Ireland: Guide To Irish Company Law - Formation And Registration Of Irish Companies, Branches And Places Of Business

Carrying on business in Ireland

The methods generally preferred by foreign investors to carry on business in Ireland are as set out in Table 1. Other legal forms allowed in Ireland – sole trader, partnership, unlimited company, company limited by guarantee – are not covered in this guide, but advice can be provided on request.

Characteristics of an Irish private company limited by shares

Irish companies are governed by 15 statutes and a large number of statutory instruments which together constitute the Companies Acts. The primary Act remains the Companies Act 1963 which is similar in many respects to the English Companies Act 1948. Following the recommendations of the Irish Company Law Review Group chaired by Arthur Cox's Dr Tom Courtney, Irish company law is due to be transformed by a consolidating and reforming statute that will repeal over 25 enactments and replace them with one unified body of law which will have a particular focus on the private company limited by shares. It is not expected that this will become law before 2013.

Private and Public

Foreign investors intending to carry on business in Ireland most commonly look to form a private company limited by shares, rather than a public company. This is because fewer obligations apply to a private than a public company, and the restrictions applicable to a private company (see Table 2) generally do not concern a foreign investor, who would not intend that the Irish company would have a large number of shareholders.

Share Capital

There is no upper limit on the share capital which a company may be authorised to issue, nor is there any restriction on the currency or denomination amount of shares. The amount of the authorised share capital and the currency and denomination of shares must be stated in the company's Memorandum and Articles of Association, but can be amended (as long as this does not result in a reduction in issued share capital) by a resolution of the members. The Articles may provide for different classes of shares and attach differing rights (e.g. regarding voting and dividend) to such different classes.

There is no minimum share capital amount that must be issued by a private company (a public limited company must have a minimum issued share capital of ¤38,092.14). A private company may have between one and 99 members (a public company must have at least seven). Shares may be issued for non-cash consideration. The liability of members is of course limited to the amount (if any) unpaid on their shares.

Management Structure

Every Irish company must have at least two directors (all of whom must be natural persons, not companies) and a company secretary (which may be a company).

Under Irish law, a person may only act as director of 25 Irish companies (although certain exemptions apply, for example public companies are not included, and a holding company and its subsidiaries are counted as one). We therefore do not provide formation directors. We do however provide a full range of corporate secretarial services, as at page 8 below.

Directors are required to make certain personal information publicly available, as set out in Table 3. Directors also have a statutory obligation to notify the company of any interest they may hold in shares or debentures of the company and of any subsidiary, holding company or any subsidiary of the company's holding company, including a company incorporated outside the State. There are no nationality requirements for the directors or secretary of an Irish company, but a company must have at least one director resident in the EEA or meet either of the two following conditions:

• obtain a certificate from the Revenue Commissioners to the effect that the company has a "real and continuous link" with an economic activity being carried out in the State; or
• put in place a bond in the amount of €25,395 which can be called upon if the company fails to pay certain fines or penalties (the premium for a two year period is approximately €1,300 plus the legal fee for putting the bond in place)

• Full name and any former names
• Residential address
• Nationality and date of birth
• Occupation
• List of worldwide directorships held over the past 10 years

Forming an Irish Limited Company

The following must be filed with the Companies Registration Office (the "CRO"):

• Form A1 setting out the details in Table 4;
• memorandum and articles of association; and
• the appropriate fee.

A private company can be incorporated within a guaranteed five working days under the online scheme, if the memorandum and articles are in a form approved by the CRO, or 10 days otherwise. Often it will be possible to incorporate in 24-48 hours.

We can look after all aspects of the formation of an Irish company and will walk our clients through the process with minimum trouble. Tax advice in relation to incorporation can be obtained on request from our colleagues in the firm's Tax Department.

