In December 2012 the Companies Bill (the Bill) was published by the Irish Parliament. There is a general expectation that the Bill will become law in the latter half of 2014.
In this article we will look at two main changes under the Bill which will reduce the administrative burden of Annual General Meetings (AGMs) for private companies.
Under Irish company law every company is required to hold an AGM once in each calendar year, with no more than fifteen months between each meeting. The only exceptions to this requirement are: a newly incorporated company which can wait up to eighteen months before holding its first AGM; and in the case of a single member private limited company, the sole member may, at any time, decide to dispense with the holding of an AGM.
The main purpose of the AGM is to facilitate the laying of the accounts, as signed by the directors, and, if audited, also signed by the auditors, before the members of the company.
It is important to note that the accounts being presented to an AGM must not predate the meeting by more than nine months and as a result the AGM must be held within nine months of the financial year end.
- Dispensing with AGMs
Under Irish company law only single member companies can dispense with the requirement to hold AGMs. The Bill will change this to permit both single and multi-member private companies limited by shares (CLS) to dispense with the requirement to hold an AGM. Section 176(3) of the Bill states that a private company need not hold an AGM in any year where all members, who are entitled at the date of the written resolution to attend and vote at the general meeting, sign a written resolution before the latest date for the holding of that meeting:
- acknowledging receipt of the financial statements;
- resolving all such matters as would have been resolved at the AGM; and
- confirming no changes in the auditor's appointment.
- Serving Notice on Members
Table A of the Companies Act 1963 provides that notices of members’ meetings may be given to any member either personally or by post by sending it to the address on the register of members. The Articles of Association may permit that notice is given to an alternative address, with the obligation to give notice being satisfied by posting the notice to one of the alternative addresses. In the case of a share held in joint names, the person who appears as the first named shareholder would usually be the person nominated to receive the notice.
The Transparency Regulations 2007 (the Regulations) provide a mechanism whereby companies which are listed on Regulated Markets can obtain “deemed consent” from members to receiving notices by means of electronic communications. However private limited companies cannot rely on the procedure set out in the Regulations to attain “deemed consent” because they do not come within the definition of “Regulated Company”.
Section 219 of the Bill contains provisions which will allow private companies to send notices to members by electronic means provided that the member has consented to the service of notice in this way.
Providing companies with an option to dispense with AGMs and to serve notice on members electronically will reduce the physical cost of posting the AGM notice and related documentation and should also result in a reduction in the time spent convening AGMs.
Generally, the changes and innovations contained in the Bill are to be welcomed by practitioners in the area, as they result in greater flexibility and choice in relation to the manner in which AGMs are held.