Dáil Éireann Debate, Wednesday - 8 February 2012
86 Deputy Dominic Hannigan asked the Minister for Jobs, Enterprise and Innovation the provisions that will be in the companies Bill to reduce the administrative burden and audit rules on community and voluntary groups; and if he will make a statement on the matter. [7139/12]
View answerCommunity or voluntary groups may be incorporated as companies, but this may not always be the case, as some may choose to avail of other legal forms. Such groups which have charitable status are governed by the Charities Act 2009, under the aegis of the Minister for Justice and Equality and are answerable to their stakeholders, shareholders and funders.
Community or voluntary organisations which incorporate as companies might conceivably choose different company types. For those that have chosen to be private companies limited by shares, the Companies Bill will introduce a number of tangible benefits which will operate to reduce the administrative burden.
The new default company type under the Bill, the private company limited by shares, or "cls" for short, will offer a number of attractive practical benefits which will make it easier to start, to use, and to run such a company. For example, such a company will only be required to have a minimum of one director, as opposed to two under the current law. The complex legal doctrine of ultra vires , which has applied to all companies up to now, will not apply to the new cls. Neither will a cls be required to draft a long document containing its Articles of Association which conventionally govern the internal operation of companies — these will now be included in the Bill as applicable “default” provisions (although a company may vary any of the vast majority of these default provisions if it has circumstances which make it appropriate to do so), and consequently the current requirement for lengthy, complex documents at the time of incorporation of a new company can be replaced by a single-document, and possibly single-page, Constitution under the proposed new law.
The cls will also be permitted to hold its AGM by written procedure, rather than being compelled to gather all of the members in the same room at the same time once a year.
The Bill also introduces the new concept of the Summary Approval Procedure, which will allow companies to undertake certain transactions which previously were either prohibited or required Court approval, by the new method of a special resolution combined with an appropriate declaration by the directors, subject to safeguards to prevent improper use.
However, I understand that many community or voluntary groups which have formed themselves as companies have done so as companies limited by guarantee (CLG). Due to their public membership structure they cannot avail of an audit exemption under the current law.
The Company Law Review Group (CLRG) 2009 Report examined the issue of extending audit exemption to companies limited by guarantee. It made the following recommendations:
"(i) Subject in each case to consultation with the Minister for Community, Rural and Gaeltacht Affairs and the charities regulator, the audit exemption regime contained in Part III of the 1999 (No. 2) Act be extended to such class or classes of CLG which are charitable organisations (within the meaning of the Charities Act 2009) so as to bring them into alignment with charitable organisations that are not companies, provided that 10% of the members with voting rights should be able to require an audit.
(ii) The audit exemption regime contained in Part III of the 1999 (No. 2) Act be extended to all CLGs which are not charitable organisations, subject to a veto right, by any one member of the company, and further subject to the requirement that audit exemption in respect of the following year, shall be an item on the agenda of the annual general meeting."
It is my intention that provisions giving effect to the recommendations of the CLRG in this matter will be included in the Companies Bill, which I aim to publish in the second half of this year. The CLRG recommendations contemplate that any proposals in this context will be subject to consultation with the Department of Justice and Equality, which now has responsibility for charities regulation.
