Stakeholders Implications Under Inaccurate Annual Returns Essay

Question:

Describe about the Stakeholders Implications Under Inaccurate Annual Returns.

Answer:

Australia securities and Investments Commission (ASIC) regulates Australian markets and financial services to ensure than there is a fair and transparent financial market in the country[1]. In the (ASIC ACT), ASIC is required to;

keep information that it has efficiently processed with immediate effect

encourage assertive and updated investor involvement

develop, facilitate and sustain financial structures performance

Ensure effective and efficient law enforcement.

Make timely public information about companies and other organizations


Under the cases investigated by ASIC, several implications might befall stake holders of the affected organization. Most affected stakeholders in such cases include shareholders, directors and managers. Auditors are obligated to account to ASIC infringements and alleged contraventions of the Corporations Act 2001 during conducting of an audit[2]. Failure to do so is considered contravention of his duties and breach of his contract. In such case an auditor is subjected to removal just as in case of Richard Langley Stewart Hill. If a company does not submit its Yearly Return in 28 days of the date to which it is made up, reminder s will first be sent to it by the Companies House. Nevertheless, if it still fails to convey its Annual Return, Companies House will finally be forced take to dissolve the company and remove it from the register. Failure to file Annual Return of a company in 28 days of the date to which it was made is considered a criminal offence by the law. Directors and, company secretaries if appointed might face personal fines of up to 5,000 US dollars and might still be ineligible of acting as directors in the future. The inaccurate returns that were originally submitted are still not removed by the Companies House. It can only be done through a court order[3]. Nevertheless, it is probable to make right data apprehended by Companies House by submitting correct Annual Return. One of the following approaches can be used to do that:

Change the made up date and file another return – corrections can sometimes be made by filing another Annual Return. However, the return date must not be, and successive Annual Returns will be due after a year of the new made-up date. Companies House filing fees will however require to be paid again. This will affect the profits of the company hence less dividends to the shareholders.

Second filings – using Companies House form RP04 or form LLRP04” – the company can make a ‘second filing’ to switch the erroneous Annual Return by submitting the amended Annual Return in a paper form in conjunction with a Form RP04 (or LLRP04 for Limited Liability Partnerships)[4].Regrettably, the ‘second filing’ cannot be made electronically. Use of this approach gives the company a chance of using the same made-up to date as the original incorrect return and it doesn’t require to pay another Companies House filing fee[5]. Nonetheless, a second filing can only be made using form RP04 if the actual incorrect Annual Return was full provided and on time.

If a company is traded on a significant market, shareholders with 5% or more should have their names and addresses included in the Annual Return[6]. A private or non-traded company should NOT include details of shareholders.

Bibliography

Austin, RP & Ramsay, IM. Ford’s principles of corporations law, 14th edn,. Butterworths, Chatswood, NSW: LexisNexis , 2010.

Cassidy, J. Corporations law, 3rd edn. Annandale, NSW. : Federation Press,, 2010.

Hanrahan, P, Ramsay, I & Stapledon, G. Commercial applications of company law, 15th edn,. North Ryde, NSW: CCH Australia Ltd, 2014.

Lipton, P & Herzberg, A. Understanding Company Law, 16th edn. Pyrmont, NSW: Lawbook Company, 2012.

Young, N, QC. "Corporate liability versus directors’ personal liability—have we gone too far or not far enough? A review of the standard of conduct required of directors under sections 180-184 of the Corporations Act." Company and Securities Law Journal, June 2008: 180-184.

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