• Company name
• Registered office address (must be in Ireland)
• Details of the directors and secretary
• Details of the company's subscribers and shares held
• Nature of the principal activity of the company
• Place(s) in Ireland where it is proposed to carry on the activity
• Place of central administration of the company (need not be in Ireland)

Ongoing Obligations

Requirement to prepare and have audited accounts

Every Irish company is required to prepare individual accounts and, if it is a parent undertaking, to prepare consolidated accounts for the group. These accounts will also generally require to be audited. An exemption may apply from having individual accounts audited if the company falls below the relevant thresholds (as set out in Table 5) in the current and preceding financial year, and its annual returns are up to date. However the exemption does not apply to a company that is a parent or subsidiary company.

• Average number of employees does not exceed 50
• Turnover does not exceed ¤7.3 million
• Balance sheet total of the company does not exceed 3.65 million

Requirement to hold AGM

Save in the case of a single member private company where its sole member has availed of the option to dispense with holding an annual general meeting ("AGM"), every company must hold an AGM within eighteen months of incorporation and at no more than fifteen month intervals thereafter (provided that an AGM is held in each calendar year), and no more than nine months after the accounting year-end.

Requirement to file accounts with annual return

Within six months of incorporation, and yearly thereafter, companies (including non-trading companies) must file an annual return. The first return may be filed without accounts but the second and subsequent returns must include audited accounts, unless the company can claim an exemption. Each company will be allocated an Annual Return Date ("ARD") and within 28 days of its ARD, the annual return and accounts must be filed. Single-member private companies may dispense with the requirement to hold an AGM under certain circumstances but are still required to file an annual return with audited accounts.

Failure to file annual returns and accounts could lead to the officers and the company being fined and/or result in the company being struck off at which time it must immediately cease trading. Late filing attracts automatic penalties up to a maximum of ¤1,200.

Requirement to notify CRO of changes in particulars

The CRO must be notified of any amendments to the company's Memorandum and Articles, or of changes in the registered office or in the details pertaining to the officers of the company.

Any changes to the issued share capital must be notified to the CRO; this includes where the change occurs as the result of an allotment of shares.

Transfers of shares are not required to be notified to the CRO other than as part of the company's annual return for the year in which they occurred. Transfers are effected by the execution of a share transfer form; filing with the Revenue Commissioners may be required should there be a question of liability for stamp duty.

Directors' duties

The directors and secretaries of Irish companies have a statutory obligation to ensure that their companies comply with the requirements of the Companies Acts. In addition to their statutory duties, directors have common law and equitable duties to their companies including to act bona fide and in the interests of the company, to avoid conflicts of interest, not to divert business opportunities from their company and to act with due skill, care and diligence. The proposed new Companies Bill will codify directors' duties.

Change of name/Registration of business name

If a company wishes to carry on business under a name other than its existing name, which may be the case where a UK company acquires an Irish company and wishes to trade under its (UK) name, the name of the Irish company can be changed (subject to CRO approval) by following the procedure in Table 6. The change of name will have effect once the CRO issues a certificate of the change of name (which usually takes about two weeks from the filing of the necessary documents).

• Special resolution to approve change
• Letter of no objection from similarly-named group companies (if applicable)
• Lodge relevant form, fee and amended M&A with the CRO

Alternatively, any body corporate that has a place of business in Ireland (which therefore includes both Irish companies, and UK companies operating through a place of business or branch) can carry on business under a name other than its own corporate name by filing the necessary form and fee with the CRO to obtain a certificate of registration of business name. It should be noted that the registration of a business name does not protect against duplication of that name; if further protection was required, it might be considered desirable to register the name as a trade mark.

Registering a place of business in Ireland

Where a foreign company establishes a "place of business" in Ireland other than one which falls to be classed as a branch (see Table 7), it must be registered with the CRO under the Companies Act 1963.

