Key Features Of Ireland’s Draft Companies Bill
The Draft Companies Bill
The second part of the draft Companies Bill, called “Pillar B”, has been drafted and is due to be published in late 2012 or early 2013.
The intention of the draft Companies Bill is to consolidate the 15 existing Irish Company Acts dating from 1963 and to introduce several company law reforms.
Sections Of The Bill
The first part of the Bill, called Pillar A, published by Minister for Jobs, Enterprise and Innovation, Mr. Richard Bruton TD, in May 2011 contains all of the laws relating to the most common company type in Ireland, the ‘private company limited by shares’, which under the Bill will be known as “CLS” (company limited by shares). Pillar A will introduce important changes which will make it easier and cheaper to start and run a company in Ireland.
The second part of the Bill, called “Pillar B”, will contain the law applicable to all other company types, such as the Public Limited Company (PLC), Guarantee Companies, Designated Activity Companies (DACs), and Unlimited Companies.
Significant Changes To The Law of Private Companies
The draft Bill proposes many significant changes to the law of private companies.
The main features of the new model private company (CLS) and reforms provided for in Pillar A include:
It will be limited by shares;
It will not be required to have an objects clause, making it easier to transact with confidence with private companies;
The minimum number of directors has reduced from two to one;
It will not be permitted to offer securities, whether equity or debt, to the public in any circumstances;
It will have a one-document Constitution, rather than a Memorandum and Articles of Association;
The necessity for each company to have detailed specific internal regulations (in the form of Articles of Association) will be removed. As most of the provisions commonly provided for in the Articles of Association on the internal administration and governance of companies will be contained in the new Bill and will apply to all private companies (unless their constitution provides otherwise);
If the members consent, all private companies will be permitted to have "written" Annual General Meetings, and the need for a physical meeting may be dispensed with;
It may pass Majority Written Resolutions; and
Offences under company law have been categorised on a scale of 1 to 4 (where 1 is the most serious). The punishment for those found guilty of each category clearly specified. This will facilitate greater transparency in respect of breaches of company law and is expected to facilitate enforcement.
Bill To Be Published in 2013 or 2014
It is expected that the entire Bill will be formally published and introduced to the Houses of the Oireachtas in late 2013 or 2014.
On a designated transition date all existing private limited companies shall convert to CLS unless steps are taken prior to that date by companies to designate themselves otherwise. One such alternative form will be for existing private limited companies to elect to become Designated Activity Companies (DAC).