Under Irish law, every company must have its financial statements audited by a statutory auditor, unless it is eligible for, and avails of, an exemption. Until recently, under section 363 of the Companies Act 2014, any company that failed to file its annual return within 56 days following its annual return date was no longer entitled to avail of this exemption for the following two years, effectively as a penalty for late filing.

It is however no longer the case that a company that files a single late annual return with the Companies Registration Office will automatically lose its right to avail of an audit exemption.  Section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024, as commenced by the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (Commencement) Order 2025 (SI 325/2025) substitutes a new provision in place of the aforementioned section 363 of the Companies Act 2014, with effect from 16 July 2025.

Under the amended legislation, a company will only lose its audit exemption (as before, for the next two financial years following the relevant financial year) if it files its annual return late in respect of a financial year (the “relevant financial year”) and has previously filed late in any of the 5 years immediately preceding the relevant financial year. This effectively introduces a “two strikes” rule.

Moreover, late filing of a company’s first annual return following incorporation, or the failure of a company to deliver an annual return before 16 July 2025, will not be considered as prior failures against the company (meaning that no company is likely to lose its exemption as a result of filing late in 2025).

Late filing penalties will continue to apply, and it continues to be the case that late filing is an offence by the company (and potentially its directors) and is a ground for the company’s involuntary strike-off.

Arthur Cox continues to work with its clients to ensure that all filings are completed appropriately and on a timely basis. However, the new amendment does give a degree of flexibility where a company may have an issue in a particular year with its filings.

For more on this and any other Company Secretarial matters, please contact Ciaran Flynn, Dáibhí O’Leary, James Heary or your usual Arthur Cox Governance and Consulting Services contact.