Mark Butler CPA FCCA Partner, HLB Sheehan Quinn
The key changes for Property Management Companies introduced by the new Companies Act 2014 which commenced on the 1st of June 2014 are as follows:
"In my view the extension of audit exemption to management companies is very welcome and a necessary change. It did not make any sense that a company with its sole purpose of running the common services of a small apartment block were subject to the same audit regime as a large private or public company. In most cases there will no longer be a need for these companies to file accounts in the companies office. These changes should help in removing some of the compliance burden placed on property owners." said Mark Butler, Managing Partner, HLB Sheehan Quinn.
Companies Limited by Guarantee
Companies Limited by Shares
Management Companies which are limited by shares will be changed to a Designated Activity Company and therefore will be subject to different provisions.
In that regard a revision of the memorandum and articles should be considered.
Companies limited by guarantee and unlimited companies may now avail of the audit exemption which is a significant change from existing legislation. Under the Companies Act 1963-2013, the audit exemption applied to private limited companies only. Since a company limited by guarantee was not a private company, it was not able to avail of the audit exemption. However, the Act contains no such qualification and therefore Companies Limited by Guarantee or CLGs as the Act identifies them, may now avail of the audit exemption. This has immediate implications for some entities such as; charities that are companies and property management companies.
With respect to charities, it is possible that the Charities Regulatory Authority (CRA) may require any charities formed as companies to have an audit.
Under the new legislation, a company will now only have to meet two out of the three criteria (below) thus potentially enabling more companies to benefit from audit exemption. In addition to meeting two of the three criteria, the company must also file the current and preceding year’s annual return on time with the CRO. Failure to submit the annual return on time will prevent a company from having the option to claim audit exemption. The requirement to meet these criteria is with respect to the current period only and the previous financial results do not have to be considered.
Audit exemption criteria (Now 2 out of 3):
If one member for a public guarantee company – CLG, request that the company not avail itself of the exemption and serve notice in writing to this effect on the company in the financial year immediately preceding the financial year concerned or during the financial year concerned but not later than one month before the end of that year, the company must have an audit. (s.334, CA 2014).
If you wish to make this change, please contact us and we can assist you taking the necessary steps or explain the implications of not taking pro-active action.
If you have any questions, or want to discuss how the Companies Act 2014 impacts on you and your company, please feel free to give me a call. We would be delighted to assist you in any way that we can.