Company directors who fail to file annual returns could face up to six months in prison through a strategy soon to be deployed by the Companies Office.

The new strategy, part of a three-year plan to force company law compliance, represents a shift in thinking by the Companies Registration Office, which had focused previously on striking companies off the register rather than going after company directors.

Under the new strategy, cases would be brought against offending directors through the Chief State Solicitor's Office, said assistant registrar Mr Brendan Moylan.

A random computer process would target errant directors, he added.

Offenders could face a variety of penalties including £1,000 (€1,270) fines, up to six months' imprisonment or, for repeated offenders, disqualification from holding company directorships.

The shift in strategy is the second phase of a three-pronged attack against non-compliance with company law.

The first phase of the campaign has led to more than 40,000 company strike-offs from the register within 1 1/2 years.

Compliance rates have risen from 35 per cent to only 60 per cent during this period, however.

"We're unhappy that it's only 60 per cent [company compliance] after two years and the second prong in the attack will now come into play," said Mr Moylan.

Last year, the Companies Registration Office did not prosecute any directors.

Mr Moylan said no director was prosecuted because of the huge pressure on the Companies Office resources.

"We couldn't concentrate on the job at hand because we were busy building up our resources.

"In the past few years we've relocated from Dublin Castle to our present location, increased our staff from 89 to 120 and brought in a completely new computer system," said Mr Moylan.

The shift follows the passage of the Companies Amendment Act No 2 in mid-December which reduces the time allowed for companies to file returns from two to one year.

A company now has only 60 days from its 1999 a.g.m. which should be no later than December 31st, 1999, to file returns or it can be struck off the register or its directors may face prosecution.

"Ireland has always had a relaxed attitude to filing returns compared to other countries such as Finland where they get put off the register without any warnings issued by the Companies Office," said Mr Moylan.

"The new amendment means we can go after the companies more easily but it doesn't mean we will neglect the directors," he continued.

The third prong in the offensive against company non-compliance is expected to be rolled out mid-year.

A director of company law enforcement, with a staff of 30, not including several gardai, will be given wide-ranging powers of investigation and enforcement.