District Court Application to Extend Time to File Annual Return

Requirement to File Annual Return 

Under Section 343 of the Companies Act 2014 (the Act), a company is required to deliver its Annual Return to the Companies Registration Office (the CRO) within 28 days of the Annual Return Date of the company, or if made up to an earlier date, within 28 days of that date.

There may be certain negative consequences for a company where it misses this deadline, such as the imposition of a late filing penalty, the loss of the company's audit exemption,  prosecution of the company and/or its directors (in instances of persistent late filing), and/or the possible involuntary strike-off and dissolution of the company.

Extension of Time – Impact of the Companies Act 2014
Prior to the coming into force of the Act, it was possible for a company to apply to the courts for an order extending the time in which to file its Annual Return but this application had to be made to the High Court.

Since the coming into force of the Act on 1 June 2015, it is now possible for this application to be made to either the High Court or the District Court (the costs of this application will be substantially lower now that the application can be made to the District Court). The Court may, if it is satisfied that it would be just to do so, make an order extending the time in which the Annual Return of the company may be delivered to the Registrar of Companies.

Procedure in the District Court
The application for an extension of time is made to the District Court in which the company's registered office is situated. It should be noted that only one court order may be made in respect of a particular year. The application is grounded on an Affidavit sworn by the Director or Secretary of the company which sets out the reasons for the delay in filing the Annual Return and why it would be just for the Court to order an extension of time. The CRO must be notified of the application, by serving a copy of the relevant documents on the CRO not later than 21 days before the hearing date. Following receipt of the documentation, the CRO will issue a letter to the applicant company/its solicitor and will send a copy of the letter to the relevant District Court Office. The requisite documentation in respect of the application must be filed by the company with the District Court Office not later than four days before the application date.

The company must have legal representation in Court for the application. If the court order extending the time in which to file is granted, the Order will show; (i) the date to which the extension is granted; and (ii) the date by which the order must be delivered to the CRO (which will normally be 28 days). The order must be submitted to the CRO within this time (failure to do so will mean that the CRO cannot accept it) and the company must then deliver (or electronically submit) its Annual Return to the CRO by the date to which the extension has been granted.

Effect of CRO Ezine dated 17 May 2016 and updated Information Leaflet No. 39
In an Ezine dated 17 May 2016, the CRO indicated that it had recently reviewed certain aspects of its role in the District Court process and, as a result, certain arrangements in relation to the process would apply with immediate effect. The CRO also appears to have updated the Information Leaflet which it has published on the process, Information Leaflet No. 39, in May 2016 to reflect its review of its role in the process.

The updated Information Leaflet No. 39, which is available on the CRO's website, states that the Registrar of Companies (the head of the CRO) reserves the right to object to any application made to the District Court for an extension of time under s. 343(5) of the Companies Act 2014, and that the Registrar will object if any one of the following circumstances apply:-

1. The annual return should have been delivered to the CRO prior to 1 June 2015; 
    
2. The reasons provided in the Affidavit and the supporting facts do not, in the opinion of the Registrar, explain or verify why it was not possible to deliver the annual return to the CRO within the time provided by the Act; 
    
3. The applicant company is a dissolved company; or
    
4. The company has previously obtained an extension of time for the same annual return year.

Further information is contained in the Ezine to explain why the Registrar will object to the application in the above instances. The updated Information Leaflet also states that the Registrar reserves the right to be represented in the District Court in any case where an application is made for an extension of time to file an Annual Return.

"Not Possible" to File on Time
With regard to the CRO's requirement for a company to show that it was "not possible" to deliver the annual return on time, the CRO Ezine states as follows:-

"The Registrar reserves the right to object to any application in the District Court for such an Order where, in the opinion of the Registrar, the reasons provided in the Affidavit and the supporting facts do not explain or verify why it was not possible to deliver the annual return to the CRO within the time permitted by sections 343(2) or 343(3), Companies Act 2014, and are therefore not sufficient to warrant setting aside the company’s legal obligations under the Act."

This wording suggests that, in the words of the CRO, a company must be able to show that it was not possible for the company to file the Annual Return within the prescribed time (rather than merely accidentally missing the deadline), which is a high bar to reach. Furthermore, no guidance is provided in the Ezine or in Information Booklet No. 39 as to what supervening events or circumstances would or would not, in the CRO's view, render it impossible for a company to deliver the return.

The Act gives the Court the power to extend the time to file the Annual Return if it considers that it would be "just" to do so. The Act does not indicate that the fact that the CRO is unconvinced that it was "not possible" for the return to be filed on time is a ground for refusing to grant the extension. However, this could be a factor which might influence the Court's decision.

In the absence of the CRO publishing guidance on what it believes to be events or circumstances where it is impossible to deliver a return, this uncertainty may have the practical effect of deterring companies which may have simply forgotten to make the filing on time, but which may not be able to show that it was impossible for them to file on time, from making an application to the District Court. It remains to be seen what approach will be taken by the various District Court judges to objections raised by the CRO in respect of these applications.

For further information please contact Rowena Caulfield.

Date published: 6 September 2016