The Companies Bill 2012 (the “Bill”), which will introduce significant reforms in company law in Ireland, is likely to be enacted in December 2014 and come into effect on 1 June 2015.

This Briefing is based on the Bill as passed at Report Stage and Final Stage in Seanad Éireann on 30 September 2014. Although further changes may be made to the Bill in the Final Stage in the Dáil, no further substantive change is expected.

Whilst some of the law relating to the role of secretary of a company is unchanged by the Bill, there are some reforms worth mentioning not least because of the impact they have on the position of both the company secretary and the company’s directors.

Key Features

  • every company must have a company secretary;
  • the secretary may be one of the directors, unless the company has only one director (for example the new private company limited by shares (CLS)) in which case that company must have a separate company secretary;
  • the company secretary must be at least 18 year old;
  • the company secretary is no longer responsible for the company’s compliance with what will be the new Companies Act;
  • it is the duty of the directors to ensure that a suitably qualified secretary is appointed;
  • the appointment of another company as company secretary continues to be permitted;
  • references to a secretary includes references to joint secretaries.

Preliminary

The Bill reaffirms the significance of the role and duties of the company secretary. Under the Bill, company secretaries will no longer be obliged to ensure compliance with what will be the new Companies Act. This change acknowledges that company secretaries lack the power and authority to ensure such compliance.

Instead, the Bill provides that the directors have a duty to ensure that the person appointed to the role of company secretary has the skills or resources necessary to discharge his or her statutory duties and other duties. This includes the case of an appointment of one of the directors of the company as secretary. The duty is based on the existing duty of directors of Public Limited Companies (Plcs) although (as may be seen below) is not as substantive.

The Bill also extends certain provisions in the current Companies Acts to apply to  both directors and secretaries. For example, the Bill allows the Director of Corporate Enforcement to investigate whether an officer is an undischarged bankrupt.

Appointment

When consenting to act, company secretaries will now be required to sign  a declaration acknowledging their legal duties and obligations. The Bill similarly extends an existing provision to an act  of a director or a secretary which shall be valid notwithstanding any defect which may afterwards be discovered in his or her appointment or qualification.

Primary Duties

The statutory duties under company law of company secretaries include filing annual returns at the Companies Registration Office (the “CRO”). The Bill consolidates the current Companies Acts’ requirements relating to annual returns, such as those related to annual return dates and documents to be annexed to the return. The duties of the company secretary are owed  to the company and there is no statutory obligation to have regard to the interests of the members in the exercise of their duties.

Other existing duties include   administrative duties such as maintaining the company’s statutory registers and books. These should include a register of directors and secretaries (past and present), a register of all shareholders (past and present) and their shareholdings, a register of any charges on the assets of the company and minutes of general meetings and directors’ meetings.

In addition, the company secretary’s role usually involves arranging directors’ meetings and shareholders’ meetings and informing the CRO of any changes in the company’s management and constitution.

A company secretary is obliged to exercise due care, skill and diligence while performing the duties that can reasonably be expected from a person of their level of knowledge and experience and they can be held liable for loss to the company arising from their negligence. Many of the Bill’s provisions stipulate that any officer (which includes the secretary) of the company who is in default shall also be liable to a fine or penalty.

Delegated Duties

The Bill does not codify the duties of the secretary in the same manner as they do directors’ fiduciary duties. The duties and powers of the company secretary will largely comprise of those which may be delegated by the directors.

The Bill does not prescribe or suggest to what extent duties should be delegated to the company secretary. The company secretary may be expressly authorised to enter into a transaction on behalf of the company either by a provision contained in the company’s constitution or by means of a resolution of the board of directors. The Bill provides that an express authorisation may now be registered with the CRO. Contracts within the apparent or ostensible authority of the company secretary, for example those relating to the administration of the company, will bind the company irrespective of whether there is an express authorisation.

Disclosure of Interests

Directors and company secretaries are obliged to disclose certain interests in shares or debentures in the company and in associated companies. The Bill eases this obligation and exempts de minimis interests from the requirement to disclose under the Bill. This means that where shares held by a director or secretary (aggregated with those of connected persons, such as spouses and children) are one per cent or less in the share capital of the company’s issued share capital of  a class of shares carrying voting rights or where the shares or debentures do not carry a right to vote at general meetings (save a right to vote in specified circumstances), such interest need not be disclosed under the Bill. The Bill also extends the ‘one per cent or less’ threshold to apply to share options.

Company Seal and Execution of Documents

At present, under Table A of the current Companies Acts, at least one director  must attest affixing of the seal, the second person can be a director, secretary or authorised person. The Bill introduces greater flexibility. There is now nothing in the Bill to prevent the constitution of a company authorising one person only to affix the seal (for example, any director or secretary).

A Public Limited Company (Plc)

The directors of a Plc have a more onerous duty because they must appoint a secretary who meets specific requirements set out in legislation. These include the requirement that the person has, for at least three years of the five years immediately preceding his or her appointment as secretary, held the office of secretary of a company; or the person is a member of a recognised body; or is, by virtue of his or her holding or having held any other position or his or her being  a member of any other body appears to the Plc directors capable of discharging their duties. The expectation of a company secretary of a Plc is that he or she would advise the board of directors, through its chairman on corporate governance matters.

A body corporate appointed as secretary would also be required to satisfy at least one of these requirements.