On 1 January 1999 the Euro will become the currency of Ireland. Between 1 January 1999 and 31 December 2001 ('the Transitional Period'), Irish pounds will remain legal tender and legal instruments may refer to Euro amounts or Irish pound amounts and, in general, payments are to be made in the currency expressed in the relevant legal instrument.

Certain institutions intend to conduct all their dealings in Euros from 1 January 1999. For example, equities quoted on the Irish Stock Exchange will be quoted and traded in the Euro from 1 January 1999. However, the nominal value of such equities may continue to be expressed in Irish pound amounts in the respective listed companies' Memoranda and Articles of Association until the end of the Transitional Period.

The Economic and Monetary Union Act, 1998 ('the Act') provides a mechanism for companies who wish to alter their share capital to Euro amounts. Briefly, this involves the following:

1. Redenomination:

Redenomination is the simple conversion from Irish pounds to Euros which will automatically happen on the 1 January 2002. The Act allows a company to redenominate its share capital during the Transitional Period by way of an ordinary or written resolution of the shareholders. The total amount of the authorised share capital (or the total amount of each share class, as the case may be) should be converted into Euros and this amount should then be divided by the total number of authorised shares (or shares of that class) giving a nominal value of each share in unrounded Euro amounts.

2. Renominalisation

The Act provides two methods by which companies may amend their Memoranda and Articles to express nominal share values in rounded figures:

  • By way of ordinary or written resolution, provided that either an adjustment in distributable reserves or an additional subscription of capital is made and share capital is not reduced.
  • By way of special resolution if a decrease in share capital will result. The aggregate amount of capital reduced must be transferred to a capital conversion reserve fund which must not represent more than 10% of the reduced share capital.

The provisions of the Act governing renominalisation will cease to have effect from the 30 June 2003.

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.