The Companies Bill 2012 was published on the 21st December 2012.
The legislation, which comprises of over 1,100 pages of text is the most significant reform in Irish company law since 1963. The new Bill consolidates the 16 existing Company Acts as well as a number of statutory instruments and judgments.
The Company Law Review Group have worked on the Consolidated Companies Bill since 2000 and recognised that the Private Company Limited by Shares is the main company type used in Ireland. The Companies Bill has been drafted with this in mind and focuses primarily on the life of a Private Company Limited by Shares. One of the main aims of the Companies Bill is to simplify company law in its current state and to make it more accessible.
The Bill consists of 26 Parts in total, Parts 1-15 applies to the model Private Company Limited by Shares and parts 16-25 deals with company types and miscellaneous matters.
Main Changes introduced by the New Companies Bill
- The Private Company Limited by Shares which we are familiar with will be known as a Company Limited by Shares (“CLS”).
- The doctrine of Ultra Vires (acting outside its powers) will be removed which will result in there being no requirement for a company to have an objects clause. This type of company will have the power to carry out any activity which its Directors determine. If a company wishes to retain or restrict its objects clause then it will have to re-register as a Designated Activity Company (“DAC”).
- A CLS will have a one document Constitution replacing the current Memorandum and Articles of Association. Many of the current provisions set out in Table A (the current model Articles for a Private Company Limited by Shares) will become statutory requirements for a CLS.
- A CLS may have a minimum of 1 Director and a Company Secretary. If a company has a single Director they cannot act as the Company Secretary.
- A CLS may dispense with the physical holding of the AGM and will have the option to hold the AGM by written resolution of the members.
- Ability to pass majority written resolutions
- There will be one omnibus validation procedure which will apply to regulated activities including transactions with directors, giving financial assistance, capital reductions & members voluntary winding ups.
- A mechanism whereby Mergers & Acquisitions between private limited companies will be made available.
- Directors Duties & Responsibilities have been codified into 1 section in the Bill
Company Law offences have been categorised on a scale of 1 to 4, 1 being the most serious. The penalties for breach of these offences will range from imprisonment of up to 10 years and/or €500,000 fine to imprisonment of up to 12 months and/or fine of up to €5,000.
Parts 1-15 of the Companies Bill 2012
As mentioned above Parts 1-15 of the Companies Bill 2012 will apply to the model Private Company Limited by Shares:
Part 1 – Preliminary and General
Part 2 – Incorporation and Registration
Part 3 – Share Capital, Shares and Certain Other Instruments
Part 4 – Corporate Governance
Part 5 – Duties of Directors and Other Officers
Part 6 – Financial Statements, Annual Return and Audit
Part 7 – Charges and Debentures
Part 8 – Receivers
Part 9 – Reorganisations, Acquisitions, Mergers and Divisions
Part 10 – Examinerships
Part 11 – Winding Up
Part 12 – Strike Off and Restoration
Part 13 – Investigations
Part 14 – Compliance and Enforcement
Part 15 – Functions of Registrar and of Regulatory and Advisory Bodies
Parts 16-25 of the Companies Bill 2012
Parts 16-25 will deal primarily with the various other company types along with miscellaneous matters:
Part 16 -Designated Activity Companies (“DAC”)
Part 17 -Public Limited Companies (“PLC”)
Part 18 -Guarantee Companies (“CLG”)
Part 19 -Unlimited Companies (“ULC”)
Part 20 -Re-registration
Part 21 -External Companies
Part 22 -Unregistered Companies and Joint Stock Companies
Part 23 -Public Offers of Securities, Financial Reporting by Traded Companies, Prevention of Market Abuse, etc.
Part 24 -Investment Companies
Part 25 -Miscellaneous
Once the Bill has been enacted it is envisaged that there will be an 18 month transition period for companies to comply with the new requirements. During this period a Private Company Limited by Shares can adopt, by special resolution, the new one document Constitution to the exclusion of its current Memorandum & Articles of Association. By following this procedure the company will become a CLS.
If however, the company wishes to retain its current objects clause or restrict its objects clause somewhat, it must re-register as a DAC. If, once the transition period has expired and a company has not already re-registered as a DAC, it will be automatically converted to a CLS.
Enactment of Companies Bill
The Companies Bill is currently making its way through the House of the Orieachtas and it is anticipated that commencement orders will be signed late 2013 or earlier