New obligations for company directors have been introduced into Irish Company Law recently. We hope to assist you in your corporate compliance programmes and to alert you to these new laws which could have costly consequences for you if not complied with now.

The Company Law Enforcement Act 2001 was signed into law on 09/07/01. Certain sections of the Act regarding the annual obligation of companies to file financial statements and annual returns at the Companies Registration Office came into effect on 26/10/01.

1. Late Filing Fees

In addition to the standard €30 filing fee, an increased late filing penalty of €100 plus €3 per day, for each day after the late filing penalty commences, will apply.

2. Calculation of the Late Filing Penalty

Until 28/02/02 an annual return will incur the late filing penalty if it is filed more than 77 days after the date up to which the return is made. The daily amount will be calculated from the day after that date.

On 01/01/02 provisions on filing annual returns change, with the introduction of a statutory "annual return date". The date for filing the annual return becomes 28 days after the "annual return date".

3. Date of Accounts attached to the Annual Return

The provision in the Act which provides that the date of the annual return cannot be more than 9 months after the date up to which the attached accounts are made also came into force on 26/10/01. It should be noted that it is the duty of company directors and secretaries to ensure that annual returns are received in the CRO on time. Personal penalties may be imposed on defaulters.

Additional information is available on the CRO web site at http://www.cro.ie

4. "Voluntary" Strike-Off's

Section 311 of the Companies Act, 1963 (as amended) provides the Registrar of Companies with the power to strike the name of a company off the register of companies where he has reason to believe that the company is no longer trading.

Up until recently applications to strike companies off the register were accepted by him from company directors and secretaries provided that they explicitly stated that the company involved either never traded or was no longer trading and had no assets or liabilities.

Recent applications have been notified by him to the Irish Revenue Commissioners and as a result there has been a huge reduction in successful strike-off applications. All applications will be notified to Revenue and strike off will only commence on receipt of approval by the Revenue.

Applications received by the Registrar have to:

a. Originate from a currently registered director of the company,

b. Explicitly state that the company has never traded or is no longer trading and has no assets or liabilities,

c. Be accompanied by all outstanding annual returns (if any) and relevant filing fees,

d. Be accompanied by a letter of no objection from the Revenue Commissioners, and

e. Be accompanied by a copy of an advertisement placed in an Irish newspaper notifying the intention to apply to have the company struck off the register.

5. Further Penalties

• Fines - The company and every officer of the company who is held to be in default in respect of the holding of Annual General Meetings/filing of annual returns on time may be liable to fines of up to €1,270 in respect of each offence on foot of a court order.
• Strike-Off - The Register of Companies may initiate strike-off court proceedings against companies failing to file an Annual Return in respect of any year
• Disqualification - Any company officer found guilty of being persistently in default in relation to the filing of returns may be disqualified from acting as director or other officer, auditor, receiver, liquidator or examiner or from being in any way involved in the promotion, formation or management of any Irish company for such period as the Court sees fit.
• Loss of Limited Liability - While the company is dissolved, the officers/members become personally liable for debts incurred by the company.
• Loss of Company Property and Assets - While the company is dissolved, the property and assets of the company automatically vest in the State. This is a consequence which will greatly inconvenience the owners of any asset holding company.

6. Obligation to File Accounts on a Timely Basis

Until now the financial statements accompanying an Annual Return may predate the date of the Return by approximately 9 ½ months.

Now the financial statements accompanying an Annual Return MUST NOT predate the date of the return by more than 9 months.

7. Share Capital and the Euro

The Economic and Monetary Union Act 1998 came into force on 01/01/99 and taken together with the two EU Directives (1103/97 and 974/98) provides the mechanism for companies to convert their share capital to Euro. From 01/01/02
the Euro supercedes the Irish Punt as the official domestic currency. The substitution is at the official conversion rate of 1 Euro to IR£0.787564. During the transition period from 01/01/99 to 31/12/01, companies could decide to redenominate existing shares in Euros as part of their overall preparation for 01/01/02. The nominal share value of each individual share is not to be rounded.

8. Redenomination of Capital during the Transition Period

Section 25 of the 1998 Act provides for companies to redenominate their share capital into Euro during the transition period. To do so an ordinary resolution approving the redenomination must be passed by the shareholders of the company. A copy of this resolution must be sent to the Registrar of Companies along with the amended Memorandum and Articles of Association and registration fees within 15 days of the passing of the resolution. There are penalties for not doing so.

9. Renominalisation of Share Capital

The process of redenominating share capital from Irish pounds to Euro can result in the share capital being expressed in uneven amounts, running to many decimal places. To rectify this the share capital can be renominalised and this may be affected by an ordinary resolution of the shareholders in general meeting or by written resolution if the Articles of Association so permit. Renominalisation could therefore result in- an increase or a decrease in the issued share capital. If it results in a decrease then the relevant resolution must be a special resolution.

If a company has not passed the necessary Ordinary Resolution to redenominate its share capital it happens automatically on 01/01/02. However, the result will almost certainly be an uneven Euro amount expressed to the nearest cent. To rectify the matter using the simple approach outlined above, ACTION MUST BE TAKEN BEFORE 30/06/03. After that date if a company wishes to alter its nominal par value in Euro to achieve a rounded amount, resulting in reduction in its share capital, High Court approval will have to be obtained. This will involve substantial cost.

We can help you with this annual company maintenance burden and the preparation and filing of compliance documentation at a very competitive rate should you so wish . We would work with you, your accountants and our secretarial agents to these ends.

Should you require any further information please do not hesitate to contact us.