• That business is conducted with some degree of regularity from a particular place of business
• That there is some physical indication that the company has a connection with that premises

Additional characteristics of a branch

• That the company has some degree of proprietary interest (whether through ownership, lease, license or otherwise) in that property
• That there is a locally-based management team, materially equipped to negotiate business and contracts directly with third parties

The company must deliver a certified copy of its constitutional documents to the CRO within one month of establishment, along with the required form setting out the details in Table 8.

• Name and legal form of the foreign company
• Country of the foreign company's registration
• Address of the place of business in Ireland
• A list of the directors and secretary of the company, and the details for each in Table 3
• The name and address of the person(s) authorised to accept service on behalf of the company within Ireland, who must be resident in Ireland (may be a company or a natural person)

There is an ongoing obligation on every company that has established a place of business to file their individual and group accounts with the CRO, but this obligation does not apply to any company that would rank as a private company if registered in Ireland. The only ongoing obligations on a foreign company equivalent to an Irish private company will be to notify the CRO of changes to the information in Table 8 or the constitutional documents of the foreign company, and on ceasing to carry on business in Ireland.

Establishing a branch in Ireland

Where certain foreign companies (in the UK, companies incorporated with limited liability) establish a place of business in Ireland that constitutes a branch (see Table 7), they will be subject to different reporting requirements.

A company that has established a branch in Ireland must deliver a certified copy of its constitutional documents, a copy of its certificate of incorporation and a copy of its most recent accounts to the CRO within one month of establishment of the branch, along with the required form, in which it must set out the details in Table 9, and fee.

Where several places of business operate under a unified management structure, they can comprise (and be registered as) one branch.

• Name and legal form of the foreign company
• Place and number of the foreign company's registration
• Name of the branch if that is to be different to that of the foreign company
• Address of the branch in Ireland
• Activities of the branch
• List of persons authorised to represent the company (e.g. to enter into contracts on its behalf), the details for each in Table 3, and the extent of their powers in relation to the activities of the branch
• Name and address of persons authorised to accept service on behalf of the foreign company ("Process Agent") (who must be resident in Ireland and may be a company or a natural person)
• Name and address of every person authorised by the branch to ensure it complies with its requirements under the Regulations (the "Compliance Officer") (who must be resident in Ireland and may be a company or a natural person)

The Compliance Officer is responsible for ensuring that all particulars filed with the CRO in respect of the branch are current. The same person can act as Compliance Officer and Process Agent.

The Compliance Officer is responsible for ensuring that once in every year the foreign company delivers to the CRO the accounting documents as drawn up, audited and (where so required) disclosed in its home country. If the company is incorporated in a country in which accounts need not be prepared, it shall be exempt from filing such accounts with the CRO for the first year following registration as a branch in Ireland; thereafter the company must submit accounts drawn up and audited in accordance with EC law, on an annual basis.

If the branch wishes to carry on business under a name other than that of the foreign company it will be required to register a business name (see page 3 above) by filing the necessary form and fee with the CRO.

Transfer of SE from UK to Ireland

Developments in the last decade in EC law (Council Regulation (EC) No 2157/2001 of 8 October 2001 and Directive 2001/86/EC (as transposed)) have allowed for the creation of a European public limited liability company, or Societas Europaea ("SE"), which may be formed in four ways (Table 10).

An SE is subject, unless otherwise stated, to the legal provisions applying to a public limited company in the State in which its registered office is situated. Differences include that it must have a minimum share capital of ¤120,000 (as opposed to ¤38,092.14 for a public limited company). A key difference is however that an SE can move its registered office from one EU State to another without this resulting in winding up the company or in the creation of a new legal person.

• Current name, registered office and number of the SE
• Proposed registered office of the SE
• Proposed statutes of the SE including, where applicable, its new name
• Any implication the transfer may have on employees' involvement
• Any rights provided for the protection of shareholders and/or creditors
• Proposed transfer timetable

The process for transfer of an SE from the UK to Ireland will commence by the management or administrative organ of the SE (e.g. the board of directors) drawing up and publicising a transfer proposal, setting out the information in Table 11, at least two months ahead of the meeting to decide on the transfer.

