April 2025 - Komsec Limited

Good News for Small Businesses: New Audit Exemption Rules

Get ready for a welcome change! The recent Companies Act 2024 is bringing in a more forgiving approach to audit exemptions. One of the most anticipated updates is the planned removal of the automatic loss of audit exemption for companies that file their annual return late for the first time.

Currently, even a single late filing could mean losing your audit exemption for two years But the upcoming Section 22 of the 2024 Act is set to change all that. Once it’s in effect, you’ll only lose your audit exemption if you file late two or more times within a five-year period.

CRO Aiming for End of May Implementation

The CRO is working hard and aiming to have these changes live by the end of May. The proposed change requires amendments to CORE, the CRO’s online filing platform. A commencement order need to be signed detailing effective date the section i when the section will come into effect and what date or financial years it will apply to. As soon as this have been confirmed we will provide an update.

This means that if your company experiences a one-off late filing within a five-year window, you shouldn’t automatically lose your eligibility for an audit exemption.

Tech Hurdles and Official Go-Ahead

It’s worth noting that this positive change requires updates to CORE, the CRO’s online filing system. Following these technical adjustments, an official commencement order will need to be signed. This order will specify exactly when this new rule kicks in and which financial years it will apply to.

The Big Picture: A More Gradual Approach

Once this new rule is implemented, it will replace the current strict system. Instead of an automatic penalty for a first-time slip-up, there will be a more gradual system. Companies will have a bit more flexibility, allowing for a single late filing within a five-year period without the immediate consequence of losing their audit exemption.

Important Note for Small Groups:

It’s crucial to remember that these changes do not apply to small group situations. The existing rule still stands: if even one company within a small group files its annual return late, the entire group will likely lose its audit exemption for the following two financial years.

Stay tuned for further updates as we get closer to the official implementation date! This change promises to be a significant benefit for many small and medium-sized companies.

The commencement of S.176A of the Companies Act 2014 – enabling companies to hold General Meetings (Member meetings) electronically – has been long anticipated.

Owing its origins to the health and travel restrictions imposed during Covid in 2020 when companies needed an alternative to holding physical general meetings. The commencement of S.176A now puts the ability to convene and hold a general meeting electronically on a permanent footing. It is hoped that enabling electronic participation will encourage members who might have previously been put off by the logistics of travel to attend electronically.

S.176A provides companies with the option of convening General Meetings by way of Electronic Communications Technology (ECT) either in whole or in part. In brief ECT must:

enable all participants to have a reasonable opportunity to participate as fully as if they were attending the meeting in person;
be readily accessible and usable by all participants;
ensure the meeting is clearly audible; and
facilitate the casting of votes.

No doubt there will be learning curve, certainly, there is an onus on companies to ensure that the systems put in place to enable electronic general meetings are compliant and secure. Bless the IT staff trying to get their heads around the logistics of running electronic meetings especially if a Poll is ever required – so glad that is not my problem!

Just as holding director meetings electronically has become a standard option so, in time, will electronic general meetings. In the meantime, if you have any queries contact us anytime.