Ireland: Incorporation Of A Company Under The Irish Companies Acts 1963-2006

1. Introduction

The Companies Acts 1963-2006 (the "Companies Acts") provide the statutory framework for the life of an Irish company from incorporation to liquidation.

The principal forms of business entities in Ireland are:

(1) limited liability companies (private and public);

(2) unlimited liability companies;

(3) general partnerships;

(4) limited partnerships; and

(5) branches of foreign entities.

2. Incorporation

Incorporation of a company in Ireland is achieved by the filing of various documents with the Companies Registration Office in Dublin including:-

(i) the memorandum and articles of the company;

(ii) statutory declaration of compliance;

(iii) list of first directors and secretary of the company, details of subscriber shareholder(s) and details of the registered office.

Since 18th April, 2000 every Irish incorporated company must have at least one Irish resident director unless it holds a bond, in the prescribed form, to the value of Euro 25,400. This residence requirement does not apply if the Registrar of Companies grants a certificate that the company has a real and continuous link with one or more economic activities that is being carried on in Ireland. Proof of this could be a letter from the Revenue Commissioners that they have reasonable grounds to believe such a link exists. Section 45 of the Companies (Amendment)(No.2) Act, 1999 also introduced a new restriction requiring that directors may hold no more that twenty-five directorships, save for certain directorships provided for in that Act.

Under the Companies Registration Office's Company Incorporation Scheme, the incorporation process takes approximately ten working days to complete. Only private companies limited by shares or by guarantee and unlimited liability companies may be formed by this method. Under this scheme model memoranda and articles of association are submitted. Only the name, main objects, liability and the share capital, if applicable, may be varied. This allows the insertion of the key objects of the company into the articles of association.

The declaration contained in the A1 Form requires that a director, company secretary or solicitor engaged in the formation of the company furnishes details of:

(i) the activity the company intends to carry out;

(ii) the place from where it proposes to carry out such business;

(iii) the place where the central administration of the company will be carried on.

From the date of incorporation specified in the Certificate of Incorporation the company becomes a separate legal entity. A private company can immediately commence business upon incorporation. Apublic limited company however, must obtain a certificate from the Registrar of Companies entitling it to do business and exercise any borrowing powers unless it can avail of the exemptions afforded to companies incorporated under Part XIII of the Companies Acts 1963 2006 or the UCITS Regulations.

Registered Office

Every company must have a registered office within Ireland. This is to ensure that every company formed and registered in Ireland has an address to which all communications and other notices may be sent. The Companies Acts also require that certain documents be kept and retained at the company's registered office e.g. the register of members, books of account etc.

Board of Directors

The day to day management of a company is entrusted to the board of directors. A company is required to have at least two directors and a secretary who may also be a director.

3. Company Secretary

Every company must have a secretary under Section 175 of the Companies Act 1963. The Company Secretary's duties revolve around seeing that a company complies with the Companies Acts, its own regulations and the law in general.

4. Shareholders and Capital

There is no residency or other requirements for shareholders in an Irish company nor any limit to the number of shares which a foreign shareholder may own.

A company may have several classes of share with different rights attached. Shares are issued with a par or nominal value. The share capital may be in a foreign currency. Under the Companies Acts, there is no minimum capital requirements imposed. A private company must have a minimum of 1 and a maximum of 99 shareholders. A public limited company must have a minimum of 7 shareholders and an issued share capital of at least Euro 38,100, of which at least 25% must be paid up. There are exceptions to this rule in cases where the companies are incorporated under Part XIII of the Companies Acts 1963 2006 or under the UCITS Regulations.

5. Reporting Requirements

Every Irish company is required to file an annual return in a prescribed form within 28 days after its Annual Return Date. The annual return includes information regarding the registered office of the company, shareholders and the directors and secretary. Each company must file an annual return and the annual return date will be the anniversary of the effective date of the most recent annual return. Any company incorporated after 1st March 2002 must file its first annual return 6 months after the date of incorporation, thereby establishing its annual return date, and thereafter, the anniversary of that date.

Every company is also required to maintain proper accounts which must be audited each year. A copy of the audited accounts must be filed in the Companies Registration Office together with the annual return. There are provisions for the filing of group accounts and for the filing of abridged accounts in the case of small or medium sized private companies. The financial statements accompanying the Company Annual Return must not be more than nine months old and the annual return date must be amended accordingly. The annual return date can only be amended once in every 5 years.

Liability of Directors and Company Secretary

Directors have a fiduciary duty to the company and will be held liable to the company for any breach of that duty. A director will not generally be held personally liable for the debts and actions of the company except where the director has acted outside of his proper power and authority or allows the company to engage in unlawful activities.

Section 100 of the Company Law Enforcement Act 2001 represents a fundamental change in the duties and responsibilities of directors and company secretaries. Hitherto, a director or company secretary could not automatically be guilty of breach of duty or breach of statutory duty through a failure to act. Liability in such circumstances depended on knowledge and the skill and the experience of the individual. Section 100 now provides that it is the duty of each director and secretary of a company to ensure that the requirements of the Acts are complied with by the company. The Section also provides that they will be presumed to have permitted a default by a company unless they can establish that they took all reasonable steps to prevent it or that, by reason of circumstances beyond their control, were unable to do so.

Section 56 of the Companies Act, 2003 now provides that a company may purchase and maintain for any of its officers or auditors insurance.

Parent Company Liability

The liability of a member with respect to a limited company is limited to any unpaid amount of the nominal value of its shares. It is only in exceptional circumstances that a shareholder will be liable for any amount beyond the nominal value of his shares, for example, if the number of shareholders falls below the required minimum number.

