out of court9
Number pending2
Total fines issued in 2018 from convictions€62,000 (approx.)

 

Should you require further information or advice on any of the above, please contact our Head of Company Secretarial – Patrick ButlerIta O’Sullivan, Eoghan Doyle or your usual Philip Lee contact.


Author

Patrick Butler

Company Secretary


Ita O’Sullivan

CONSULTANT

Eoghan Doyle

PARTNER

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