The Companies Acts 1963-2013 contained a number of provisions giving rise to offences, but there was no express system of penalties as between these different offence provisions.
The new Companies Act 2014 contains a formal categorisation of offences ranked on a scale from 1 to 4 for breaches of company law and directors must be wary of their obligations under the Acts or face possible criminal prosecutions.
The most serious offences are contained in Category 1 and are punishable by fines of up to €500,000 and/or a maximum 10 years imprisonment if tried on indictment. These include offences such as false accounting and fraudulent trading.
Category 2 sets out the punishment for offences ranging from financial assistance, dishonest dealings before a company becomes insolvent or goes into liquidation, failure to keep adequate accounting records, failure to communicate with and make full disclosure to statutory auditors and other similar offences. If found guilty of offences under this category, directors or any other officer of the company who is in default, face fines of up to €50,000 and/or a term of imprisonment of up to 5 years.
Categories 3 and 4 apply to less serious offences under the Act. Category 3 offences include non-filing of annual returns, failure to hold an AGM and trading under a misleading name or without a trading certificate. If convicted of a category 3 offence, a director faces a Class A fine (up to €5,000) and/or a maximum term of imprisonment of 6 months. Category 4 offences on the other hand do not attract a term of imprisonment but directors may still face possible fines of up to €5,000. An example of a category 4 offence includes failure to make routine filings.
Under the new Act There will continue to be a number of exceptional categories in the case of more serious offences such as market abuse, prospectus and transparency. These offences attract higher tariffs with fines ranging from €100,000 to €10,000,000 and terms of imprisonment of up to 10 years.
Directors must be extremely cautious with regard to knowing their obligations under the Companies Act 2014. Directors have a duty to ensure compliance with the Act and therefore should take all steps necessary to ensure that appropriate policies and procedures are in place in order to discharge this duty.
Contact Ursula McMahon for more information.
This publication is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Leman Solicitors for any action taken or not taken in reliance on the information set out in this publication. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. Any and all information is subject to change.