On 1 August 2020, the Companies (Miscellaneous Provisions) (COVID-19) Act 2020 (Act) was signed into law. This legislation, due to commence soon, will address certain specific company law issues arising because of the ongoing and unprecedented Coronavirus (COVID-19) crisis.
Due to the Irish Government’s ongoing restrictions on the number of attendees at indoor events and on international travel, the Act makes certain amendments to the Companies Act 2014 regarding the holding of general meetings. These changes will apply until 31 December 2020 (the Interim Period), although the Government may, at the request of the Minister for Business, Enterprise and Innovation (the Minister), extend this period if doing so would be in the public interest (having regard to the impact of COVID-19).
The key changes are:
- AGM Extension: companies will be able to hold their AGMs on any date before the end of 2020, regardless of the usual deadlines that would apply under the Companies Act 2014 or under their constitutions.
- Electronic Meetings: AGMs, EGMs, class meetings and scheme meetings (together, Meetings) can be, wholly or partly, conducted electronically (by the use of electronic communications technology which must enable real time, two-way audio-visual or audio communication) without the need for a physical venue, provided all attendees have a reasonable opportunity to participate in the Meeting. The Act includes specific requirements in relation to the form of notices of electronic general meetings (including class meetings) and the conduct of voting at such meetings. The Minister is empowered to make regulations supplementing the requirements under the Act.
- Rearranging Meetings: directors will, at any time prior to the day of the scheduled Meeting (if this is deemed necessary to comply with public health guidance or restrictions on movement or gatherings), have discretion to: (i) cancel a Meeting; (ii) change the venue; or (iii) change the means of holding the Meeting (including by facilitating electronic attendance). In addition, directors will be able to cancel a Meeting at any time prior to the holding of that Meeting if this is deemed necessary due to exceptional and unexpected circumstances. The Act contains formalities regarding the manner of notice which must be given where a Meeting is rearranged or cancelled.
- Dividends: after issuing notice of a general meeting recommending a dividend, directors will have the ability to either: (i) withdraw the resolution to declare a dividend; or (ii) reduce the amount of the dividend proposed, where the directors conclude that such action is needed because of the actual or perceived consequences of COVID-19 on the affairs of the company. In practice, this power is very limited in use as it can be exercised only where unanimous written shareholder consent is obtained and at least 3 days’ notice is given to members before the general meeting.
Similar amendments are made to the Industrial and Provident Societies Act 1893 which will allow cooperative societies to: (i) hold electronic general meetings; (ii) postpone, rearrange and cancel general meetings; and (iii) give extra time for holding their 2020 AGMs.
Corporate Restructuring and Insolvency
In recognition of the serious financial impact of the COVID-19 crisis on many Irish companies, the Act makes the following changes to the Companies Act 2014 for the duration of the Interim Period:
- Court Winding Up: the minimum debt threshold, for one or more creditors to petition the court for the winding up of a company, will be increased to €50,000 from the current levels of €10,000 (for a single creditor) and €20,000 (where two or more creditors are acting together).
- Examinerships: for companies in examinership, the court will have discretion, where exceptional circumstances exist in respect of the relevant company, to extend the period in which the company benefits from court protection from creditors to up to 150 days. This extension to the existing period (currently up to 100 days) could be particularly helpful in complex, international examinerships and where an examiner needs additional time to negotiate with creditors and to secure investment.
- Electronic Meetings: certain creditors’ meetings (including for a winding up or examinership) can be, wholly or partly, conducted electronically, provided all relevant attendees have a reasonable opportunity to participate. The Act also includes specific requirements in relation to the form of notices of electronic creditors’ meetings and the conduct of voting at such meetings.
A permanent amendment is made to the Companies Act 2014 in relation to proceedings before the Workplace Relations Commission (WRC). Where an employer is in liquidation, employees of that company will no longer need to get leave from the High Court to bring proceedings before the WRC. This replaces the exemption that currently applies to proceedings before the Employment Appeals Tribunal, the functions of which have been largely replaced by the WRC.
Execution of Documents
The Act relaxes the law regarding the execution of documents under company seal for the duration of the Interim Period. By enabling the use of counterparts, it will be easier for a company to execute documents under company seal in circumstances where the company seal and the directors/company secretary are in different locations. This will be particularly helpful at signing and closing of transactions or restructurings during the Interim Period.
If you have any questions regarding the changes introduced by the Act, please contact:
- Mark Talbot or another member of the Corporate team for information regarding any company law issues; or
- Craig Sowman or another member of our Corporate Restructuring and Insolvency team regarding any insolvency-related issues.
Contributed by Henry Bridge