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Section 697 of The Companies Act No. 17 of 2015: Application to the Court to rectify defective annual financial statement or directors’ report of company

    

(1) If at the end of the period referred to in section 696(2), or such extended period as the Cabinet Secretary may allow, it appears to that Secretary that the directors have not—
(a) given a satisfactory explanation of the relevant financial statement or directors' report; or
(b) prepared a revised financial statement or directors' report that complies with the requirements of this Act, the Cabinet Secretary, or a person authorised by the Cabinet Secretary in accordance with section 698, may apply to the Court for a declaration and order under subsection (4).
(2) On making an application under subsection (1), the Cabinet Secretary or authorised person shall lodge with the Registrar for registration a notice of the application, together with a general statement of the matters in issue in the proceedings.
(3) The directors of the company in respect of which an application is made under subsection (1) are entitled to be served with a copy of the application and to appear as respondents at the hearing of the application.
(4) If, on the hearing of an application made under subsection (1), the Courtis satisfied that the relevant financial statement or report does not comply with the requirements of this Act, it may make a declaration to that effect and order the directors of the company concerned to prepare a revised financial statement or directors' report that complies with the requirements of this Act.
(5) If the Court makes an order under subsection (4) requiring directors to prepare a revised annual financial statement, it may also give directions for—
(a) the auditing of the statement;
(b) the revision of any relevant directors' remuneration report, directors' report or summary financial statement;
(c) the taking of steps by the directors to bring the making of the order to the notice of persons likely to rely on the previous financial statement; and
(d) such other matters as the Court considers appropriate.
(6) If the Court makes an order under subsection (4) requiring the preparationof a revised directors' report, it may also give directions for— (a) the review of the report by the company's auditors;
(b) the revision of any relevant summary financial statement;
(c) the taking of steps by the directors to bring the making of the order to the notice of persons likely to rely on the previous report; and (d) such other matters as the Court considers appropriate.
(7) If the Court finds that the company's financial statement or directors' report did not comply with a requirement of this Act, it may order all or part of—
(a) the costs of and incidental to the application; and
(b) any reasonable expenses incurred by the company in connection with, or in consequence of, the preparation of a revised financial statement or a revised directors' report, to be borne by such of the directors as were party to the approval of the defective statement or report.
(8) For the purpose of subsection (7), each person who was a director of the company at the time of the approval of the annual financial statement or directors' report is taken to have been a party to the approval unless the person proves that the person took all reasonable steps to prevent the approval from being given.
(9) In making an order under subsection (7), the Court—
(a) is required to have regard to whether the directors who were party to the approval of the defective statement or report knew or should have known that the statement or report did not comply with the requirements of this Act; and
(b) may exclude one or more directors from the order or order the payment of different amounts by different directors.
(10) At the conclusion of proceeding under this section, the applicant shall lodge with the Registrar for registration a copy of the order of the Court order or, if the application has failed or was withdrawn, a notice giving details of the failure or withdrawal.
(11) This section applies equally to a revised financial statement and a revised directors' report, in which case it has effect as if a reference to a revised financial statement or revised directors' report were a reference to a further revised financial statement or further revised directors' report.

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Disclaimer: This document is not to be taken as legal advise.

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