(i) Implementation of the Companies Bill

The Report and Final stages of the Companies Bill 2012 were completed on 30 September 2014, when all of the 164 amendments tabled by the Department of Jobs, Enterprise and Innovation were agreed to.

Dáil Eireann must approve the Bill again however, because the amendments proposed and made in the Seanad, though introduced by the Government, have to be approved by the Dáil before the Bill can be formally passed by both Houses of the Oireachtas. No date has yet been announced for the Dail approval.

As was the case with many of the changes previously proposed and agreed during the passage of the Bill through both the Dáil and the Seanad, many of the most recent changes were of a technical nature, or were inserted for the purposes of clarification.

It is now expected that the Companies Bill will not be enacted until December 2014 at the earliest. Notwithstanding the date of enactment of the Bill, the commencement date of the Act will be 1 June 2015.

Private companies limited by shares will be given an 18 month transitional period to take certain action as a result of the introduction of the Act. The Minister for Jobs, Enterprise and Innovation may choose to extend this by a further 12 months. The transitional period will give directors and shareholders the time to decide between registering as a new-form company ("CLS") and registering as a designated activity company ("DAC"), or another type of company (public limited company, Societas Europaea, Company Limited by Guarantee). Where a company takes no action, it will be deemed to have become a CLS on the expiry of the transition period. It is to be noted that many of the changes will, however, come into effect immediately.

By way of summary, some of the key changes under the Companies Bill include:

The Codification of Directors' Common Law Fiduciary Duties

The Companies Bill gives statutory recognition to the current common law and equitable principles regarding director's duties which will ensure greater clarity for directors.

New Model Company – Private Company Limited by Shares

The new model private company limited by shares is intended to replace the existing private company limited by shares. There are many similarities between these legal entities, however there are some important changes such as:

  • A model company limited by shares can be formed with just one director; and
  • A model company limited by shares will have unlimited legal capacity and the "ultra vires" rule, whereby a company's legal capacity is limited to the objects set out in its memorandum of association, will be abolished.

Elective Regime

All private companies will be obliged to either register as a designated activity company or adopt a new form of constitution and be registered as a private company limited by shares within the 18 month transition period. Otherwise, the private company will be deemed to be a private company limited by shares and a default form of constitution deemed to have replaced its memorandum and articles of association.

Summary Approval Procedure

The new summary approval procedure will authorise activities that might otherwise require High Court sanction or approval to be approved by the shareholders of a company. In certain circumstances, a reduction of capital or a merger may be effected without the need for High Court approval once the process set out under the Companies Bill is complied with.

Directors' Compliance Statements

Directors of the following companies will be obliged to sign a compliance statement acknowledging responsibility for compliance with company law obligations:

  • Public Limited Companies; and
  • "Large" private companies limited by shares, designated activity companies and guarantee companies (i.e. which have a balance sheet total exceeding €12.5 million and a turnover exceeding €25 million).

Directors of unlimited companies and investment companies are excluded from these obligations.

Changes to the Insolvency and Corporate Recovery Regimes

The Companies Bill proposes a welcome consolidation and modernisation of the law relating to liquidations, receiverships and examinerships. The Companies Bill seeks to reduce the Court's supervisory role in Court liquidations such that it is more closely aligned to creditors' voluntary liquidations and introduces greater consistency between the three types of liquidations, being members' voluntary, creditors' voluntary and Court liquidations. The Companies Bill also proposes more extensive powers of intervention and scrutiny over liquidators for the Director of Corporate Enforcement. While the changes in relation to examinerships are relatively modest, the Companies Bill does also reform and consolidate the law relating to receivers including, for example, providing that receivers' powers will be enumerated in a non-exhaustive list, that list being without prejudice to powers which may be granted by a debenture.

Re-classification of all Company law offences

All company law offences have been allocated into four categories of offences with penalties attaching to each offence.

Priority of charges and registration of charges

Where security is taken over assets which do not require specific registrations for priorities in registries other than the Companies Registration Office (such as the Land Registry), the current law provides that the priority rests with the creditor who has taken the security first in time. It is proposed under the Companies Bill that this will no longer be the case and instead where security is taken over such assets, the priority will rest with the creditor who has been the first to register the security interest with the Companies Registration Office. In addition, whilst the existing procedure for the registration of the particulars of charges with the Companies Registration Office within a 21 day period will remain (the "one stage procedure"), a new "two stage procedure" will also be introduced for the registration of the particulars of charges.

Further information relating the technical amendments of the Companies Bill are available accessing the following link:


(i) IOSCO publishes Responses to Consultation on Code of Conduct Fundamentals for Credit Rating Agencies

The International Organization of Securities Commissions (IOSCO) updated the publications section of its webpage on 15 July 2014 in order to provide links to the public responses that have been received to its consultation, which was published in February 2014, on revisions to the code of conduct fundamentals for credit rating agencies ("CRAs") (CR01/2014). Some of the respondents included The European Association of Credit Rating Agencies (EACRA), FitchRatings, Moody's Investor Service and Standard & Poor's Ratings Services.

(ii) ESMA Consults on Guidelines on Periodic Information Submitted to it by CRAs

ESMA has commenced a consultation in respect of new supervisory guidelines concerning the material periodically submitted by CRAs to ESMA. The objective of the consultation paper is to make certain that the information that CRAs are asked to submit aids ESMA's supervisory work in terms of identifying the key risks in the CRA sector. The final date for comments is 31 October 2014.

