PART III

Exemption from requirement to have accounts audited

31. —In this Part—

“the Act of 1986” means the Companies (Amendment) Act, 1986 ;

“the exemption” means the non-application, by virtue of section 32 , of section 160 of the Principal Act and the provisions referred to in subsection (2) of section 32 ;

“financial year” means the financial year of the company concerned;

“private company” does not include an unlimited company other than such a company (being a private company) to which Part III of the 1993 Regulations applies;

“the 1993 Regulations” means the European Communities (Accounts) Regulations, 1993 (S.I. No. 396 of 1993).

32. —(1) Subject to section 33 (1), if—

(a) the directors of a private company are of opinion that the company will satisfy the conditions specified in subsection (3) in respect of a financial year and decide that the company should avail itself of the exemption in that year (and they record that decision in the minutes of the meeting concerned), and

(b) unless that financial year is the first financial year of the company, the company satisfied the said conditions in respect of the preceding financial year,

then—

(i) without prejudice to section 35 , section 160 of the Principal Act (which requires the appointment of an auditor to a company) shall not apply to the said company in respect of that financial year, and

(ii) unless and until circumstances, if any, arise in that financial year which result in one or more of the said conditions not being satisfied in respect of that year, the provisions mentioned in subsection (2) shall not apply to the said company in respect of that year.

(2) The provisions mentioned in subsection (1) are those provisions of the Companies Acts, 1963 to 1999, (other than this Part) the 1993 Regulations and the European Communities (Single— Member Private Limited Companies) Regulations, 1994 (S.I. No. 275 of 1994), that apply to the company, being provisions that—

(a) confer any powers on an auditor or require anything to be done by or to or as respects an auditor,

(b) make provision on the basis of a report of an auditor having been prepared in relation to the accounts of the company in a financial year,

and, without prejudice to the generality of the foregoing, include the provisions specified in the First Schedule.

(3) The conditions mentioned in subsection (1) are that—

(a) in respect of the year concerned—

(i) the company is a company to which the Act of 1986 applies,

(ii) the amount of the turnover of the company does not exceed £250,000,

(iii) the balance sheet total of the company does not exceed £1,500,000,

(iv) the average number of persons employed by the company does not exceed 50,

(v) the company is not—

(I) a parent undertaking or a subsidiary undertaking (within the meaning of the European Communities (Companies: Group Accounts) Regulations, 1992 (S.I. No. 201 of 1992)),

(II) a holder of a licence under section 9 of the Central Bank Act, 1971 , or a company that is exempt from the requirement under that Act to hold such a licence,

(III) a company to which the European Communities (Insurance Undertakings: Accounts) Regulations, 1996 (S.I. No. 23 of 1996) apply, or

(IV) a company referred to in the Second Schedule (other than paragraph 18 thereof),

and

(b) a failure to comply with the requirement of section 127(1) of the Principal Act as regards the forwarding, to the registrar of companies, of an annual return in respect of the company does not occur in the year concerned.

(4) In this section “amount of turnover” and “balance sheet total” have the same meaning as they have in section 8 of the Act of 1986.

(5) For the purpose of subsection (3)(a)(iv), the average number of persons employed by a company shall be determined by applying the method of calculation prescribed by paragraph 42(4) of the Schedule to the Act of 1986 for determining the number required by subparagraph (1) of that paragraph to be stated in a note to the accounts of a company.

(6) In the application of this section to any period which is a financial year of a company, but is not in fact a year, the amount specified in subsection (3)(a)(ii) shall be proportionally adjusted.

(7) Each occasion of an amendment of the kind referred to in subsection (8) being effected shall operate to enable the Minister to amend, by order, subparagraphs (ii) and (iii) of subsection (3)(a) by substituting for the amount and the total, respectively, specified in those provisions a greater amount and total (not being an amount or total that is greater than the amount or total it replaces by 25 per cent.).

(8) The amendment referred to in subsection (7) is an amendment of the total and the amount specified in paragraphs (a) and (b), respectively, of section 8(2) of the Act of 1986, being an amendment made for the purpose of giving effect to an act adopted by an institution of the European Communities.

33. —(1) A company shall not avail itself of the exemption in a financial year if any member or members of the company holding shares in the company that confer, in aggregate, not less than one-tenth of the total voting rights in that company requests or request the company not to avail itself of the exemption in that year.

(2) A request referred to in subsection (1) shall be contained in a notice served by the member or members concerned on the company in the financial year preceding the financial year concerned (but not later than 1 month before the end of that preceding year).

(3) A notice served under and in accordance with subsection (2) shall be valid notwithstanding that subsection (1) is not in operation on the date of its being served.

