New Filing Obligations with the Registrar of Companies
This issue of Getting It Right focuses on some frequently asked queries with respect to the new filing obligations resulting from the recent changes in the Companies Act (Chap. 386). It also gives some important information about the outline policy for the Maternity Leave Contribution.
Can private exempt companies elect not to publish the income statement?
In terms of article 183(2) of the Companies Act (Chap. 386) a company which qualifies as a small company in terms of article 185(1) and is a private company having the status of an exempt company, need not deliver to the Registrar the profit and loss account. If the directors elect to remove the income statement it is being suggested that the detail of the profit and loss account is removed and instead the following declaration is inserted “The directors have elected not to file the income statement in terms of article 183(2) of the Companies Act (Chap. 386)”. Furthermore the directors of such companies are required to make a declaration as referred to in Article 183 of the Companies Act (Chap.386), when submitting their companies’ annual accounts to the Registrar. A template of this declaration may be downloaded from the Registry of Companies website.
If the directors elect not to publish the income statement can a standard auditor’s report be filed, i.e. following international auditing standards?
ISA 700 (Revised) requires an auditor to form an opinion on whether the financial statements are prepared in accordance with the applicable financial reporting framework. Financial Statements as defined under ISA means “a complete set of general purpose financial statements, including the related notes”. Therefore an opinion is formed taking into consideration the complete set, which includes the income statement. If the company qualifies for exemption, the directors can elect not to deliver to the registrar the profit and loss account.
Is a small company still allowed to file abridged financial statements with the Registrar of Companies?
Under the Companies Act, companies are not eligible to prepare abridged financial statements for financial periods beginning on or after 1 January 2016.
Can companies adopt GAPSME retrospectively? If for example, a company was incorporated after 1 July 2015, the first audited financial statements will cover the period from the date of incorporation up to 31 December 2016. Can the financial statements be prepared using the GAPSME reporting framework?
GAPSME regulations cannot be applied retrospectively but are only applicable for financial periods beginning on or after 1 January 2016.
In determining whether an entity shall be classified as small or medium in 2016, is there a limit to how many years we should go back to establish the two consecutive years?
There is no limit to how many years one should go back. So much so that, in order to establish the size threshold in the first year of application of GAPSME, this could entail going back to the year of inception of the company. One must also remember that directors of companies qualifying as small companies who want to take advantage of any exemption granted to such companies by the Companies Act are required to make a declaration as referred to in Article 183 when submitting their companies’ annual accounts to the Registrar. A template of this declaration may be downloaded from the Registry of Companies website.
Can a company include additional information to that required by GAPSME, particularly in the case of small companies?
Yes of course, the regulations only specify the minimum requirements; including other information is therefore permitted.
Under the GAPSME reporting framework, the share capital note is no longer required for small companies. If there is an increase in the authorized and issued share capital of the company, should a note be included in the financial statements?
The note is no longer required, and therefore does not have to be included. Further disclosure is at the option of the directors.