The new draft Companies Bill was the subject of detailed discussion and analysis at a conference in Dublin Castle on Thursday last, 21 July. The draft Bill, which was published in part on 30 May this year, aims to dramatically overhaul the fundamentals of existing Irish company law and is set to have a significant impact in the area of company law, governance and administration in Ireland.
The conference, the first to be held by the Irish Corporate Law Forum, sought to consider the impact that the Bill is likely to have for private companies in Ireland. It featured a number of speakers from legal, accounting and governmental backgrounds including Sinead Kelly of A&L Goodbody who spoke on the new company forms being introduced in the new regime and the features of each. Specifically, the conference aimed to analyse the key structural and governance implications, to outline the main features of the new company limited by shares (or CLS) which is to be the principal form of company going forward, and to set out the procedures for registration and transitioning to the new regime.
Among the many interesting aspects of the draft Bill which were discussed were:
- the new procedures for mergers and divisions of Irish companies, neither of which is currently available in this form in Ireland;
- the additional obligations which are to be imposed on directors in terms of the new statements which they must make, for example, upon appointment, in relation to their company law obligations, and regarding the audit, in relation to relevant audit information;
- the register of authorised persons (that is, persons authorised to bind the company) which is maintained in the Companies Registration Office;
- the peculiarities of the new CLS company type, including its unlimited corporate capacity, the possibility of one director only, and its short-form one-document constitution;
- the new majority written resolution process for members which will sit alongside the existing unanimous written resolution facility currently available;
- the recast financial assistance provisions which are possibly narrower than the current language of Section 60 of the Companies Act 1963;
- the abolition of the long-form model articles of association currently set out in Table A of the Companies Act 1963, and the incorporation instead of many of these provisions into the new Bill itself together with a number of new provisions (for example in relation to electronic meetings of members and directors);
- the statutory codification of directors' duties, and in particular the new duties to act honestly and responsibly and to ensure that the company secretary is properly skilled; and
- the new categorisation of company law offences on a scale of 1 to 4 in accordance with the severity of the breach.
The transition process from the existing regime to the new regime was also discussed at length at the conference. The consensus was that all companies will be required to take certain steps to avoid the deemed imposition of a new form of constitution and to ensure conversion to the most appropriate company form in each case.
In terms of the timescale for the enactment of the Bill: Only Pillar A of the Bill, which deals with the CLS, has been published so far. As mentioned, it was published on 30 May last in draft to allow interested parties to digest to contents. The publication of the remaining parts of the Bill, known as Pillar B, which will deal with other company types including the public company, is expected during 2012. It was felt that, unlike Pillar A, Pillar B may not be published first by way of "exposure draft". The likely timeframe for enactment of the Bill is expected to be 2013.
The conference provided a very useful platform for practitioners and other interested parties to discuss and consider the many important changes to be introduced by the new Bill.