MORE THAN 280 representatives of Ireland’s venture capital, and corporate and financial services sector attended a breakfast briefing on the new Companies Bill in the Shelbourne Hotel on February 13, hosted in conjunction with the Corporate Governance Association of Ireland by Barbara Kenny, Partner in William Fry’s Corporate Department with guest speaker, Helen Dixon, Registrar of the Companies Registration Office (CRO).
Attendees at the event heard from the speakers on a number of topics around the Bill including: changing company structures and associated processes, cost saving measures proposed under the Bill, transparency around directors duties and the implications of the mandatory compliance statement for larger companies.
Designed with the intention of simplifying the existing, complex and fragmented legislation, the Companies Bill mandates a level of reform for all Irish companies. Private companies limited by shares represent 88% of all companies registered in Ireland.
Under the Bill, existing private limited companies must either convert to a ‘LTD’, a new model company limited by shares or, those companies opting to maintain a more traditional company formation in line with the existing structure, must register as a ‘DAC’ or Designated Activity Company.
Some of the proposed reforms provided by for the Bill are:
- Directors’ duties will be consolidated under the one Bill and become more transparent;
- Dispensing with the current ‘two director minimum’, the new companies limited by shares will be able to avail of a sole director;
- Dispensing with mandatory ‘physical’ AGM requirements;
- The directors of plcs and large private companies meeting certain thresholds will be required to make compliance statements;
- A LTD will have a one-document constitution – the memorandum and articles of association will be replaced by one document with no objects clauses;
- Irish private companies will be able, for the first time, to engage in mergers and divisions with each other; and
- Audit exemptions will be extended to group companies, and to dormant companies.
“While this legislation has been engineered around the most common Irish company, that of the private company limited by shares, all companies registered in Ireland will be affected by the Companies Bill and so must prepare for a new regime under its enactment” said Barbara Kenny this morning, adding,: “The Companies Bill is good news for Irish companies. The structure of the legislation is simplified and it’s easier to follow. This is going to reduce costs and allow companies carry out activities which they cannot do under the existing legislation but it needs careful navigation.”
Attendees also received good news from Helen Dixon of the CRO who spoke of the opportunities around cost saving for companies under the new legislation, noting: “This legislation crystallises the legal requirements for those businesses seeking to become established as a legal company. Under the new Bill, the process of incorporation has been simplified, the reduction in the amount of red tape previously mandated for incorporation means that entities or start-ups could make considerable saving in professional fees associated with the existing process. This reform makes Ireland a significantly more attractive as an international commercial destination and strengthens our global offering as we bid to attract companies to our shores from all over the world.”