Registered CRAs must periodically report to a Central Repository ("CEREP") and the Supervision of CRAs Tool ("SOCRAT"). All registered and certified CRA must make available information on the historical performance of their ratings on CEREP while SOCRAT will facilitate the processing of data in a standard and automatic manner and support ESMA CRA Unit in the conduct of the supervisory activities. Additionally CRAs must notify ESMA of amendments to their original conditions for registration and submit periodically to ESMA information in compliance with ESMA's Guidance on the enforcement practices and activities. CRAs must also submit annually information regarding their revenues for the calculation of the supervisory fees and market share to ESMA. Finally, CRAs submit to ESMA periodically other information that is used for on-going supervisory purposes.

As part of the supervision mandate conferred to ESMA by the Regulation, ESMA will also request CRAs to submit ongoing information on their ratings activity. To support an efficient, standardised and secure treatment of this data, ESMA is developing, for the sole purpose of internal supervision, the Supervision of CRAs Tool (SOCRAT). The tool will facilitate the processing of such data in a standard and automatic manner and support ESMA CRA Unit in the conduct of the supervisory activities.

Article 16 of EU No 1095/2010 of the European Parliament and of the Council of 24 November 2010 proposes the guidelines, and enables ESMA to publish guidelines addressed to financial market participants with the aim of creating reliable, capable and effective supervisory procedures. These proposed guidelines will substitute CESR's Guidance on the enforcement practices and activities to be conducted under Article 21.3(a) of the Regulation (ESMA/2010/944) of 30 August 2010.

The consultation paper should be by read by CRAs (as defined in Article 3(1)(b) of the CRA Regulation), companies which have applied for registration or are considering applying for registration, competent authorities, and consumer groups. The consultation paper can be viewed via the following link:

(iii) ESMA Publishes Technical Advice on Creditworthiness Assessment for Sovereign Debt under CRA Regulation

ESMA published technical advice (ESMA/2014/850) to the European Commission on the development of an EU creditworthiness assessment for sovereign debt on 18 July 2014.

The Commission is required by Article 39b(2) of the CRA Regulation (Regulation 1060/2009) (as amended by the CRA III Regulation (Regulation 462/2013)) to adopt a report on this issue by 31 December 2014.

In its request for advice, the Commission had asked ESMA to provide input on the issue of sovereign ratings and rating processes, including an overview of the market for sovereign ratings, information on operational issues relating to sovereign ratings, information on sovereign rating processes, as well as lessons drawn from ESMA's supervisory experience.

ESMA identifies a number of key points that it believes are important when considering the appropriateness of the development of a creditworthiness assessment for sovereign debt. These include:

  • The rating process should be a fully independent assessment;
  • The review function responsible for the annual review of rating methodologies must be independent of the business lines that are responsible for credit rating agencies (CRAs);
  • Confidentiality of all rating sensitive information is critical. Also, access to pre-rating information should only be available to people involved in rating activities and all necessary steps should be taken to ensure this information is adequately protected; and
  • Sufficient resources must be available for the conduct of both a rigorous rating process and ongoing monitoring.

(iv) ESMA Report on Staffing and Resource Needs Arising from Regulatory and Supervisory Responsibilities under CRA

ESMA published a report on 5 August 2014 to the European Parliament, Council of the EU and European Commission on ESMA's staffing and resource needs arising from the assumption of its powers and duties under the CRA Regulation.

The regulatory and supervisory duties that ESMA utilises to meet its responsibilities under the CRA Regulation are outlined in Section III of the report. For each task, the report assesses the implications in respect of both the processes and activities to be carried out and ESMA's resources and budget.

The other supervisory duties to be carried out by ESMA resulting from CRA III are addressed in Section IV of the report. These include the provision of reports, guidelines and technical advice on a range of topics.

The report addresses the fact that ESMA encountered a sharp increase of resources in the initial years subsequent to the entry into force of the CRA Regulation. It expects that incremental growth in staff numbers in 2015 and 2016 will allow it to cope successfully with the additional tasks resulting from CRA III.

(v) European Commission Adopts Three Delegated Regulations on CRA III Regulatory Technical Standards

The European Commission published a press release on 30 September 2014, stating that it has adopted the following three Delegated Regulations containing regulatory technical standards (RTS) required by the CRA III Regulation (Regulation 462/2013):

  • Commission Delegated Regulation (EU) No .../.. supplementing Regulation (EC) No 1060/2009 of the European Parliament and of the Council with regard to regulatory technical standards on disclosure requirements for structured finance instruments (C(2014) 6939 final). The Commission also published the annexes to this delegated Regulation.
  • Commission Delegated Regulation (EU) No .../.. supplementing Regulation (EC) No 1060/2009 of the European Parliament and of the Council with regard to regulatory technical standards for the presentation of the information that credit rating agencies make available to the European Securities and Markets Authority (C(2014) 6840 final). The Commission also published the annexes to this Delegated Regulation.
  • Commission Delegated Regulation (EU) No .../.. supplementing Regulation (EC) No 1060/2009 of the European Parliament and of the Council with regard to regulatory technical standards for the periodic reporting on fees charged by credit rating agencies for the purpose of on-going supervision by the European Securities and Markets Authority (C(2014) 6871 final). The Commission also published the annexes to this Delegated Regulation.

On the condition that no objection is raised by either the European Parliament or the Council of the EU within the relevant time period specified in the European Banking Authority (EBA) Regulation (Regulation 1093/2010), the Delegated Regulations will be published in the OJ. The Delegated Regulations will enter into force twenty days after publication in the OJ.

The provisions will be directly applicable from the following dates:

  • Reporting on fees charged by CRAs: date of entry into force.
  • European Rating Platform: 21 June 2015.
  • Disclosure on structured finance instruments: 1 January 2017.

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