The management shall also draw up a report explaining and justifying the legal and economic aspects of the transfer and explaining the implications for shareholders, creditors and employees. The SE's shareholders and creditors shall be entitled to examine the transfer proposal and the report and to obtain copies of those documents, at least one month before the decision to transfer.

The company must resolve at the general meeting to approve the decision. The majority required (currently 75% of votes cast) and the appropriate protection for minority shareholders who oppose a transfer will be determined by UK law.

When the SE satisfies the Secretary of State for Business, Innovation and Skills that the interests of creditors and holders of other rights in respect of the SE have been adequately protected in respect of any liabilities arising prior to the transfer proposal in accordance with UK law, that authority shall issue a certificate attesting that the acts required to be done before the transfer have been completed.

This certificate must be submitted to the Registrar of Companies in Ireland (the "Irish Registrar"), along with a copy of the statutes of the SE, and the necessary form. The Irish Registrar shall register the SE where he or she is satisfied that the statutory requirements have been complied with in respect of the proposed transfer.

The transfer of the registered office and the consequent amendment of the statutes of the SE will take effect on the date on which the SE is registered by the Irish Registrar. The Irish Registrar must notify the new registration to Companies House in the UK of, which will delete the old registration. The new registration and the deletion of the old registration must be publicised in Ireland, by the Irish Registrar publishing (in the CRO Gazette) notice of the registration and of the receipt of the documents and particulars related to it, and will also be published by the Registrar of Companies in the UK (the "UK Registrar") in the London Gazette, Belfast Gazette or Edinburgh Gazette, as appropriate.

The Irish Office of the Director of Corporate Enforcement may oppose the transfer of a registered office on grounds of public interest, but we are not aware of any case in which they have done so. Where an SE is supervised by a national financial supervisory authority according to Community directives the right to oppose the change of registered office applies to this authority as well. The only restriction likely to apply is that an SE may not transfer its registered office if proceedings such as for winding-up, liquidation, insolvency or suspension of payments have been brought against it.

Inward cross-border mergers

Even more recent developments in EC law (Council Directive 2005/56/EC, as implemented in Ireland by the European Communities (Cross-Border Mergers) Regulations 2008 (SI 157/2008), and in the UK by The Companies (Cross- Border Mergers) Regulations 2007 (2007 No. 2974)) allow for a merger between companies from different member states (a "cross-border merger"). A UK company can merge into an Irish company in one of three ways, as set out in Table 12.

• Merger by absorption, where the UK company stablishes an Irish company as its 100% owner, and transfers all its assets and liabilities to that holding company
• Merger by acquisition, where an existing Irish company acquires all the assets and liabilities of the UK company in exchange for the allotment of shares by the Irish company to the members of the UK company
• Merger by formation of a new company, where a new Irish company is formed and acquires all the assets and liabilities of the UK company, in exchange for the allotment of shares by the Irish company to the members of the UK company

In all cases the UK company is then dissolved, without going into liquidation.

The necessary steps for the merger of a UK company into an Irish successor company are as follows:

1. The management organs (e.g. boards of directors) of the two entities must prepare common draft terms of merger (the "Common Draft Terms"), to include the information in Table 13.

2. The board of directors of both companies must also together draft explanatory notes to the proposed merger, to set out:

(i) the expected implications of the merger for

members, creditors and employees; and

(ii) the legal and economic grounds for the merger.

3. An expert's report must be drawn up for each merging company by a qualified person (e.g. the auditor), to confirm the valuation methods used to determine the share exchange ratio and whether such methods were appropriate. This will not apply where it is unanimously agreed that a report is not necessary, or in the case of a merger by absorption, or where the Irish company holds 90% or more of the voting shares of the UK company.

4. At least one month before the general meeting of the merging companies to approve the common draft terms of merger, the UK company must deliver to the UK Registrar, and the Irish company to the Irish Registrar, a copy of the Common Draft Terms and the prescribed form.

