The New Companies Bill which was published by the Minister for Jobs, Enterprise and Innovation Richard Bruton TD has been described as the largest substantive piece of legislation in the history of the State. The Bill which was published on 12th December consolidates the existing 16 Companies Acts which date from 1963 to 2012. There are many positive aspects about this publication which could come into law in 2014.
One of the driving forces for this bill is to make Ireland one of the best small countries in which to do business, and many of the new innovations in the bill are welcome.
The main benefit for new companies is the cost savings that they will benefit from. The bill reduces red tape and will make the legislation easier to understand. The most common type of company incorporated in Ireland is a Private Limited Company Limited by Shares. This type of company will be at the center of the legislation. The main changes to the legislation is as follows:
- It will be possible to have only one director in the company instead of currently having to have two Directors.
- Currently there is no facility for Private Companies to engage in Mergers and divisions. This will be facilitated under the new legislation.
- The Memorandum Of Association currently provides for an Objects Clause describing the company activity (What they can and cannot do). Under the new legislation, there will be no Objects Clause, instead the company will have the same legal capacity as a natural person. This will aid commercial transactions, and companies’ interactions with banks and lending institutions (the bank will no longer need to require a company to establish – usually at the company’s own cost – that the company has the legal power to borrow money for the purpose of the activity which it wishes to carry out).
- Audit Exemption availability will be extended to Dormant Companies and Group Companies.
- SME’s will be able to apply to the Circuit Court for Examiner ship.
- The current “Private Limited Company” will become known as a “Company Limited by Shares” or C.L.S.
- Much of the Case Law regarding legal and equitable duties of Directors is set out over 150 years. Under the new legislation, these duties will be codified under the bill making this law more accessible and transparent.
- The company will no longer be required to hold an Annual General Meeting as currently required. Instead, the company will be able to complete this by written procedure.
- An interesting change is that a company will no longer need to draft a Memorandum and Articles of Association. Instead, the company will have a one document constitution. The bill will contain provisions by default. The company has the option to vary any of the provisions contained.
- Offences under company law will be categorized by severity. Category one will have the most severe penalty of €500,000 or 10 years imprisonment.
- There will be a new “Summary Approval Procedure”. This will allow companies to perform certain activities by means of a directors declaration, and a Shareholders’ resolution. Currently activities require a High Court approval.
- Other company type changes include:
- It will be easier for companies to change their company type where they find that they have a change in their circumstances.
- Under the bill, PLC’s, Guarantee Companies, & Unlimited Companies will have dedicated parts which will improve the accessibility and visibility of the law for all users.