Companies (Auditing and Accounting) Act 2003

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Review of whether accounts comply with Companies Acts.

26.—(1) In this section—

“relevant undertaking” means—

(a) a public limited company (whether unlisted or listed),

(b) a subsidiary undertaking of a public limited company referred to in paragraph (a) (whether the subsidiary undertaking is a company or is an undertaking referred to in Regulation 6 of the 1993 Regulations),

(c) a private company limited by shares that, in both the relevant financial year and the immediately preceding financial year of the company, meets the following criteria:

(i) its balance sheet total for the year exceeds—

(A) €25,000,000, or

(B) if an amount is prescribed under section 48 (1)(h) for the purpose of this provision, the prescribed amount;

(ii) the amount of its turnover for the year exceeds—

(A) €50,000,000, or

(B) if an amount is prescribed under section 48 (1)(h) for the purpose of this provision, the prescribed amount,

(d) a private company limited by shares that is a parent undertaking, if the parent undertaking and all of its subsidiary undertakings together, in both the relevant financial year and the immediately preceding financial year of the parent undertaking, meet the criteria in paragraph (c),

(e) each subsidiary undertaking of a parent undertaking that comes within paragraph (d),

(f) an undertaking referred to in Regulation 6 of the 1993 Regulations that, in both the relevant financial year and the immediately preceding financial year of the undertaking, meets the criteria in paragraph (c),

(g) an undertaking referred to in Regulation 6 of the 1993 Regulations that is a parent undertaking, if the parent undertaking and all of its subsidiary undertakings together, in both the relevant financial year and the immediately preceding financial year of the parent undertaking, meet the criteria in paragraph (c), or

(h) each subsidiary undertaking of a parent undertaking that comes within paragraph (g),

but does not include a company or an undertaking of a class exempted under section 48 (1)(j) from this section.

(2) A reference in this section to the directors of a relevant undertaking is to be construed in the case of an undertaking that does not have a board of directors as a reference to the corresponding persons appropriate to that undertaking.

(3) Subject to subsection (12), the Supervisory Authority may give notice to the directors of a relevant undertaking concerning its annual accounts where—

(a) a copy of the annual accounts has been sent out under section 159 of the Act of 1963 or laid before the undertaking at its annual general meeting or delivered to the registrar of companies, and

(b) it appears to the Supervisory Authority that there is, or may be, a question whether the annual accounts comply with the Companies Acts.

(4) The notice to the directors of the relevant undertaking must specify—

(a) the matters in respect of which it appears to the Supervisory Authority that the question of compliance with the Companies Acts arises or may arise, and

(b) a period of not less than 30 days within which those directors are required to give the Supervisory Authority an explanation of the annual accounts or to prepare revised annual accounts that comply with the Companies Acts.

(5) If before the end of the specified period, or such longer period as the Supervisory Authority may allow, the directors of the relevant undertaking prepare revised annual accounts, the Supervisory Authority may, taking account of the circumstances of the case and the degree of co-operation by the directors with the Supervisory Authority, require that undertaking to pay some or all of the costs the Supervisory Authority incurred under this section in relation to that undertaking.

(6) If at the end of the specified period, or such longer period as the Supervisory Authority may allow, the directors of the relevant undertaking have, in the Supervisory Authority's opinion, neither given a satisfactory explanation of the annual accounts nor revised them to comply with the Companies Acts, the Supervisory Authority may apply to the High Court for a declaration of non-compliance and an order under subsection (8).

(7) If an application is made to the Court under subsection (6), the Supervisory Authority shall give to the registrar of companies for registration—

(a) notice of the application, and

(b) a general statement of the matters at issue in the proceedings.

(8) If satisfied after hearing the application that the relevant undertaking's annual accounts referred to in subsection (3) do not comply with the Companies Acts, the Court may make a declaration to that effect and may, by order, do one or more of the following:

(a) require the directors to revise the annual accounts so that they comply with those Acts;

(b) give directions respecting one or more of the following:

(i) the auditing of the revised annual accounts;

(ii) the revision of any directors' report;

(iii) the steps to be taken by the directors to bring the court order to the notice of persons likely to rely on the annual accounts that were the subject of the declaration;

(iv) such other matters as the Court thinks fit;

(c) require the directors of the relevant undertaking to pay—

(i) the costs incurred by the Supervisory Authority under subsections (3) and (4) in relation to that undertaking, and

(ii) any reasonable expenses incurred by the relevant undertaking in connection with or in consequence of the preparation of revised annual accounts.

(9) For the purpose of subsection (8)(c), every director of the relevant undertaking at the time the annual accounts were approved is considered to have been a party to their approval unless the director shows that he or she took all reasonable steps to prevent their being approved.

(10) In making an order under subsection (8)(c), the Court—

(a) shall have regard to whether any or all of the directors who approved the annual accounts that were the subject of the declaration knew, or ought to have known, that they did not comply with the Companies Acts, and

(b) may exempt one or more directors from the order or may order the payment of different amounts by different directors.

(11) On the conclusion of the proceedings, the Supervisory Authority shall give to the registrar of companies for registration—

(a) a copy of the court order, or

(b) notice that the application has failed or been withdrawn.

(12) The Supervisory Authority shall consult with the Irish Financial Services Regulatory Authority before making any decisions under this section with respect to a company regulated by the latter Authority, including a decision to give notice under subsection (3).

(13) This section applies equally to revised annual accounts, in which case references to revised annual accounts are to be construed as references to further revised annual accounts.

(14) For the purpose of applying this section to a partnership that is referred to in Regulation 6 of the 1993 Regulations and that is a relevant undertaking—

(a) the partnership is to be treated as though it were a company formed and registered under the Companies Acts, and

(b) the section applies with any modifications necessary for that purpose.

(15) Where revised annual accounts are prepared under this section, then, subject to a direction given under subsection (8)(b), any provision of the Companies Acts respecting the preparation, auditing, circulation and disclosure of annual accounts applies with the necessary changes to the revised annual accounts.