by Sabrina Burke May-14-2014 in Commercial & Business, Corporate Governance
The Companies Bill was published on the 21st of December 2012. The Bill consolidates the numerous existing pieces of company law legislation which date from 1963 to 2012 into one single Act and introduces a number of reforms which are designed to make it easier to operate a company in Ireland. It constitutes a complete overhaul of Irish company law.
The Bill is divided into 25 Parts. Parts 1 to 15 of the Bill set out the law which will apply toPrivate Companies Limited by Shares (a “CLS”) (which represents about 90% of all Irish companies). Parts 16 to 25 of the Bill deal with additional provisions applying to other kinds of companies such as Companies Limited by Guarantee, Public Companies, Unlimited Companies, Designated Activity Companies (which will be a new kind of company with restricted objects clauses).
The reforms introduced by the Bill include:
- Directors’ duties are codified in the Bill, making the law in this area more transparent and accessible
- All company law offences will be categorised into four categories. A “category 1” offence will be the most serious and will carry a maximum fine of €500,000 or a maximum term of imprisonment of 10 years
- The establishment of a domestic legal merger regime for private companies
- The establishment of a simplified approval procedure by directors and/or members to allow companies to carry out certain activities which under the current law would require making an application to the High Court for approval (e.g. share capital reductions)
- Removal of the necessity for a company to have an objects clause (other than a designated activity company) – in other words, companies will now have the same legal capacity as a natural person replacement of the memorandum and articles of association of a company with a simpler single constitution document and permitting a CLS type company to have only director
The Bill will now be reviewed by the Houses of the Oireachtais as part of the legislative process. Due to the size of the Bill, it is expected that it will be not be enacted until sometime in 2014. Following enactment of the Bill, there will be a transition period for companies before most of the laws come into force. We will keep you updated on the progress of the Bill and in due course of what steps will need to be taken by existing companies in preparation of the new regime coming into force.
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About the Author
Sabrina Burke
Sabrina is a senior associate solicitor in the Commercial & Business team at Hayes solicitors. Sabrina's main area of work is mergers and acquisitions, where she acts for buyers and sellers across various industry sectors. She also advises on corporate reorganisations, shareholder agreements and other commercial arrangements and contracts including agency/franchise/distribution agreements.