Companies Act 2014

Commencement of the Companies Act 2014

The Companies Act 2014 commenced by Statutory Instrument on the 1st of June 2015 with a transition period of 18 months for certain elements. The Companies Act impacts heavily on every Irish company including both directors and shareholders.

There are certain limited exceptions to the 1st of June commencement, including:

(i) a deferral of the repeal of current insider dealing rules under the Companies Act 1990;

(ii) a deferral of the revocation of certain regulations on registration and publication of documentation requirements for Irish merging companies;

(iii) a deferral of commencement of certain provisions of the Act relating to registration of an unregistered company under the Act; and

(iv) a deferral of certain consequential repeals and revocations relating to unregistered and joint stock companies.

As regards the approach in relation to financial statements, the Commencement Order clarifies:

1. If the financial year ends before the 1st of June 2015 and the financial statements are signed by the director(s) before the 1st of June, they must be prepared and filed in accordance with the 1963-2013 Companies Acts; and

2. If the financial year ends after the 1st of June 2015, the financial statements must be prepared and filed under the Companies Act 2014.

Under the Commencement Order the following new obligations in Part 6 of the Act will be commenced in respect of financial years beginning on or after the 1st of June 2015:

  • section 167: Audit committees
  • section 225: Director's compliance statement and related statement
  • section 305(1)b: Share options disclosure
  • section 306(1): Payments to connected persons
  • section 326(1)a: Director's names
  • section 330: Directors' report: statement on relevant audit information

New Company Type

Perhaps the most significant change introduced by the Act is the requirement for existing private limited companies to convert to one of the two new forms of company provided. There is an 18 month transition period from the 1st of June 2015 during which existing private companies must convert to either a private company limited by shares (LTD) or a designated activity company (DAC).

Existing private companies shall be deemed to be a DAC during the transition period or until they convert to an LTD. If by the end of that period a private limited company has not converted to a type of company recognised under the Act, the company automatically becomes an LTD. Other company types, such as public limited companies, unlimited companies and guarantee companies, will not need to convert although there will be some changes to the rules applicable to them.

Dillon Eustace are advising companies to take a proactive approach and to address this process sooner rather than later. By taking a personal approach to each company and offering plain English advice, Dillon Eustace believe that ensuring compliance with the Act should be a straightforward and inexpensive process.

Other Key Provisions and Features

Corporate Capacity

The doctrine of ultra vires no longer applies to an LTD and the LTD will no longer have an objects clause. The LTD will have unlimited corporate capacity to do anything lawful that its directors are resolved to do.

Corporate Authority

The Act now permits the company to appoint persons with unrestricted entitlement to bind the company and have those persons registered with the Companies Registration Office. Once authorised by the board of directors and registered with the CRO, the registered person or persons are taken to be duly authorised until the CRO is otherwise notified (even in circumstances where the company has already revoked the authorization of such persons).

Share Capital


The Act allows most companies to reduce its share capital using the summary approval procedure without any court involvement or to use the previous procedure which involves court confirmation.

Corporate Governance

Directors' Duties

Director's common law fiduciary duties have been codified in the Act. Directors will be subject to an objective standard of care, skill and diligence. Where a company and director acts in breach of his or her statutory fiduciary duties then the director is liable to account to the company for any gain which she or he makes directly or indirectly from that breach of duty and/or may be required to indemnify the company for any loss or damage resulting from the breach.

Single Director

An LTD is permitted to have a single director but that sole director is not permitted to be the company's secretary. A DAC retains the requirement have a minimum of two directors.

Compliance Statement

The Act requires that directors of a Public Limited Company (PLC) (other than investment company), LTD, DAC or Company Limited by Guarantee (CLG) the balance sheet of which exceeds €12,500,000 and the turnover which exceeds €25,000,000, should prepare a statement of compliance (this does apply to unlimited companies). The compliance policy statement must set out the company's policies that are appropriate to the company in terms of its compliance with company and tax law and should be included in the director's report in the annual accounts.

Directors' Loans

If loans are made to directors and are not in writing it is presumed they are repayable on demand and bare interest. If advances are made by directors to a company and are not in writing it is presumed not to be a loan and to the extent that it was such a loan it does not bare interest or security and is subordinate to all other creditors.

Disclosure of Interest in Shares and Share Options

Where shares or share options are held by a director and once aggregated with those of connected person's amount to an interest in less than 1% in the nominal value of the company's issued share capital of a class of shares carrying voting rights then such a director shall not be obliged to disclose such interest.

Serious Loss of Capital

Under the Act there will be no requirement for private companies to convene an EGM on a serious loss of capital. However, this requirement will remain for PLCs.

Default Governance Provisions

One of the innovations of the Act is the codification of the rules of internal management, i.e. where company's constitution is silent on any particular issue, the provisions in the Act will apply by default. The substance of virtually all of the regulations in "Table A" will now apply as requirements of law save to the extent that the company's constitution provides otherwise.

