Investment Funds, Companies And Miscellaneous Provisions Act, 2006

Author:Mr Abigail Kennedy
Profession:Dillon Eustace
 
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1. Company law update

The Investment Funds, Companies and Miscellaneous Provisions

Acts 2006 (the "2006 Act") became law on 24 December

2006.

The Irish company law statutes are now collectively referred

to as the Companies Acts 1963 to 2006.

2. Increased membership numbers for private companies

Private companies will now be entitled to have up to 99

members. The limit, which was previously set at 50 members, was

increased to reflect EU law.

In its first Report the Company Law Review Group recommended

the maximum number of members be increased to 150, but this

figure had to be decreased in light of the Prospectus Directive

which required that a company issue a prospectus where shares

were offered to 100 or more persons.

In addition to being reflective of EU-led changes to Irish

company law, the increase to 99 members is sensible as now a

private company may be able to delay converting to a PLC (which

have no limit on the number of their members) to raise share

capital from new members.

3. Permitted offers by private companies

On the adoption of the Prospectus Directive into Irish law

(by the Investment Funds Companies and Miscellaneous Provisions

Act, 2005 and the Prospectus Regulations) there was a concern

that the new legislation had unwittingly broadened the

definition of a 'public offer' to such an extent that

any communication or private placement of securities by a

private company could be considered a 'public

offer'.

This was a problem because section 33 of the Companies Act,

1963 provides that a private company is one which

"prohibits any invitation to the public to subscribe for

any shares or debentures of the company". This has been

satisfactorily addressed by the 2006 Act which clarifies that a

private company can make an offer of:-

shares to qualified investors, to fewer than 99 persons,

or both;

debentures solely to 'qualified investors' (such

as credit institutions, investment firms, insurance companies

and collective investment schemes);

debentures to fewer than 100 persons;

debentures to investors where the minimum consideration

payable is at least Ä50,000 per investor, or the

denomination per unit is at least Ä50,000; and

debentures where the total consideration for the offer is

limited to less than Ä100,000. The changes take effect

retrospectively, from 1st July 2005 (the date of the Act of

2005 and the Prospectus Regulations).

4. Audit exemption

The 2006 Act has made some improvements in relation to the

audit exemption for...

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