Summary of the New Companies Bill in Ireland which will become law in 2015
On December 21, 2012, Richard Bruton, TD, the Minister for Jobs, Enterprise and Innovation, circulated the new Companies bill in Ireland. There are many proposed changes put forth in the bill that will truly reform business law in Ireland as it stands now.
This bill is based upon the General Scheme. It was drafted by the Company Law Review Group (CLRG). This is a group that includes representatives of trade unions and businesses, along with practitioners in the accountancy and legal practices. Additionally, regulators and representatives of relevant Government bodies are represented.
With this bill, there is consolidation of the present sixteen Companies Acts (1963 – 2013) into a single Act. Many reforms that make it simpler to run a business in Ireland are introduced by the bill, as well.
Important Modifications to Private Companies
A number of significant changes are suggested with regard to the law of private companies, such as:
-Only one director will be required by firms. The effect of reducing the required minimum number of directors to one is greater accountability in governance. It is anticipated that accountability will increase as the need for appointed directors is reduced;
-The constitution of companies will become a single document. That is to say that a single document will take the place of the Memorandum and Articles of Association;
-Going forward, it will not be mandatory for firms to have an objects clause. For this reason, companies will be able to make use of the same legal capacity as an actual person. This means the doctrine of ultra vires that relates to any company’s powers will not apply to private companies that are limited by shares;
-Furthermore, private companies will be able to have up to as many as 149 members;
-The new procedure of summary approval will let companies carry out specific activities via the declaration of a director and shareholders’ resolution. This would be true for activities which would currently require High Court approval. For example, certain transactions involving directors and capital reductions;
-Furthermore, private companies will now be allowed to engage in divisions and mergers. The law at present does not allow the merger of two private Irish companies;
-Dormant and group companies will now enjoy the privilege of audit exemption;
-The bill will codify the duties of the directors, causing the law to be both accessible and transparent. In the present, both equitable and legal director’s duties can be seen by reviewing over a century and a half of case law experience;
-Under current company law, offenses will be streamlined then categorized into four separate categories. The first category will be quite serious and will carry a maximum fine of €500,000 or an alternate prison term of no more than a decade;
Other types of Companies:
-Now each company, including a guarantee company, an unlimited company or a PLC, will get it’s own dedicated section within the bill, a move that improves the law’s visibility and accessibility for all parties.
-Also, all companies will be able to convert from their present structure to another type of company, which can be formed thanks to this bill.
The bill known as the Benefits Of The Companies Bill
This bill includes changes which will result in savings in excess of €6m per year for private companies. This savings amount is limited by shares which are established annually due to allowing the Companies to be more efficiently incorporated. The changes are likely to immensely improve the way in which business is handled in Ireland.
For more information on the companies bill, or to start a company in Ireland, please don’t hesitate to contact us.