Company Secretary

The Act provides that the companies' directors are required to ensure that the company's secretary either has the skills or resources necessary to discharge his or her statutory and other duties. Company secretaries are no longer obliged to ensure compliance with company legislation as was previously the case.

Annual General Meeting

An AGM is now optional for LTDs and single members DACs, PLCs, CLGs and unlimited companies. Under the new regime they are entitled to adopt written procedures in place of holding an AGM.

Majority Written Resolution

Majority written resolutions can be passed as ordinary resolutions (greater than 50% of total voting rights) or special resolutions (greater than 75% of the total voting rights) and will take effect seven in 21 days, respectively, after the last member has signed. The old unanimous written shareholder resolution can still be utilised which take immediate effect if so used.

Charities Act update

The majority of the Charities Act 2009 came into effect from the 16th of October 2014. Part 4 (Protection of Charitable Organisations) and Part 7 (Miscellaneous Provisions), have yet to be commenced however.

On the 16th of October, a Ministerial Order established the Charities Regulatory Authority (the "CRA"). This new authority is empowered to maintain the Register of Charities, to require and hold annual reports from registered charities and to investigate complaints about charities (the investigative powers are yet to be commenced).

The Minister for Justice and Equality recently extended the time frame within which Charities established before the 16th of October 2014 must apply to the CRA to be registered on the Register of Charities. Section 40 of the Charities Act 2009 provides that charities established prior to the 16th of October 2014 will not automatically be registered with the CRA and must therefore apply directly in order to register.

The deadline for applications has been extended to the 16th of April 2016 to allow Charities more time to submit their applications.

Consumer Rights Bill

Consumer law in Ireland is due to undergo significant change within the next year. The Minister for Jobs, Enterprise and Innovation, Richard Bruton recently published a Consumer Rights Bill which envisages major reforms in the area of Irish Consumer Law.

The Bill primarily aims to consolidate and modernise the current primary, secondary and European legislation governing consumer law and as result should make consumer rights clearer to both consumers and businesses. Secondly the Bill seeks to address the significant gaps in protections afforded to consumers under the existing legislation by introducing new rights for consumers.

If enacted the Bill will impact every consumer and business in Ireland and the key proposals in the Bill concern the following areas:

  • Downloads – establishing rights and remedies for consumers who download/stream music, video games, videos, apps etc;
  • Expiry Dates – a ban on using expiry dates for gift cards and vouchers;
  • Services – bolster consumer rights in relation to purchasing services e.g. the right to have a substandard service remedied or refunded;
  • Goods – introduce a 30 day standard period in which consumers can return defective goods and obtain a full refund;
  • Unfair Terms in consumer contracts, whether sales, digital content or service contracts;
  • Information Rights for consumers in transactions for healthcare, social services and gambling; And
  • Gifts – introduce the same statutory rights for the purchase of gifts as those that apply to the purchase of goods.

The scheme of the Bill is currently in the consultation process and the Department of Jobs, Enterprise and Innovation are considering the responses on the proposed Bill before finalising for submission to Government. It is expected that the Bill will be enacted in the middle of next year.

Workplace Relations Act 2015

The Workplace Relations Act is one of the largest developments in the area of employment law in Ireland in recent history. It was signed into law on the 20th of May 2015, with a commencement date of the 1st of October 2015. The new legislation fundamentally alters the previous system, providing an inherently simplified procedure for resolving employment disputes between the employer and employee. The new streamlined regime will provide for superior access to justice and will result in the expedient resolution of disputes in the workplace.

The Act provides for the effective resolution, mediation and adjudication of workplace disputes and complaints relating to the contravention of, or entitlement under, the Act governing the employment relationship between employers and employees. The aim of the Act was to provide a world-class workplace relations service which provides for maximum compliance with employment law and to ultimately attract businesses to engage in employment in Ireland. The Act will apply to employment legislation and equality legislation.

The Act provides for a single informative source on employment law and a clear process of dispute resolution, thus moving away from the overcomplicated and outdated previous system. From now on all employment disputes will firstly be referred to the Workplace Relations Commission, with the Labour Court being the single appeals body.

The major developments once commenced on the 1st of October 2015 are that the Act will dissolve the Employment Appeals Tribunal and the Equality Tribunal and it will transfer their powers to the Workplace Relations Commission ("WRC") which will have a "Director General" ("DG"). The DG of the WRC has been appointed in addition to other officers in order to deal with disputes more efficiently.

The new structure represent a stark contrast to the current system, whereby the Employment Appeals Tribunals sits as a panel of three with appeals being reverted to both the Circuit Court and the Equality Tribunal who represent single decision makers. The Labour Court provides a conclusive appeals body. It represents a much needed reform to the workplace relations service which is simple to use, independent, effective, impartial, cost effective and provides for workable means of redress and enforcement, within a reasonable period of time.

To view the full article please click here.

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.