5. At least one month before the general meetings of the companies to approve the Common Draft Terms, the Irish Registrar must publish notice of delivery of the Common Draft Terms in the CRO Gazette, the UK Registrar in the London, Edinburgh or Belfast Gazette (as applicable), and the Irish merging company in two Irish daily newspapers.

6. The Common Draft Terms, directors' explanatory report and expert's report (if applicable) must be made available for inspection to members, and employees or employee representatives (if applicable), in the registered offices of the companies at least one month before the general meetings.

7. The Common Draft Terms must be approved by a special resolution (i.e. 75% of votes cast) of the members of each merging company (for the UK, 75% of each class must also approve the terms).

• Details of the merging companies - names, registered address, registered numbers, legal form, register in which each is registered
• The date from which the transactions of the UK company are to be treated for accounting purposes as being those of the Irish company
• The Irish company's articles of association
• The rights conferred by the Irish company on members of the UK company
• Information on the evaluation of assets and liabilities to be transferred to the Irish company
• The dates of the accounts used for the purpose of preparing the draft terms
• If applicable, the proposed terms for the share allotment to members of the UK company
• The likely repercussions on employment of the merger
• Arrangements on procedures for determining employee participation rights
• Details of any special advantage to be granted to a director of a merging company or auditor appointed to provide an expert's report (if applicable; see point 3 above)

If the articles so provide, this approval may be given by way of written resolution of shareholders, instead of at a general meeting, which avoids notice requirements. Shareholder approval of the Common Draft Terms is not required in the case of a transferor in a merger by absorption, or in the case of a successor in a merger by acquisition if certain conditions are met.

8. A minority shareholder in the UK company may require that the Irish company acquire his shares for cash.

9. Any creditor of the UK company may apply to the court that it order a meeting of creditors or of a class of creditors. If the court orders that such a meeting be held, the Common Draft Terms must be approved by a majority in number, representing 75% in value, of the

creditors or class (as the case may be) present and voting at the meeting.

The corresponding Irish provision states that any creditor of the Irish company may be heard by the High Court at the hearing confirming the merger.

10. Each company will then apply to court – the Irish company to the High Court in Ireland, and the UK company to the High Court in England and Wales, or Northern Ireland, or to the Court of Session in Scotland, as appropriate – for an order certifying that the company has completed the pre-merger acts and formalities above.

11. The management organ of each merging company which has employees shall take the necessary steps, as soon as possible after publication of the Common Draft Terms, to start negotiations with the

representatives of the employees, to facilitate employee participation in the Irish company after the merger.

12. Once the orders at 10 above have been obtained, and any arrangements for employee involvement determined (as at 11 above), the Irish company will

apply to the High Court in Ireland for an order approving the merger and specifying the date on which it is to have effect.

13. Within 14 days of the order approving the merger being made, the High Court registrar in Ireland will notify the Irish Registrar, who then completes certain

publication and notification requirements, including notifying the UK Registrar. The UK Registrar will note the fact of the merger in the register and strike the name of the UK company from it.

Arthur Cox Company Compliance & Governance Group

Group Structure

The Arthur Cox Company Compliance & Governance Group (the "Group") is a specialist group with extensive experience in providing advice on all aspects of corporate governance, legal and compliance risk management, and company secretarial services.

The Group is headed by Dr Thomas B Courtney, Partner. Tom is the author of The Law of Private Companies (2nd ed; 2002) one of the leading textbooks on Irish company law and co-editor with Lyndon MacCann SC of Companies Acts, 1963 – 2009 (Bloomsbury Professional; 4th ed; 2010). He is also the Chairman of the statutory Company Law Review Group which advises the Irish government on company law reform and was a member of the EU Commission's Advisory Group on Company Law and Corporate Governance, established by Commission Decision (2005/380/EC).

