Newsmedianews - Archived direct input headlines

NEWSMEDIANEWS

______________________________Direct Input News Archive______________________________

Landmark Companies Bill sent to President printable version

17 Dec 2014: posted by the editor - Business, Ireland

The largest substantive piece of legislation in the history of the State, the Companies Bill, has passed all stages in the Houses of Oireachtas and has now been presented to President Michael Higgins for final approval.

Some 200,000 SMEs and 12,000 start-ups every year will be able to substantially reduce the costs and time associated with establishing and running a company, as a result of a range of reforms to be introduced as part of the landmark Companies Bill, the Government said. The Bill, which was introduced by the Minister for Jobs, Enterprise and Innovation Richard Bruton TD in December 2012, has passed all stages in the Houses of the Oireachtas and has today (Wednesday) been sent to the President.

Once commenced, the Act aims to provide significant benefits to companies by reducing red tape and making company law obligations easier to understand. This landmark legislative project, which is the largest substantive Bill in the history of the State, will bring significant benefits to companies of all types throughout the country, and is part of the Government's drive to make Ireland the best small country in the world in which to do business.

The Bill consolidates the existing 17 Companies Acts, which date from 1963 to 2013, into one Act and it also introduces a number of reforms, which are designed to make it easier to operate a company in Ireland. Set out across 25 Parts, to ease the accessibility of the law for each different company type, the Bill contains 1,448 sections, and 17 Schedules.

For the private company limited by shares, the Bill contains a number of significant reforms:

· It will now be possible for such a company to have only one director—there will no longer be a requirement to have a second director
· The company will not be required to hold a "physical" AGM
· The company will be permitted to have a one-document constitution.
· The company will no longer be required to have an objects clause, setting out what the company does and does not have capacity to do—the company will now have the same legal capacity as a natural person.
· The new "summary approval procedure" will allow companies to carry out certain activities by means of a directors' declaration and a shareholders' resolution, for activities which under the current law would require High Court approval (for example, certain transactions with directors, capital reductions, and solvent windings-up)
· Private companies will be able, for the first time, to engage in mergers and divisions (under the current law, there is no facility for two Irish private companies to merge).
· Directors' duties have been 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 than 150 years of case-law.
· Companies can now file their annual returns online (in full) and this will create efficiencies and reduce costs for all businesses

Minister Bruton said: "This Government is determined to make Ireland the best small country in the world in which to do business, so that more businesses can start-up, grow and create the jobs we need. A key part of our Action Plan for Jobs is implementing a series of changes to reduce the administrative burdens imposed by Government on business.

"The Companies Bill is a groundbreaking piece of legislation. It consolidates the 17 Companies Acts as well as the many statutory instruments and court judgements so as to make it easier for companies to know and understand their legal obligations. It also implements a series of major reforms to allow for more electronic transactions, to reduce red tape and to make it easier and cheaper to run a company in Ireland. It will make a real difference to our international competitiveness. It will save businesses in terms of compliance costs and will ultimately make it easier to create jobs.

"I would like to acknowledge the valuable contribution made by the members of the Houses of the Oireachtas and thank them for their collegial approach in progressing this large and technical Bill in such an efficient and supportive manner. I would also like to pay tribute in particular to officials of my Department who worked incredibly hard on this project, and to the CLRG and all the others who contributed to this massive and hugely important project."

See link to Companies Bill 2012: http://www.djei.ie/commerce/companylawreview/companiesbill.htm

The most common company type in Ireland, the private company limited by shares, will now, for the first time in Irish company law, be placed at the centre of the legislation. All of the law which applies to this company type—which represents approximately 90% of all companies registered at the Companies Registration Office—is now contained together, in Parts 1 to 15 of the Bill, and is set out logically to follow the life-cycle of a company, starting with the provisions governing incorporation, followed by the sections which apply to the ongoing operation of the company, before dealing with the provisions which apply to the closing down, or winding up, of the company.

Each other company type, such as PLCs, guarantee companies, unlimited companies, has its own dedicated Part within the Bill, thereby making it far easier for anyone involved with any of the possible company types to find the law that applies to their company more easily.

The Bill is based on the General Scheme which was drafted by the Company Law Review Group (CLRG), the statutory expert body which is charged with advising Minister Bruton on matters relating to company law. The CLRG has the benefit of drawing on the wide range of expertise in company law provided by stakeholders from across the private and public sectors. Chaired by Dr. Tom Courtney, one of the leading company law experts in Ireland, the CLRG membership includes representatives of business (both large and small) and of trade unions, practitioners in the legal and accountancy professions, representatives of relevant Government bodies, and regulators.

Major reforms are as follows:

For the private company limited by shares, the Bill contains a number of significant reforms:

· It will now be possible for such a company to have only one director—there will no longer be a requirement to have a second director
· The company will not be required to hold a "physical" AGM—instead, the business which is required to be carried out at the AGM can be completed by written procedure
· The company will be permitted to have a one-document constitution. The requirement under the current law for every company to have detailed Articles of Association will no longer apply—instead the Bill will contain provisions which will apply by default, unless a company wishes to vary any of these provisions. The Bill contains a standard template of a company constitution which will be useful to small companies and new companies seeking to incorporate in the most cost-effective manner.
· The company will no longer be required to have an objects clause, setting out what the company does and does not have capacity to do—the company will now have the same legal capacity as a natural person. This will mean that the old legal doctrine of ultra vires (related to a company's powers) will no longer apply to private companies limited by shares. This will aid commercial transactions, and companies' interactions with banks and lending institutions (the bank will no longer need to require a company to establish—usually at the company's own cost—that the company has the legal power to borrow money for the purpose of the activity which it wishes to carry out)
· The new "summary approval procedure" will allow companies to carry out certain activities by means of a directors' declaration and a shareholders' resolution, for activities which under the current law would require High Court approval (for example, certain transactions with directors, capital reductions, and solvent windings-up)
· Private companies will be able, for the first time, to engage in mergers and divisions (under the current law, there is no facility for two Irish private companies to merge).
· The availability of the audit exemption has been extended to group companies, to dormant companies, and to companies which fulfill two out of the three qualifying criteria (Previously they were required to fulfil all three criteria). It is expected that this change to two criteria will reduce costs for small business.
· Directors' duties have been 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 than 150 years of case-law.
· All offences under company law have been streamlined and categorised into four categories, with category 1 being the most serious, and carrying a maximum fine of €500,000 and/or a maximum term of imprisonment of 10 years.
· Companies can now file their annual returns online (in full) and this will create efficiencies and reduce costs for all businesses
· Any company will be enabled to convert from its existing company type to any other company type which can be formed under the Bill. This will provide flexibility and greater options to companies which find a change in their circumstances.

Tags: Companies Bill

Back to headlines
comments (0)
recommend

>Local comment

Name: Remember me

E-mail: (optional)

Captcha

Return to full index