Annual Cost of Compliance

The registration fee for the annual return filed on time is Euro 40. For registration of an annual return that is not received by the registrar within 28 days after the date to which it is made up, the registration fee will be Euro 140 plus Euro 3 per day for each day on which the failure to file the return continues subject to a maximum fee of Euro 1,200 for each outstanding return.

6. Incorporation Documentation for all Types of Companies

In order to complete the Statutory Form A1, Tudor Trust Limited will require the following information:-

Name

It usually is prudent to suggest a minimum of three names in order of preference.

Authorised Share Capital:

The amount and currency required.

Issued Share Capital:

Amount to be issued.

Shareholders:

The full name and residential address of a minimum of 1 shareholder if a limited liability company. If more than 1 shareholder, we will require the percentage of each holding.

Objects Clause:

Details of the main objects of the Company.

Registered Office:

The address of the registered office should be situated in the State.

The place from where it proposes to carry out business:

The address of the place in Ireland from where the Company proposes to carry out business.

The place where the central administration of the company will be carried on:

The address of the place in Ireland where the central administration of the Company will be carried on.

Directors:

There has to be a minimum of two directors with 1 being an Irish resident, and details of full christian names and surnames, residential address, occupation, dates of birth, a List of their Worldwide Directorships over the last 10 years indicating the name of the companies, place of incorporation, the dates of their appointment and / or resignation from these Directorships and the Company Registration Number, where applicable, must be provided.

Please note that since 18 April, 2000 every Irish incorporated company must have at least one resident director unless it holds a bond, in the prescribed form, to the value of Euro 25,400. This residence requirement does not apply if the Registrar of Companies grants a certificate that the company has a real and continuous link with one or more economic activities that is being carried on in Ireland. Proof of this could be a letter from the Revenue Commissioners that they have reasonable grounds to believe such a link exists. Section 45 of the Companies (Amendment)(No.2) Act, 1999 also introduced a new restriction requiring that directors may hold no more that twenty five directorships, save for certain directorships provided for in that Act.

Secretary:

Full christian name and surname and residential address.

We attach details of Tudor Trust Limited which can provide company secretarial services for a company incorporated in the State. However before undertaking such a role, Tudor Trust Limited would have to be satisfied that the due diligence required in relation to the client (promoter/shareholders of the company) is satisfactory.

Tudor Trust Limited

Tudor Trust Limited is a private company limited by shares and is wholly owned by the partners of Dillon Eustace.

It was incorporated at the same time as the constitution of the partnership of Dillon Eustace to provide company secretarial services to clients of Dillon Eustace.

The primary function of Tudor Trust Limited is to act as Company Secretary and fulfil the duties which pertain to that position. Every company must have a secretary under Section 175 of the Companies Act 1963. The Company Secretary's duties revolve around seeing that a company complies with the Companies Acts, its own regulations and the law in general. In this regard, there is some overlap with the company's solicitors. For this reason, we consider Tudor Trust Limited ideally suited to assume the role of company secretary of any companies for which Dillon Eustace acts or advises.

The duties of the Company Secretary as fulfilled by Tudor Trust Limited are as follows:

1. Formation of companies and ensuring their legal compliance in all aspects;

2. Maintenance of the statutory books and other registers;

3. Supervising installation of statutory registers and furnishing of copies of same;

4. Sending out the notices and agendas convening directors', committee of directors', shareholders' and noteholders' meetings;

5. Keeping the minutes of board meetings, committee meetings and shareholders' and noteholders' meetings;

6. Completion and filing of statutory forms in relation to directors and secretary;

7. Completion and filing of statutory forms in relation to registered office;

8. Registering transfer of shares and corresponding with the Revenue Commissioners therein;

9. Despatching share certificates;

10. Certifying share transfers;

11. Completion, filing and corresponding with the Revenue Commissioners in relation to returns of allotments;

12. Completion, signing and filing of the annual return with the Companies Registration Office;

13. Certifying as true the copies of the annual accounts attached to the annual return;

14. Filing of the annual audited accounts with the Companies Registration Office;

15. Signing the application form of a private limited company to re-register as a public company;

16. Signing the application form for a limited company to re-register as unlimited;

17. Signing the application form required for an unlimited company to be registered as limited;

18. Signing the application form and making the statutory declaration required for an unlimited company to re-register as a public limited company;

19. Making the statutory declaration required for a public limited company before it may carry on business;

20. Filing particulars of charges affecting the company's property;

21. Filing any memorandum of satisfaction and redemption of any such charge;

22. Witnessing the affixing of the common seal;

23. Completing and signing the required application form to register a business name;

24. Making out the Declaration of Solvency in a members winding-up;

25. Communication with members of the company;

26. Drafting business letters, where directed, and ensuring that all letters and communications by companies contain any information required by statute;

27. Obtaining the Financial Regulator's permission in relation to changes to the board of directors.

Obviously the particular functions of Tudor Trust Limited will vary depending on the type of company for which it acts. At present, Tudor Trust Limited acts as company secretary for a wide range of Irish companies, companies with tax residency in Ireland, EU and non-EU countries. Tudor Trust Limited currently acts as Company Secretary for and provides company secretarial services for a large number of non-UCITS designated and non-designated investment companies. Tudor Trust Limited also acts in a similar capacity for a large number of UCITS investment companies, private limited companies, unlimited companies and companies limited by guarantee.

The practice at Dillon Eustace is for company secretarial matters to be dealt with by the partner who had been involved in the establishment of the Fund in question. Responsibility is therefore assigned on a client by client or fund by fund basis.

Our Company Secretarial Department, managed by Vivienne Feaheny F.C.I.S. with eleven company secretarial assistants and two secretaries monitors on a full-time basis the ongoing compliance by the fund or company. The services of this Department are available to any partner, assistant or trainee on a full-time basis. The responsibility for the general running of the Department resides with Vivienne Feaheny.

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.