The Irish Government plans to introduce a new Companies Bill as part of a move to consolidate and simplify existing company law. On 30 May 2011, the Minister for Jobs, Enterprise and Innovation published a draft of Pillar A of the proposed Bill. This will represent two thirds of the future Companies Bill and contains all of the law relating to private companies limited by shares. The remainder of the proposed draft is expected to be published in 2012.
Some of the key proposed changes for private companies in the draft Bill include:
- Single Constitution
Each private company’s existing Memorandum and Articles of Association will be replaced by a single document called a Constitution. - Directors’ Meetings
There are prescriptive provisions determining where a directors’ meeting is deemed to be held if some or all of the directors participate by conference call. This may have implications for determining where the “management and control” of the company is located. - Single Director Companies
A major (and welcome) change is the ability to have single director companies. - Transition
An existing private company which does not wish to convert into a private company under the Bill will have a six month period from the time when the relevant section of the Bill is commenced to convert into a “designated activity company”. After that six month period, every private company will have a 12 month “transition period” to adopt a new Constitution. - Directors’ Compliance Statements
The concept of directors’ compliance statements, which was shelved in 2003, has been re-introduced. This requirement will apply to public limited companies and directors of large private companies with both a balance sheet total of over €12.5 million and a turnover of over €25 million. - Annual General Meetings
Under the proposed reforms, AGMs may be dispensed with in favour of written resolutions where all the members consent. - Majority Written Resolutions
One of the most welcome reforms of the Bill is the proposal to permit majority written resolutions of shareholders (both ordinary and special) and to dispense with the requirement to have unanimous written resolutions. - Full and Unlimited Capacity
One of the most significant changes in the Bill is that private companies will have the same capacity, for the purposes of company law, as natural persons. This will effectively abolish the doctrine of “ultra vires” in relation to companies and will remove any concern companies or lenders may have as to a company’s ability to perform a transaction or grant security.
For a more detailed summary of the proposed changes, please click here to view our Company Law Update.
Contributed by David Fitzgibbon.