The Group includes a large team of qualified chartered secretaries, and also includes the following key individuals:

Jacqueline McGowan-Smyth, Director in the Group, a Fellow of the Institute of Chartered Secretaries and Administrators with 25 years' experience, and co-author of Irish Company Secretary's Handbook (Bloomsbury Professional; publication due in October 2011);

James Heary, an affiliate of the Association of Chartered Certified Accountants and a member of the Institute of Chartered Secretaries and Administrators, who holds a Diploma in Corporate Governance; and

Dáibhí O'Leary, a qualified solicitor specialising in company law, and who worked with a Big Four accountancy firm as a qualified auditor prior to joining Arthur Cox.

Services Provided

The Group offers a full range of company secretarial services which include annual company secretarial services, outlined in Table 14, which we charge for on a fixed fee basis. As a number of the services are not interlinked, a client can pick and choose which of these services they wish to avail of. All of these details would be discussed prior to our standard engagement letter being executed.

In addition to the annual company secretarial services we provide advice, draft resolutions, convene meetings, and file prescribed forms in connection with routine matters such as are set out at Table 15. Such services are provided at a set price, quoted on request.

• Acting as company secretary for companies. We can provide the use of Bradwell Limited, an Arthur Cox nominee company, to act as the named company secretary or assistant company secretary
• Installing and maintaining the company's statutory registers on our company secretarial database including maintenance of the company's minute book
• Preparation of the company's Annual Return for filing in the CRO
• Preparation of documents and resolutions necessary to convene, hold and minute the AGM and to approve the annual audited accounts, or the documents and resolutions necessary to approve the accounts but to dispense with the holding of an AGM
• Provision of registered office facility for clients at our address, Arthur Cox Building, Earlsfort Terrace, Dublin 2. All correspondence received on behalf of the company will be forwarded to an address designated by the company
• Correspondence which requires immediate attention (e.g. from the Revenue Commissioners, the CRO or legal processes) shall be forwarded to the company by courier or registered post. Normal post will be forwarded by regular post

• Formation of companies
• Change in name of company
• Changes in companies' directors
• Procuring bonds for non-resident directors
• Changes to companies' memoranda and articles of association
• Transfers and allotments of shares.

Finally, the Group has extensive expertise in advising and drafting documentation in relation to special company secretarial services, as set out in Table 16.

• Complex share capital restructurings
• Capital extractions
• Capital contributions
• Reconstruction of statutory registers
• Company compliance due diligence in mergers and acquisitions
• Conversion from one company type to another and re-registration
• Cross-border mergers
• Inward transfer and re-registration of an SE
• Voluntary strike-off (including pre-strike off due diligence advice)
• Administrative and court re-instatement of companies to the register of companies

The Group provides the services set out in Table 17 for a branch or place of business.

• Registration of a branch or place of business
• Registration of alterations to the M&A of the company forming the branch or place of business
• Notification of any change to the address of the branch or place of business
• Notification of changes among the following persons, or in the particulars relating to them:
• • In respect of a place of business, the directors or secretary of the company
  • In respect of a branch, the authorised persons or compliance officers
  • The persons authorised to accept service on behalf of the company
• Filing of company financial statements (where required)
• Notification of the company winding up, closing the branch or ceasing to carry on business in Ireland.

We can provide a process agent service for a company which needs someone to accept service of documents in Dublin on their behalf. We can also provide chartered secretaries or solicitors to attend board meetings and AGMs to take minutes and advise on compliance with the Companies Acts.

Every year sees the passing of new statutes or statutory instruments that change the compliance obligations on Irish companies. We can provide an upstream corporate compliance risk management service to support our clients, in the nature of a new-obligations checklist.

Opinions on Irish Company Law

The expert knowledge and extensive experience within the Group, and across the firm, leaves us uniquely positioned to advise, and if deemed appropriate provide formal legal opinions, on questions of Irish company law.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.