In Ireland, companies are required to keep proper books of account which give a true and fair view of the company's financial affairs. This blog will examine some of the most frequently asked questions surrounding the financial year-end of Irish companies.
Is there a requirement to prepare Financial Statements?
Although exemptions such as audit exemption, filing exemption and abridgement exemption may be claimed in certain circumstances, all companies in Ireland are required to prepare statutory financial statements which must be laid before the members at the AGM. Every set of statutory financial statements must begin on the date immediately following the end date of the last set of financial statements. When producing the first set of financial statements or when changing the year-end, the financial statements may be prepared for a period up to 18 months. All other sets of financial statements must be made for a period which is no more than 7 days shorter or longer than 12 months.
Can a Company set its own Financial Year End?
Yes, most companies can choose the financial year-end. The most common financial year-end for companies in Ireland is 31st December. When deciding on a financial year-end, the directors of a company usually consider several factors such as tax reporting, compliance deadlines of the company and the financial year-end of associated companies. However, pursuant to section 288 of the Companies Act 2014, unless there are substantial reasons not to do so, the directors of a holding company must ensure that the financial year-end date of each of its subsidiary undertakings included in its consolidation coincide with that of the holding company.
Does the Annual Return Date (“ARD”) affect the Financial Year End?
In Ireland, the financial statements are filed in the Companies Registration Office together with the Annual Return. Although the financial year-end is not dependent on the ARD, the two are interlinked. Unless amended, the ARD of a company is set by the company’s date of incorporation. The annual return of a company cannot be made up to a date more than 9 months after the financial year-end. Consequently, companies which have ARDs more than 9 months after the financial year-end will need to bring their ARD forward to comply with this. It is usual practice for companies that have ARDs closely following their financial year-end to alter their ARD in order to provide them with the longest possible time to prepare their financial statements.
Is it possible to change the Financial Year End?
In certain circumstances, it is possible to change the financial year-end. The directors of a company may resolve to amend the financial year-end. Upon filing of the relevant Statutory form in the Companies Registration Office, a company may amend its current or previous financial year-end date. This is on the condition that the filing date for the year-end in question has not expired and the financial period is no more than 18 months. A company may only alter its financial year-end once every five years unless the company is making the change in order to wind up; has received a direction from the Director of Corporate Enforcement or the change is being made to coincide with the financial year-end of a holding or subsidiary company.
Compliance with the financial statements requirements and annual return requirements is very important for Irish companies with serious consequences for non-compliance. It is recommended that you seek the assistance of professionals when considering such matters. Corplaw has 35 years of experience in company law and compliance. If you have any questions in relation to your compliance please contact us.
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