The publication of a draft Company Law Bill will amend a number of core provisions of company law, with important implications for existing companies.
The Bill, due to be introduced in 2012, will repeal and consolidate all of the existing Companies Acts 1963 to 2009, leaving a single legal rulebook for the administration of Irish companies. The suite of EU-derived securities laws will not be included in the consolidation. The Irish company has become a favourite form of incorporation for subsidiaries in international groups and increasingly, as the ultimate parent company for enterprises wanting to depart haven jurisdictions as a consequence of the tightening of US anti-avoidance tax legislation.
Non-lawyers and cross-border lawyers doing business in Ireland are arguably the principal beneficiaries of consolidation. Since 1963, Irish company law has become dispersed among various amending Acts and statutory instruments. The new Bill will replace these enactments with a single statute.
In addition to the important work of consolidating company law, the Bill also implements a series of reforms that will alter Irish company law in practice. The most visible reforms amend statutory governance requirements with a view to removing procedures that have become hollow formalities for many small private companies.
One important thing to note is that, as currently drafted, the transition regime set out in the Bill obliges each private company limited by shares to take action during the Bill's proposed 18-month transition period in order to ensure that a statutory deemed constitution is not imposed on it.
Where a private company limited by shares has not taken one of the prescribed actions by the end of the transition period, it will be deemed to have adopted a new form constitution. This is a nearly blank document that will omit any of the company's existing non-standard internal rules. Such developments raise particular concerns for joint venture companies and other companies that are governed by idiosyncratic administrative or profit-sharing arrangements.
The new Companies Bill will consolidate the law that applies to Irish companies in a single rulebook built around the small private company limited by shares. This is an important advance for Irish company law, and seems certain to assure the continuing popularity and success of the Irish company into the future.
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