Companies Bill 2012 – Key Changes

Author:Mr Lorcan Tiernan and Sinéad O'Loghlin
Profession:Dillon Eustace
 
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INTRODUCTION

Publication of the Companies Bill 2012 (the "Companies Bill") by the Minister for Jobs, Enterprise and Innovation on 21 December 2012 represented a significant reform of Ireland's company law regime.

The Companies Bill will consolidate, reform and amend existing company law legislation. We have set out below some of the key innovations of the Companies Bill.

Dillon Eustace will provide regular updates and briefing sessions on the Companies Bill as the effective date becomes closer. It is expected that the effective date of the Companies Bill will be in early 2015 with a transition period for certain elements of 18 months.

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The Companies Bill once enacted will impact every Irish company together with all directors and shareholders. The key changes under the Companies Bill include:

The Codification of Directors' Common Law Fiduciary Duties

The Companies Bill gives statutory recognition to the current common law and equitable principles regarding director's duties which will ensure greater clarity for directors.

New Model Company - Private Company Limited by Shares

The new model private company limited by shares is intended to replace the existing private company limited by shares.

There are many similarities between these legal entities, however there are some important changes such as:

a model company limited by shares can be formed with just one director; and A model company limited by shares will have unlimited legal capacity and the "ultra vires" rule whereby a company's legal capacity was limited to the objects set out in its memorandum of association will be abolished. Elective Regime

All private companies will be obliged to either register as a designated activity company or adopt a new form of constitution and be registered as a private company limited by shares within the 18 month transition period. Otherwise, the private company will be deemed to be a private company limited by shares and a default form of constitution deemed to have replaced its memorandum and articles of association.

Summary Approval Procedure

The new summary approval procedure will authorise activities that might otherwise require High Court sanction or approval to be approved by the shareholders of a company. In certain circumstances, a reduction of capital or a merger may be effected without the need for High Court approval once the process set out under the Companies Bill is complied with.

Directors' Compliance Statements

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