In this issue:-

  • Execution of Deeds
  • Regulations on Accounts and Consolidated Accounts
  • The Companies (Miscellaneous Provisions) Bill, 2009

EXECUTION OF DEEDS

Almost all of the provisions of the Land and Conveyancing Law Reform Act came into force on 1 December, 2009. Although the Act is primarily concerned with changes to land law and conveyancing practice, there are some provisions of general application - such as the provisions related to the execution of deeds; and not only those deeds which may form part of a property transaction.

The provisions of the new Act apply to any deed executed after December 1, 2009, if

  • In the case of an individual, it is a deed subject to Irish law; and
  • In the case of Irish incorporated company or a body corporate anywhere else in the world, whether or not the deed is subject to Irish law.

Section 64 provides that any instrument executed as a deed after 1 December 2009, shall be considered as a deed, provided that the name given to such an instrument indicates that it is to be considered as a deed (for example because it includes the word "Deed"), or it is otherwise made clear on the face of the document by the parties to it that they intended it to be a deed by expressly stating that it is signed or executed as a deed.

In relation to execution of a deed by an individual, there is no longer any need for any kind of seal to be affixed. However, it is now an execution requirement that the individual signs in the presence of a witness, who attests the individual's signature. Previously, the witnessing of an individual's signature on a deed would have been considered good practice from an evidentiary point of view; now it is actually an execution requirement for execution of a deed by an individual.

In relation to the execution of a deed by a body corporate, Section 64 provides that

  • in the case of an Irish incorporated company, it should be executed under seal in accordance with the Articles of Association of the company;
  • in the case of an Irish body corporate other than a company, it should be executed in accordance with the legal requirements governing such a body; (thus for example, IDA Ireland, and for which the relevant governing legislation contains provision for execution of instruments)
  • in the case of body corporate incorporated outside of Ireland; it should be executed in accordance with the legal requirements for the execution of the relevant instrument in the jurisdiction in which the foreign company is incorporated.

Neither Section 40 of the Companies Act 1963 (which relates to the execution of a deed outside of Ireland by a Irish incorporated company) nor the Powers of Attorney Act 1996 have been expressly amended by the Act.

REGULATIONS ON ACCOUNTS AND CONSOLIDATED ACCOUNTS

In November, 2009, the European Communities (Directive 2006/46/EC) Regulations (S.I. 450 of 2009), implementing Directive 2006/46/EC on Company Reporting in Ireland, were signed into law. On the 25 February 2010, an amending regulation to S.I. 450 of 2009 namely S.I. 83 of 2010 ("the Regulations") was published bringing clarity to the effective date of the Regulations.

The key changes are as follows:

  • Irish incorporated companies (excluding investment companies) whose securities are admitted to trading on a regulated market or on a multilateral trading facility will be required to prepare and include a Corporate Governance Statement in the annual (directors') report for financial year's ending on/after 18 November 2009 (the Regulations);
  • However, the requirement to include a description of the main features of the internal control and risk management systems of the company in relation to the financial reporting process and the auditor's opinion on same shall only apply for financial year's beginning on/after 18 November 2009 (the Regulations).
  • Listed investment companies (i.e. listed fund companies), who are not already subject to annual reporting obligations in relation to a governance code by virtue of that listing, will have to produce a Corporate Governance Statement for financial year's beginning on/after 18 November 2009 (the Regulations).
  • Disclosure requirements for "off balance sheet arrangements" and "related party transactions" will apply to listed and unlisted companies in respect of financial years ending on/after 18 November 2009.
  • Amendment to existing fair value rules whereby Regulation 3 extends the right of both public and private companies, which prepare annual accounts under the Companies Acts to use fair value accounting for a variety financial instruments in accordance with IAS 39 in both their individual and consolidated accounts.

It should be noted that a person who contravenes these Regulations is guilty of an offence and is liable on summary conviction to a fine of €5,000 or three months imprisonment or both and on indictment to a fine of €50,000 or imprisonment for a term not exceeding three years or both.

THE COMPANIES (MISCELLANEOUS PROVISIONS) ACT, 2009

On the 23 December, 2009, the Companies (Miscellaneous Provisions) Act, 2009 (the "Act") was signed into law introducing a number of important changes to Irish company law.

Sections 1, 2 and 3 (a) – (h) and Section 4 of the Act have commenced relating to:

  • The use of US GAAP by certain companies on a temporary basis therefore reducing the burden on those companies listed on the US Securities and Exchanges Commission, which want to relocate their head office to Ireland;
  • The creation of a new type of purchase called an "overseas market purchase" to facilitate international companies re-domiciling to Ireland, which are not listed on the Irish Stock Exchange and that wish to avail of the market purchase regime when undertaking share buy-back programmes;
  • The continuity of membership by directors of committees of enquiry established by the Irish Auditing and Accounting Supervisory Authority (IAASA) ensuring membership doesn't change during an enquiry, which could endanger fair procedure and process; and
  • The limit of potential costs to the Exchequer of certain types of investigations into the affairs of the company, as the High Court may now require the applicant (e.g. such a director) calling for an investigation to give unlimited security for payment of costs of the investigation. Previously the security was limited to an amount up to IR£250,000.

Section 3(i) to (j) and Section 5 relating to migrating funds have not yet been commenced as the Financial Regulator is currently liaising with Cayman, Bermuda, Gibraltar and the Channel Islands to agree reciprocal arrangements. This is likely to take another six months. When these sections are commenced, the Act will introduce a mechanism whereby certain collective investment undertakings can migrate their registered offices into and out of Ireland without firstly having to wind up in their current jurisdiction thus attracting investment funds business from third countries who are seeking to relocate to a well regulated jurisdiction.

In addition, the Act amended the Companies Act 1990 to extend the definition of "recognised stock exchange" to include exchanges outside the State, as well as individual markets outside the State. This provision was dependent on the Minister prescribing exchanges. The Tánaiste has signed the Companies (Recognised Stock Exchanges) Regulations 2010 (SI 100 of 2010) prescribing the London Stock Exchange, the New York Stock Exchange and the NASDAQ as "recognised stock exchanges", to permit Irish public companies to make overseas market purchases of their own shares on a recognised stock exchange.

A new notification requirement was also introduced for overseas market purchases in the Act. The company is required to publicise its purchase of own shares on the company website for not less than 28 days, beginning on the day following the purchase. Companies are only required to publish the highest and the lowest prices paid, and the date of the purchase.

The Department of Enterprise, Trade and Employment has indicated that additional exchanges may be recognised at a future date.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.