(4) If a company avails itself of the exemption in a financial year, the balance sheet prepared by the company in respect of that year shall contain a statement by the directors of the company that, in respect of that year—

(a) the company is availing itself of the exemption (and the exemption shall be expressed to be “the exemption provided for by Part III of the Companies (Amendment) (No. 2) Act, 1999)”,

(b) the company is availing itself of the exemption on the grounds that it satisfies the conditions specified in section 32 ,

(c) no notice containing the request referred to in subsection (1) has been served, in accordance with subsection (2), on the company, and

(d) the directors acknowledge the obligations of the company, under the Companies Acts, 1963 to 1999, to keep proper books of account 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 to otherwise comply with the provisions of those Acts relating to accounts so far as they are applicable to the company.

(5) The statement required by subsection (4) shall appear in the balance sheet in a position immediately above the signatures of the directors required by section 156 of the Principal Act or, as the case may be, the statement required by section 18(2) of the Act of 1986.

(6) If subsection (4) or (5) is not complied with, the company and every officer of the company who is in default shall be guilty of an offence and be liable to a fine.

(7) The reference in subsection (1) to a voting right in a company shall be construed as a reference to a right exercisable for the time being to cast, or to control the casting of, a vote at general meetings of members of the company, not being such a right that is exercisable only in special circumstances.

34. —(1) If a company—

(a) decides that the appointment of a person as auditor to the company should not be continued during the whole or part of a financial year in which the exemption is being availed of in relation to the company, and

(b) decides, accordingly, to terminate the appointment of that person as auditor to the company,

then—

(i) that person shall, within the period of 21 days beginning on the date of his or her being notified by the company of that decision, serve a notice on the company containing the statement referred to in subsection (2),

(ii) unless and until that person serves such a notice, any purported termination of his or her appointment as auditor to the company shall not have effect.

(2) The statement to be contained in a notice under subsection (1)(i) shall be whichever of the following is appropriate, namely—

(a) a statement to the effect that there are no circumstances connected with the decision of the company referred to in subsection (1) that he or she considers should be brought to the notice of the members or creditors of the company, or

(b) a statement of any such circumstances as aforesaid.

(3) Where a notice under subsection (1)(i) is served on a company—

(a) the auditor concerned shall, within 14 days after the date of such service, send a copy of the notice to the registrar of companies, and

(b) subject to subsection (4), the company shall, if the notice contains a statement referred to in subsection (2)(b), within 14 days after the date of such service, send a copy of the notice to every person who is entitled under section 159(1) of the Principal Act to be sent copies of the documents referred to in the said section 159(1).

(4) Copies of a notice served on a company under subsection (1) need not be sent to the persons specified in subsection (3)(b), if, on the application of the company concerned or any other person who claims to be aggrieved, the court is satisfied that the notice contains material which has been included to secure needless publicity for defamatory matter and the court may order the company's costs on an application under this subsection to be paid in whole or in part by the auditor concerned notwithstanding that he or she is not a party to the application.

(5) Subsection (2A) (inserted by the Companies Act, 1990 ) of section 161 of the Principal Act shall not apply to an auditor as respects his or her removal from office in the circumstances referred to in subsection (1).

35. —(1) Whenever the exemption ceases to have effect in relation to a company by reason of circumstances referred to in section 32 (1)(ii) arising in the financial year concerned, it shall be the duty of the directors of the company to appoint an auditor to the company as soon as may be after those circumstances arise and such an appointment may be made by the directors notwithstanding the provisions of section 160 of the Principal Act.

(2) An auditor appointed pursuant to subsection (1) shall hold office until the conclusion of the next meeting of the company held after his or her appointment at which accounts are required to be laid.

(3) If the directors of the company fail to carry out their duty under subsection (1), the company in general meeting may appoint an auditor to the company and subsection (2) shall apply to an auditor appointed by it.

36. —This Part shall apply to a company as respects a financial year that commences on or after the commencement of this Part.

37. —(1) If a person in any return, statement, balance sheet or other document required by or for the purposes of any provision of this Part wilfully makes a statement, false in any material particular, knowing it to be so false, he or she shall be guilty of an offence.

(2) A person guilty of an offence under this section shall be liable—

(a) on summary conviction, to a fine not exceeding £1,000 or imprisonment for a term not exceeding 12 months or both, or

(b) on conviction on indictment, to a fine not exceeding £10,000 or imprisonment for a term not exceeding 3 years or both.

38. —This Part shall apply to a partnership to which Part III of the 1993 Regulations applies as this Part applies to a private company with the following modifications—

(a) the substitution in this Part for references to section 160 of the Principal Act of references to Regulation 22 of the 1993 Regulations,

(b) the substitution in this Part for references to other provisions of the Companies Acts, 1963 to 1999, of references to so much of those provisions as are applied to partnerships by the 1993 Regulations,

(c) the substitution in this Part for references to directors of a company of references to partners of a partnership,

and any other necessary modifications (including any modifications necessary to take account of the fact that such partnerships are unincorporated).

39. —Nothing in this Part shall authorise the removal of an auditor from office which, apart from this Part, would not be lawful.