Dáil Éireann Debate, Tuesday - 2 December 2014
250. Deputy Terence Flanagan asked the Minister for Jobs, Enterprise and Innovation the position regarding the commencement of the new Companies Act; the main changes; and if he will make a statement on the matter. [46228/14]
View answerThe Companies Bill 2012 completed Report and Final Stages in the Seanad on 30 September 2014. “Report Back” to the Dáil on the Seanad amendments is expected in mid-December. The Bill is expected to be enacted by the end of 2014 with commencement from the 1st June 2015. The main changes contained in the Companies Bill, 2012 are:
- The private company limited by shares (LTD) will have the same legal capacity as a natural person.
- The LTD will be allowed to have only one director.
- The LTD will have a single-document constitution.
- The LTD will no longer be obliged to go through the formality of holding a “physical” Annual General Meeting (AGM) whereby all of the members have to convene in one location at the same time once each year. The Bill allows the members to instead hold a “written” AGM, whereby all of the matters which must be dealt with at the AGM can be approved by written procedure.
- Directors' duties are codified in the Bill, thereby making the law in this area more transparent and accessible. Currently many of the legal and equitable duties of directors are set out over more the 150 years of case law.
- The Bill provides for a “summary approval procedure”, which will be applicable to a number of activities (for example, reduction of capital) which under the current law might require the company to undertake the burdensome and expensive process of securing Court approval. The new “summary approval procedure” incorporates safeguards in relation to directors’ liability in circumstances where the procedure is used without proper justification.
- The Bill contains a qualification regime for liquidators. In general, this will require liquidators to be a member of a prescribed accountancy body, or of the Law Society, or of any other body recognised for this purpose by the Irish Auditing and Accounting Supervisory Authority (IAASA), or to be approved individually by IAASA pursuant to the transition (or “grandfathering”) provision, based on the individual’s experience and expertise. Liquidators will now also be required to hold appropriate professional indemnity cover. This qualification regime will also be extended to examiners under the Bill.
- All offences under company law have been streamlined under a new classification procedure which operates on the basis of four categories of offences, with Category 1 being the most serious. This will bring a structure and consistency to the offence provisions throughout the legislation.
- It will be possible to merge two Irish private companies. The procedure for this is modelled on the EU Cross-Border Merger Regulations, which are regarded as relatively straightforward to operate by the business and advisory community.
- Each company type (other than the private company limited by shares, which is dealt with in Parts 1 to 15) will have its own dedicated Part of the Bill. Each of these Parts will apply, disapply or vary the default provisions as set out in Parts 1 to 15, so as to tailor the application of the law for each other type of company.
- The company types which will each have their own dedicated Part, following this structure, are as follows – designated activity companies (Part 16), PLCs (Part 17), guarantee companies (Part 18), unlimited companies (Part 19), external companies (Part 21), unregistered companies (Part 22), and investment companies (Part 24).
- Part 18 extends the availability of the audit exemption to guarantee companies, on the same basis as this is available to “normal” trading companies (private companies limited by shares). However, any one member of a guarantee company can object to the audit exemption being availed of, and in these circumstances the company will be required to proceed with an audit.
- Part 20 contains provisions which will enable a company to convert from any company type (for example, a private company limited by shares) to any other company type (for example, a PLC), subject to complying with the requirements for the company type to which it wishes to convert.
- Part 21 contains a streamlined regime for external companies operating in Ireland. The previous “place of business” concept from the Companies Act 1963, which was problematic in certain respects in its operation, is not being carried forward in the Bill. All external companies will now have the single option of registering as a “branch” in Ireland, which is a concept under EU law (and which Ireland is accordingly obliged to provide for) and which offers greater clarity and structure.
- Part 23 contains the provisions that apply to companies whose shares are traded on a stock exchange, including provisions in relation to what is known as “Markets law”. This includes provisions dealing with public offers of securities (including prospectus law), market abuse law, corporate governance statements for traded companies, and transparency law. These provisions are largely based on EU requirements in these respective areas.- Part 24 contains the provisions relevant to investment funds companies, which were previously set out predominantly in Part XIII of the Companies Act 1990. These have now been consolidated, with appropriate subsequent provisions from the 2005, 2006 and 2009 Acts in this Part.
