Rules relating to the automatic loss of audit exemption relaxed

The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (Commencement) Order 2025 (SI 325/2025) brings section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (the ”2024 Act”) into effect from 16 July 2025. Section 22 amends the relevant section in the Companies Act 2014 which imposed an automatic loss of audit exemption for two financial years on a company entitled to avail of the audit exemption where that company was late in filing its annual return at the Companies Registration Office (CRO).

With effect from midnight on 15 July 2025, companies which avail of the audit exemption (eg micro and small companies and dormant companies) and which are late in filing their annual return, will not automatically lose their audit exemption for the first instance of late filing. The loss of the audit exemption for two financial years will instead arise only on the second and subsequent instance of late filing within a five consecutive year period. This should ease the compliance burden on small companies and help them avoid significant audit costs.

Prior to the commencement of section 22 of the 2024 Act, the penalties imposed on a company for failing to meet its annual filing deadline date (i.e. by not filing within 56 days from the annual return date), included a late filing fee and the automatic loss of audit exemption for two financial years. If the filing deadline date was missed, these penalties were automatically imposed on the company.

While the rules relating to the automatic loss of audit exemption have helpfully now been relaxed, late filing fees will continue to be imposed. Therefore, it is very important for all companies to continue to file their annual returns on time and before the relevant annual deadline date to avoid being in breach of the Companies Act 2014 and to avoid the automatic late filing fees.

It is also important to note that the amendment made by section 22 only applies to a micro or small company or a dormant company availing of the audit exemption, it does not apply to companies availing of the exemption within a micro or small group. Therefore, if a company within a micro or small group is late in filing its annual return, the audit exemption will be lost to that company and other Irish companies within the group on the first instance of late filing for the two financial years immediately succeeding the relevant financial year.

In relation to the sections of the 2024 Act not yet commenced, including the sections which require new “prescribed forms” to be filed as part of the summary approval procedure, these are expected to come into effect later in 2025. For more information and detail on the amendments made (and to be made) to the Companies Act 2014 by the 2024 Act, please refer to our previous briefings here and here.

For a link to the CRO’s announcement, click here. For a link to section 22 of the 2024 Act and SI 325/2025, click here and here.

Thanks to Tracy MacDevitt (Professional Support Lawyer) and Aidan Rafferty (Assistant Head of Company Secretarial) for contributing to this briefing.