ANNUAL RETURNS
This provision took effect on 17 May 2004.

Previously, filing an Annual Return made up to a date which was more than 14 days before the company s current Annual Return Date ("ARD") automatically moved the company s next ARD to the anniversary of the earlier date to which the Return had been made up.

Section 46(c) of the 2003 Act changes this by stipulating that if an Annual Return is made up to a date earlier than the company s current ARD, its ARD in future years shall be the anniversary of the date to which the annual return has been made up, unless the company elects in the Annual Return to retain its existing ARD or establishes a new ARD by extending the ARD using a Companies Registration Office (CRO) Form B73. The new (revised) Form B1 provides a tick box mechanism on page 1 by which a company can inform the CRO that it wishes to retain the anniversary of its existing ARD for next year, notwithstanding that it has made its current Return up to a date earlier than its current year s ARD.

The effect of the new provision is that if a company has its Annual Return ready early in a particular year, it can make the Return up to a current date and file it, and inform CRO on the new Form B1 that it wants to keep its original ARD for next year. For example, a company with an ARD of 31st July 2004 may make its 2004 Annual Return up to 1 June 2004, and by ticking the "Yes" box on the new Form B1, retain 31st July as its ARD for 2005.

This option is not available to companies filing their first Annual Return following incorporation. The first Annual Return of a new company is now required to be made up to the date that is its annual return date (i.e. the date that is six months after its date of incorporation). Such a company may not make its first return up to any other date. This applies to new companies incorporated on or after 17th May 2004.

The new revised Form B1 (version 3) came into effect on 17th May 2004. This version of the form must be used if a company wishes to file an Annual Return made up to a date earlier than its current ARD while retaining the anniversary of its current ARD for next year.

The previous Form B1 (version 2) remains valid for use until 31 October 2004. It cannot be used in respect of Returns made up to 1st November 2004 or later.

AUDIT EXEMPTION
The audit exemption available to small companies was introduced in the Companies (Amendment)(No.2) Act, 1999.

This allows a “private company” (being a limited company or an unlimited company or partnership which is obliged to file accounts under the European Communities (Accounts) Regulations 1993) not to have to audit its accounts or to appoint/retain an auditor.

The directors must be of the opinion that the company will satisfy specified conditions in respect of a financial year (and unless it is the first financial year, be satisfied the company met the conditions in the previous financial year) and decide to avail of the exemption. The directors’ decision to avail of the exemption must be recorded in the minutes of the requisite meeting.

The exemption is lost if during the financial year one or more of the conditions are not satisfied.

Availing of the exemption means the provisions in various Companies Acts (and regulations), which confer powers on an auditor or require something to be done by an auditor or make provisions based on an auditors report do not apply.

The 1999 Act stipulated that a company could avail of the exemption if:

-it was a company to which the Companies (Amendment) Act, 1986 applies (namely most private companies and certain unlimited companies). The 1986 Act does not apply to a limited company which is not trading for the acquisition of gain by the members. Also guarantee companies (not having a share capital) are public companies and thus must continue to have their accounts audited (many of those companies are charities and thus must audit accounts in any event); - it was a company to which the Companies (Amendment) Act, 1986 applies (namely most private companies and certain unlimited companies). The 1986 Act does not apply to a limited company which is not trading for the acquisition of gain by the members. Also guarantee companies (not having a share capital) are public companies and thus must continue to have their accounts audited (many of those companies are charities and thus must audit accounts in any event)

- its turnover did not exceed € 317,434.51

- its balance sheet total did not exceed €1,904,607

- the average number of persons employed does not exceed 50

There are certain types of companies who may not avail of the audit exemption. These are companies whose businesses are regulated by the Central Bank or a company if it has subsidiaries.

The 2003 Act now extends the turnover threshold to € 1.5 million. This new provision takes effect from 1st July 2004 and applies in relation to accounting periods beginning on or after that date. It will not apply retrospectively to earlier financial years.

In addition to the audit exemption eligibility conditions which are set out in the 1999 Act, there is a further requirement that the relevant Annual Return with the un-audited accounts attached, be filed on time in the CRO (i.e. not later than 28 days after the effective Annual Return Date), and where the company filed accounts in respect of the immediately preceding financial year, that Return must also have been filed on time in the CRO.

A company cannot avail of the exemption if any member(s) holding not less than 1/10 of the voting rights (not being rights exercisable only in special circumstances) requests the company not to avail of the exemption. A member must do this by notice served not later than one month before the end of the preceding financial year.

If a company is availing of the exemption the balance sheet must include a statement from the directors that:
- the company is availing of the exemption

- the company satisfies the conditions

- no notice (requesting the company not to avail of the exemption) has been received from relevant members

- the directors acknowledge the obligations of the company under the Companies Acts to keep proper books of accounts and prepare accounts which give a true and fair view of the state of affairs of the company at the end of its financial year and of its profit or loss for such a year and otherwise comply with the provisions of those Acts relating to the accounts so far as they are applicable to the company. This statement must be immediately above the signatures.

Where a company removes an auditor (because it is availing of the exemption) the auditor must serve notice on the company that there are no circumstances connected with the removal which should be brought to the notice of members/creditors or if there are such circumstances a statement of same.

A copy of the auditor’s notice must be given to the Registrar and if the auditor has stated that there are circumstances to be brought to the attention of members/creditors the company must forward a copy of it to all members/creditors entitled to receive a copy of the accounts under the Companies Acts.

If the exemption ceases to have effect the directors (failing which the members in general meeting) must appoint an auditor “as soon as may be”. The auditor then holds office until the next general meeting at which accounts are laid.

This commentary on certain provisions of the legislation is not intended to be a legal or comprehensive interpretation. Professional advice should be sought in specific circumstances. For further information on statutory requirements, or any provision of the Companies Acts, 1963 to 2003, please contact our Company Secretarial Department on FREEPHONE: 1800 677 677