Part 24 of the Companies Bill 2012 governs the establishment of an “investment company” which is defined as a company (to which the UCITS Regulations do not apply) that is a public limited company with the sole objective being the collective investment of its funds in property with the aim of spreading investment risk and giving its members the benefit of the results of the management of its funds.
Comparison to Part XIII companies
Investment companies established by virtue of Part 24 of the Bill will be materially similar to investment companies established pursuant to Part XIII of the Companies Act 1990 (which this Bill will repeal) and, with a small number of exceptions, Part 24 is effectively a re-statement of the existing law as it currently applies under Part XIII of the 1990 Act.
Part 17 of the Bill provides for public limited companies (PLCs) which remain largely unchanged. A distinction is drawn in the interpretation section of Part 17 whereby investment companies are distinguished from ordinary PLCs. While investment companies will still be considered PLCs, they will not be governed by Part 17 of the Bill.
Existing investment companies
Companies, to which Part XIII of the Companies Act 1990 applies, will continue in existence after the commencement of the Bill and will be deemed to be an investment company to which Part 24 applies.
Corporate governance statement
The Bill introduces the requirement for an investment company to provide a corporate governance statement where it has shares or debentures admitted to trading on a regulated market in the EEA.
Under the Bill, an investment company that has been struck off may apply to the High Court to be restored to the register within 2 years of the date of dissolution of the company. This contrasts to a period of 20 years for other company types under the Bill.
This may facilitate the dissolution of investment companies by way of voluntary strike off rather than by a members voluntary winding up and mean that companies may be effectively wound up more cheaply and easily than if they go through a formal liquidation process. However, directors of some companies may prefer the security which a formal liquidation process provides.
The Bill re-states the existing position that a company can be wound up if the Court is of the opinion that it is just and equitable to do so. However, the Bill prescribes certain conditions that must be satisfied before an investment company can be wound up on this ground.
Status of Bill
The Bill has passed Committee Stage in Seanad Éireann and is likely to be enacted towards the end of 2014. The majority of provisions will take effect from early to mid 2015.