Corporate Quarterly Legal Update - Q4 2014

Author:Mr Lorcan Tiernan, Adrian Benson, Tom Carney, Sinéad O'Loghlin and Catherine Hicks
Profession:Dillon Eustace
 
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COMPANIES BILL UPDATE

(i) Implementation of the Companies Bill

The Report and Final stages of the Companies Bill 2012 were completed on 30 September 2014, when all of the 164 amendments tabled by the Department of Jobs, Enterprise and Innovation were agreed to.

Dáil Eireann must approve the Bill again however, because the amendments proposed and made in the Seanad, though introduced by the Government, have to be approved by the Dáil before the Bill can be formally passed by both Houses of the Oireachtas. No date has yet been announced for the Dail approval.

As was the case with many of the changes previously proposed and agreed during the passage of the Bill through both the Dáil and the Seanad, many of the most recent changes were of a technical nature, or were inserted for the purposes of clarification.

It is now expected that the Companies Bill will not be enacted until December 2014 at the earliest. Notwithstanding the date of enactment of the Bill, the commencement date of the Act will be 1 June 2015.

Private companies limited by shares will be given an 18 month transitional period to take certain action as a result of the introduction of the Act. The Minister for Jobs, Enterprise and Innovation may choose to extend this by a further 12 months. The transitional period will give directors and shareholders the time to decide between registering as a new-form company ("CLS") and registering as a designated activity company ("DAC"), or another type of company (public limited company, Societas Europaea, Company Limited by Guarantee). Where a company takes no action, it will be deemed to have become a CLS on the expiry of the transition period. It is to be noted that many of the changes will, however, come into effect immediately.

By way of summary, some of 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 is 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...

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