A company law conference on the Companies Bill 2012 heard a call for Irish companies of all sizes to examine carefully the terms of the Bill and advised business owners and directors to consider what they should be doing now to prepare for its implementation.
The Bill, which contains 1,400 different sections, consolidates the Companies Acts 1963 to 2013 as well as introducing significant reforms in certain areas, and is the culmination of more than 12 years of work by the Company Law Review Group. It is expected at this stage that the Bill will be enacted by the end of 2014 and that commencement will be mid-2015.
The event, on Monday 20 October 2014, was co-hosted by Chartered Accountants Ireland and William Fry, and served to raise awareness of the implications of the Bill. The presenters were Kevin Prendergast of the ODCE, Barbara Kenny and Mark Talbot of William Fry, and Oliver Holt and Mary Shier of Deloitte. The conference focused on:
• The impact of the Bill on directors’ duties, focusing on the codification of directors’ duties and other changes impacting on directors’ dealings with a company.
• The enforcement powers of the ODCE under the Bill
• A comparison of the different forms of company provided for under the Bill, the conversion process and timelines, as well as actions that companies may need to take.
• The changes to share capital in the Bill including the introduction of merger relief and the introduction of the new Summary Approvals Procedure for certain restricted transactions such as directors’ loans and financial assistance to acquire own shares
• Auditing and accounting implications of the Bill, highlighting that the transposition of recent EU accounting, audit and transparency directives will provide for more change in this area soon after the Bill is enacted.
Mark Talbot, William Fry, described what the new laws will mean for directors. While the new Bill does not significantly increase directors’ duties, it represents a clear re-statement of existing duties. One important reform contained in the Bill is a requirement for directors of PLCs and large private companies to complete a Compliance Statement. “While the accessibility of the Bill will bring much-needed clarity for directors in their duties and obligations, the level of accountability will be much more explicit. In the new era, it will be up to directors to comply with the Act, they can no longer rely on ignorance of their duties as a mitigating factor.”
Kevin Prendergast, Head of Enforcement at ODCE said that although the Bill’s primary purpose is one of reform and consolidation, the powers of sanction available to the ODCE are retained from earlier legislation. These include access to company records, the power to seek a warrant from the courts for search and seizure, and requiring companies to undertake to comply with the Act – all retained and taken forward in the new legislation. He also noted the new power allowing the ODCE to seek to confirm a company’s entitlement to audit exemption. “The Act will augment the powers of the Office to carry out its remit. Changes in the area of insolvency may have particular practical impact.”
Mary Shier, Director, Corporate and Legal Services at Deloitte’ presented on the new forms of company possible under the Bill, the need for existing companies to consider which form they wish to adopt and the actions and timelines commented “The new regime which the enactment of the Companies Bill will bring to Irish businesses should be a more practical approach to doing business in Ireland particularly for the private limited company, with the effort required to make the initial transformation being well worth the benefit.”
Barbara Kenny, William Fry, presented on some of the significant changes proposed in the Bill in the areas of share capital and the Summary Approvals Procedure. She noted that the new Summary Approvals Procedure, introduced by the Bill, can be used to validate certain transactions, such as the reduction of share capital, which can currently only be achieved by going to the High Court. “Directors will, however, need to be very conscious of the responsibilities they are taking on by signing the declaration required by the Summary Approvals Procedure, as failure to make the declaration on reasonable grounds can lead to directors assuming personal responsibility for all of the debts of the company.”
Oliver Holt, Director of Financial Reporting Advisory Services at Deloitte, discussed the Bill’s likely impact on financial reporting, including welcome increases in company size thresholds; a more relaxed audit exemption regime and provision to fix defective financial statements that are on the public record. Commenting on commencement of the Bill, Oliver said “it would make sense to commence Part 6 (the accounting and auditing provisions) of the Bill at the same time as the accounting changes mandated by recent EU Directives, which are not reflected in this Bill, i.e. for accounting periods commencing on or after 1 January 2016.”
Presentation Slides- Please click here
