The Companies Registration Office (CRO) is introducing a more forceful prosecution policy against companies that are late in filing their returns.

Persistent late filers will be pursued by way of fines and court actions, and continued refusal to comply with the rules will result in the loss of limited liability, the companies registrar, Mr Paul Farrell, said yesterday. "The carrot hasn't worked" for companies that are still filing late returns, "so we have to employ the stick", he said.

Using a new system, the Integrated Enforcement Environment, the CRO can more easily identify companies that are consistently misbehaving. It has identified the 5,000 least-compliant companies on the registrar.

The CRO is to decide which of its five major enforcement options it will use against these companies. The options are: on the spot fines; strike off; prosecution of the company; prosecution of the directors; and a High Court application directing the company and officer to file the returns.

"The reason we have not been doing this before is purely practical. When over three-quarters of companies did not file returns at all, trying to pursue them was impossible. We'd have needed thousands of staff and massive financial resources," said Mr Farrell.

"Now that the numbers have been brought down to a much more reasonable level, pursuing the worst offenders is both possible and desirable."

Public information campaigns have led to average compliance rising from 15 per cent at the start of the 1990s to 84 per cent now. However, the 84 per cent includes a lot of companies that file, but not on time. Only 63 per cent of companies filed on time in 2003.

Mr Farrell said that some companies did not file on time because they were too busy, while others did so on purpose believing it gave a commercial advantage over competitors.

Last year the office took in €28 million in fines from non-compliant companies. However, Mr Farrell said the CRO did not want this money, it wanted companies to file on time.