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Changes To The New Companies Bill 2012 In Ireland

Changes To The New Companies Bill 2012 In Ireland

Changes To The New Companies Bill 2012 In Ireland  The new Companies Bill in Ireland was distributed on 21 December 2012 by Minister for Jobs, Enterprise and Innovation, Richard Bruton TD. The Bill has outlined a number of proposed changes which will transform current Irish company law.

The Bill is based on the General Scheme and was drafted by the Company Law Review Group (CLRG), which includes representatives of business and of trade unions, practitioners in the legal and accountancy professions, representatives of relevant Government bodies, and regulators.

The Bill consolidates the existing sixteen Companies Acts, which date from 1963 to 2012, into one Act. The Bill also introduces a number of reforms in order to make it easier to operate a company in Ireland.

Significant Changes To Private Companies

The draft Bill proposes many important changes to the law of private companies including the following:

  • Companies will only require one director. In reducing the statutory minimum number of directors to one, accountability in governance will be increased as the need for directors to be appointed to meet the minimum number of directors required will fade;

  • Companies will have a one-document constitution. In other words, the Memorandum and Articles of Association will be replaced by one document;

  • Companies will no longer be required to have an objects clause. Therefore, the company will now have the same legal capacity as a natural person which means that the doctrine of ultra vires relating to a company’s powers will no longer apply to private companies limited by shares;

  • Private Companies may have up to 149 members;

  • The new summary approval procedure will allow companies to carry out certain activities by way of a directors’ declaration and a shareholders’ resolution for activities which would require High Court approval under current law, e.g., certain transactions with directors and capital reductions;

  • Private companies will be able to engage in mergers and divisions. Under current company law, there is no facility for two Irish private companies to merge;

  • The availability of the audit exemption will be extended to group companies and dormant companies;

  • Directors’ duties will be codified in the Bill, making the law in this area more transparent and accessible. Currently many of the legal and equitable duties of directors are demonstrated over more than 150 years of case law;

  • All offences under company law will be streamlined and categorised into four categories, with category 1 being the most serious, and carrying a maximum fine of €500,000 or a maximum term of imprisonment of 10 years; and

  • SMEs will be able to apply to the Circuit Court for examinership. 

Other Company types

  • For the first time, each company type, such as PLCs, guarantee companies, unlimited companies, will have its own dedicated part within the Bill, therefore improving the accessibility and visibility of the law for all users; 

  • Any company will be enabled to convert from its existing company type to any other company type, which can be formed under the Bill.

The Benefits Of The Companies Bill

Changes included in the Bill will result in a saving of more than €6m per year for private companies limited by shares which are established every year as a result of allowing the Companies to be incorporated more efficiently. These changes will potentially make substantial improvements to the way in which business is conducted in Ireland.

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