Lawmakers in Ireland have recently been discussing the largest piece of legislation in the history of the State. The Companies Bill 2012 consolidates 16 existing Companies Acts - dating from 1963 to 2013 - into one single piece of legislation. It also includes undertakings from EU legislation, which harmonise laws across the continent and add to the size and complexity of Ireland's company law.
It is clear the Bill will greatly benefit business operations in Ireland as the main changes included will give Irish companies greater flexibility in a number of ways.
- The Private Company Limited by Shares which we are familiar with will be known as a Company Limited by Shares ("CLS").
- Companies will now only require one director and not two as is currently the case
- Directors' common law and equitable duties will be codified making the law more transparent and accessible.
- The doctrine of Ultra Vires (acting outside its powers) will be removed which will result in there being no requirement for a company to have an objects clause. This type of company will have the power to carry out any activity which its Directors determine. If a company wishes to retain or restrict its objects clause then it will have to re-register as a Designated Activity Company ("DAC").
- A CLS will be able to engage in domestic mergers similar to those which are currently only possible in the case of cross-border mergers. Statutory mechanism is provided whereby two Irish companies can merge so that the assets and liabilities (and identity) of one are transferred to the other, before the former is dissolved.
- A CLS will not be permitted to list any securities, whether shares or debts - in so providing the law relating to the model private company can be kept simple. Other types of private company such as DACs will continue to be allowed to list debt securities.
- There will be no requirement to hold an actual, physical annual general meeting and may be conducted in writing.
- Guarantee companies and dormant companies will be able to exempt themselves from audits. This will apply to companies in the voluntary sector and charities.
- Rather than have a Memorandum of Association and Articles of Association, a new limited company will only have to have a single-document constitution.
- Small companies will be able to apply to the Circuit Court to enter examinership instead of applying to the High Court. This will have the primary benefit of reducing costs.
Other changes include streamlining the regime for external companies operating in Ireland, enabling them to can register a 'branch' in Ireland. Currently, a foreign company which operates in Ireland from a fixed address must file its constitutional documents, a list of its directors, and the address of its "place of business" in Ireland with the Company Registration Office ("CRO"). The Bill means that, as long as a company is registered in the EU, then a "branch" needs only to file annual returns with the CRO.
The Companies Bill 2012 passed Committee Stage on 6 November 2013. It is hoped that the bill, once it completes its passage through the Irish Parliament this year, will be enacted and enforced in mid 2014. TMF Group will closely follow this exciting development in Irish business and keep our clients, new and existing, informed at every step.
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