by Ken Casey , David Mangan, Tommy Whittle December-19-2024 in Corporate
The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (the "Act") introduces substantial amendments to the Companies Act 2014 (the "2014 Act"). These changes are aimed at enhancing corporate governance and streamlining company law procedures in Ireland. These changes, which came into effect on 3 December 2024, are designed to modernise the legal framework for Irish companies, particularly in the areas of virtual meetings and company mergers. The key changes and their implications for companies operating in Ireland are outlined below.
Virtual Meetings
A notable change introduced by the Act is the facilitation of virtual meetings. This amendment aligns Irish company meetings facilitation more closely with modern business practices that have evolved significantly, particularly in response to restrictions on meetings in person during the Covid-19 pandemic. While many companies (particularly, larger publicly traded companies with significant numbers of shareholders) had adapted their individual constitutional documents to enable virtual meetings, the Act facilitates this on a broader basis. Key points include:
- Hybrid and Wholly Virtual General Meetings: The Act amends the 2014 Act to allow companies to hold general meetings either wholly virtually or in a hybrid format, unless a company's constitution expressly provides otherwise. Where a company has disapplied all optional provisions under the 2014 Act it will need to include an express regulation in its constitution if it wishes to facilitate a virtual meeting. This would allow those entitled to attend to participate in meetings online without the need for a physical location.
- Participation and Voting: Participants in virtual meetings are deemed present at the meeting, and the Chairperson has the authority to adjourn the meeting if there are issues with the electronic communication platform. Resolutions can only be voted upon if the Chairperson can identify those entitled to vote and verify the content of the voting instructions given by online participants.
These changes are expected to enhance engagement and make it easier for companies to conduct meetings, especially for those with geographically dispersed shareholders.
Simplification of the Merger Process
The Act also introduces significant amendments to simplify the merger process for Irish companies. These changes are designed to make mergers more efficient and cost-effective, particularly for corporate groups with multiple entities. The key amendments include:
- Mergers for Designated Activity Companies (DACs): Previously, the summary approval procedure for mergers could only be used if at least one of the companies involved was a private company limited by shares. The Act now allows this procedure to be used where at least one of the companies is an LTD or a DAC. This means that two or more DACs can now merge using the summary approval procedure without requiring an LTD to be involved.
- Concurrent Mergers by Absorption: The Act facilitates the merger by absorption of multiple wholly owned subsidiaries in one transaction. Before this amendment, under the 2014 Act, a separate merger process was required for each subsidiary. The new provisions remove the necessity for multiple concurrent mergers, streamlining the process significantly.
Flexibility in executing Deeds
Ireland remains one of the few common law jurisdictions that mandates the execution of deeds and certain other documents under the company seal. This process can be quite cumbersome, as it requires two company officers to sign the same document in wet ink, with the company seal affixed next to the signatures.
While the requirement to execute deeds under seal has been retained, the Act introduces an amendment allowing companies to execute documents under seal in counterpart. This means that the two signatories do not need to physically sign the same document. This amendment permanently reinstates a measure that was temporarily introduced during the Covid-19 pandemic, which proved effective in facilitating documents being entered into where company officers and the company seal were at different locations.
These amendments are expected to be particularly beneficial for corporate groups looking to rationalise their structures, reducing the administrative burden and associated costs.
Audit Exemption
Under the 2014 Act, a small or micro company would lose its audit exemption where it failed to file an annual return on time with the CRO. Whereas, under the Act, the audit exemption will only be lost where a company fails to deliver its annual return on time for a second or subsequent time within a five-year period.
Optional reporting of board gender
Under the Act, for statistical purposes, a company has been given the power to provide information regarding the gender of its board of directors in its annual return.
Conclusion
The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 represents a significant update to Irish company law, reflecting the evolving needs of Irish companies today. By facilitating virtual meetings and simplifying the merger process, the Act aims to enhance corporate governance and operational efficiency.
We are committed to helping our clients navigate these changes and the new legal framework. If you have any questions or need assistance with corporate governance or restructuring matters, please feel free to contact Ken Casey (kcasey@hayes-solicitors.ie), David Mangan (dmangan@hayes-solicitors.ie) or your usual Hayes contact.
Back to Full NewsShare this article:
About the Authors
.jpg)
Ken Casey
Ken is Head of the Corporate team and has built a practice in acquisitions, disposals, and capital markets transactions across various industry sectors; joint ventures and corporate re-organisations of publicly quoted and private companies; and advises on corporate governance and general corporate law. He has extensive expertise in the financial services, aviation, gaming, technology, media and sports sectors.
David Mangan
David is a partner in our Corporate team. He advises clients on structuring and executing domestic and cross-border transactions, including mergers & acquisitions, joint ventures, private equity investments and capital markets transactions.
Tommy Whittle
Tommy is a solicitor in the Corporate team at Hayes solicitors.
Tommy advises on mergers and acquisitions, investments, corporate restructurings, shareholder agreements, and various general commercial arrangements. He advises a wide range of clientele, including international and Irish-based entities spanning sectors such as technology, finance, insurance, charities and retail, ranging from startups to multinational companies.