Company Law Compliance

Frequently Asked Questions

What is Company Legal Compliance?

All companies, regardless of size, are regulated by the Companies Acts 1963 – 2003. Limited Liability is a privilege and in order to obtain the benefit of that privilege one must run the affairs of a Company in accordance with the Companies Acts.

What happens if I don’t comply with Company Law?

There are dozens of offences under the Companies Acts for even the most minor of oversights which result in significant fines and jail sentences. The Government has also created a special office called the Director of Corporate Enforcement to ensure that Company Laws are enforced rigorously.

Is Company Law connected with Taxation?

Everybody likes to pay as little tax as possible. Very often certain tax efficient arrangements can be entered into by using Companies e.g. the establishment of a holding company. Such arrangements are perfectly legal provided they do not offend the Taxes Acts and Company Law. For instance the Revenue Commissioners may seek to undermine any particular arrangement if they examine the Tax Planning structure in question and find out that it does not comply with Company Law. Any benefit that it was hoped to have accrued under the tax arrangement will be lost if the Law has not been complied with.

Does Company Law compliance apply to small family companies ?

Yes, all companies are covered by the rigorous requirements of the Companies Acts 1963-2003. In certain circumstances, smaller companies are entitled to certain Accounting/Audit exemptions but otherwise companies regardless of their size are obliged to comply with Company Law.

But I have been OK so far!

We are now living in a new era of compliance with Company Law. Since the Government created the Office of the Director of Corporate Enforcement, Company Laws that had previously been ignored are now being rigorously implemented and directors are being fined and made personally liable for the debts of the Company in many instances. There are now significant fines imposed by the Companies Registration Office in the event that Annual Returns with annexed accounts are not filed on time. There are even recorded instances of fines for failing to keep Statutory Registers written up to date.

But my Accountant usually does this sort of work for me!

Company Legal Compliance is now viewed as a separate service because of its complexity and due to the fact that it is quite time consuming. Increasingly, many Accountants are taking the view that Company Law Compliance issues should be left in the hands of experts, while they focus on their core areas: preparation of accounts, auditing and taxation work. Very few Accounting Firms actually offer a fully comprehensive Company Law Compliance service to their clients. Up to this the Accountancy Profession tended to prepare the accounts that would be annexed to the Annual Return to be submitted to the Companies Registration Office. Formerly, this by and large was enough to keep a Company on the Register of Companies and to avoid any significant problems for the directors. In this new era of compliance, the old role played by Accountants in filing an Annual Return is only a very minor part of the Company Law compliance to which directors must now adhere. We believe that very large numbers of Accountants will recommend to their clients that they need to retain suitably qualified professionals to assist them with Company Law Compliance.

What does Company Legal Compliance entail?

Company Legal Compliance entails such issues as are listed in detail as services
offered by Morgan McManus Solicitors.

Does Company Legal Compliance have any role to play in the context of a directors dispute?

Unfortunately company directors do fall out from time to time. Often such disputes can lead to an extremely bitter break up of a company and of a business relationship. It is becoming increasingly common for a disaffected Director to report his fellow Directors to the Director of Corporate Enforcement and/or the Revenue Commissioners regarding any non-compliance with the Companies Acts or the Tax Acts. This could be very damaging to the other directors of the Company. In the context of any proceedings arising out of the dispute, the disaffected Director may be able to show the Court that the other directors are not fit people to be involved in the running of the Company because they did not comply with Company Law or Tax Law. Failure to keep the housekeeping in a company in order can lead to all sorts of untold problems in the future.

What role has my Accountant?

Accountants are increasingly being put under pressures from both a Company Law and a Tax Law viewpoint. There are several pieces of legislation in existence now where Auditors are required to report their Client Companies to either the Revenue Commissioners and/or the Director of Corporate Enforcement regarding corporate misconduct. For instance, if a Director borrows money from his Company and the Loan transaction does not follow the proper Company Law procedure, then your Auditor must report this to the Director of Corporate Enforcement. This will then lead to the Director of Corporate Enforcement investigating your Company with the potential of fines and/or a jail sentence on the Directors. Accountants are being put in an impossible position. As we said earlier accountants understand the need for their clients to take proper professional advice. As such, your Accountant will understand the times you need to take legal advice and should notify you accordingly provided that you let him/her know what you are doing.