Compliance Agenda - September 2018

PUBLISHED: 3rd September 2018

We are delighted to publish the latest edition of our newsletter Compliance Agenda. It contains a round-up of all the latest legal updates of interest to Company Secretaries, Company Directors and Compliance Officers.

Disclosure of Company Details – are you in breach of legislation?

Every day Irish companies communicate with third parties through email, letter, and through visits to their websites. 

In doing so many of these companies are unknowingly in breach of the provisions of the Companies Act 2014.  Care should therefore be taken to ensure that such breaches do not occur and what follows is a synopsis of what you need to know.

Information to be disclosed

The following particulars must be shown on all business letters of a company and are also required to appear on order forms of limited liability companies:

• the full name of the company.
• the names of the directors and their nationality, if not Irish.
• the legal form of the company.
• place of registration and registered number (as per certificate of incorporation).
• address of the registered office.
• in the case of a company exempt from the obligation to use the use the company type (Companies Limited by Guarantee/Designated Activity Companies) as part of its name, the fact that it is such a company.
• in the case of a company which is being wound up, the fact that it is so.
• if the share capital of a company is mentioned on letterheads or order forms of a company, the reference must be to the paid up share capital.

Websites & Corporate Details

All company's which have a website must disclose the same information that is required to be displayed on letters and order forms.  If this information is not included on the company’s homepage, there must be a visible link on the company's homepage which will redirect to this information.

Companies (Accounting) Act 2017 - What is new?

Companies (Accounting) Act 2017 introduces a new definition of an External Company and new filing obligations.

Section 80 of the Companies (Accounting) Act 2017 (the “2017 Act”) came into operation on 9 June 2018, which brought into effect a new definition of an External Company.

As a result of the new legislation, foreign body corporates, including undertakings (partnerships and unincorporated bodies) with unlimited liability and with a branch in Ireland will fall within the definition of an external company and therefore will be required to register their details with the Companies Registration Office and file financial statements on an annual basis

Under previous legislation, both an EEA company and a non-EEA company were defined as a body corporate whose members’ liability was limited.  Therefore, an external company was required to have limited liability in order to fall within the definition of an external company. 

Late filing penalties and the importance of filing annual returns accurately  

In the past, when an annual return (Form B1) was filed in the CRO containing errors or omissions, the CRO sent this back for correction or amendment.  Section 898 Companies Act 2014 required that all the errors/omissions in question must be corrected, with a fully compliant annual return delivered to the CRO within 14 days of the annual return being returned to the company.

As of 1 April 2018, Annual Returns will now automatically be rejected where the Annual Return has been submitted containing an error or requires correction.  The Registrar of Companies will no longer use her discretion under Section 898 of the Companies Act 2014 in these cases and will not allow 14 days for the amendment required.  Common errors occur when the signature page or overall certificate is not signed or where financial statements are not uploaded electronically.

New CRO rules now stipulate that in such circumstances, a new annual return must be submitted, financial statements uploaded and a new signed signature page be delivered to the CRO.  Should this new annual return be submitted more than 28 days after the company’s Annual Return Date, the Annual Return will be deemed late. This will have the usual negative results arising from the late filing of an annual return including:

• Late filing penalties;
• Loss of audit exemption and the future requirement to have audited financial statements filed; and
• Conveying poor corporate compliance.

The Fifth Anti-Money Laundering Directive - Key points

The Fifth Anti-Money Laundering Directive (5AMLD) makes various changes to the Fourth Anti-Money Laundering Directive (4AMLD).

5AMLD which was adopted by the Council of the EU on 14 May 2018 came into force on 9 July 2018 with an 18 month transposition period. 

In brief, the key changes included in 5AMLD relate to:

• broadening access to information on beneficial ownership, improving transparency in the ownership of companies and trusts;
• addressing risks linked to prepaid cards and virtual currencies;
• cooperation between financial intelligence units; and
• Enhanced checks on transactions involving high-risk third countries.

The Department of Finance has advised that it is considering the implications of 5AMLD for the central register of beneficial ownership of companies and industrial & provident societies and will provide an update in the near future.

What can LK Shields do for you?

If you would like further information on establishing an external company in Ireland and the statutory filing requirements for such an entity, please contact a member of our company secretarial team.