The General Scheme of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 (the Scheme) was published by the Department of Enterprise, Trade and Employment on 15 March 2024 and is available here.

At 138 pages, the Scheme contains 86 ‘heads’ of amendment, which includes the following:

• Virtual General Meetings: The Scheme proposes to put electronic participation in meetings on a permanent statutory footing. This section of the Scheme largely reproduces the temporary provisions that were put in place on an interim basis during the Covid-19 pandemic.
• Proxies: Weekends and public holidays will be excluded from the time counted towards the minimum 48-hour notice required in the appointment of proxies.
• Counterparts: Companies will be allowed, once again, to execute documents in counterpart which facilitates the affixing of the common seal of a company on a separate counterpart.
• Small Company Audit Exemption: Currently small companies lose their audit exemption on the first occasion that they fail to deliver an annual return on time. The amendment means that the audit exemption will only be lost where a small or micro company fails to deliver an annual return on time for a second or subsequent time, within a period of five consecutive years.
• Involuntary Strike Off: The are also three additional grounds for involuntary strike off:
  • failure to notify a change of registered office;
  • failure to record a company secretary with the CRO; and
  • failure to notify the Registrar of Beneficial Ownership of the information in relation to the beneficial owner of a company.

• Domestic Mergers: The ability for two private Irish companies to merge so that the assets and liabilities of one are transferred to the other by operation of law will also be updated to provide that one of the companies must be an LTD or a DAC (currently the Act requires one of the merging companies to be an LTD). In the case of a merger by absorption, a group of subsidiary companies, wholly owned by the same parent company, can be merged (i.e. absorbed by another company) in one transaction rather than in several transactions.
• Corporate Enforcement Authority: The CEA powers will be further enhanced in a number of areas including data sharing and the exercise of targeted surveillance functions in a manner akin to other enforcement bodies such as the Competition and Consumer Protection Commission. The CEA’s surveillance powers will be limited to suspected Category 1 and Category 2 offences as these are analogous to “arrestable offences”.
• PLCs:
  • Investigations regarding Ownership of Shares: Currently, a PLC may investigate the ownership of its shares over a period up to the three preceding years, by requiring information from any person that the company knows is, or has reasonable cause to believe to be, or to have been, interested in the shares of the company. The Scheme proposes to oblige the relevant person to reply to such enquiry within five days rather than the current ‘reasonable period’ requirement.
  • Alternative Special Majority for Schemes of Arrangement: Another amendment is to provide a relevant issuer with an additional method of arriving at a special majority that is required to approve a scheme of arrangement. The Company Law Review Group referred to the current method that requires a majority in number (essentially a “headcount”) as having “an air of unreality” to it given that the settlement of securities is typically made via a Central Securities Depository (CSD). For example, a CSD could hold the legal title to 95% of the securities of the relevant issuer but would only count as one shareholder and therefore could be defeated by three shareholders holding the remaining 5% of the securities because of the majority in number requirement. The amendments seek to deal with this issue.
  • Record Date for Adjourned Meetings: It is proposed to change the record date for an adjourned meeting to the record date of the original meeting (subject to the adjourned meeting taking place within 14 days of the original meeting). This is aimed at closing off the possibility of new proxy forms being submitted if a meeting is adjourned which was causing practical challenges for CSDs.

Other amendments in areas such as corporate insolvency and the regulation of receivers are also proposed and the Scheme is now being referred to the office of the Attorney General on a priority drafting basis.

If you have any questions on the Scheme, please contact Mark Talbot or another member of the corporate team.

Contributed by Oisin Callaghan