The Minister for Jobs Enterprise and Innovation published the long-awaited Companies Bill 2012 on 21 December 2012. The Bill seeks to simplify existing company law and will consolidate the existing 16 Companies Acts. The Bill, the largest in the State to date with over 1400 sections, also contains significant proposals for reform of the existing law.
Under the legislation, the private limited company will now form the model company type and the provisions applicable to it represent the majority of the Bill.
Some of the key proposed changes for private companies in the Bill include:
- Full and Unlimited Capacity
Private companies will have the same capacity, for the purposes of company law, as natural persons. This will effectively abolish the doctrine of “ultra vires” in relation to companies and will remove any concern companies or lenders may have as to a company’s ability to perform a transaction or grant security. This will remove the need for an "objects clause" in its constitutive documents.
- Company Constitution
Companies will now be permitted to have a one-document constitution and so there is no longer a requirement for detailed Articles of Association.
- Single Director Companies
A major (and welcome) change is the ability to have single director companies.
- Annual General Meetings
AGMs may be dispensed with in favour of written resolutions.
- Directors’ Duties
Directors’ duties will be codified which should ensure the often complex law in this area is more easily understood by and accessible to directors.
Irish private companies will be able to engage in mergers and divisions, which up to now was not possible.
- Capital Reductions
A new “summary approval procedure” will allow companies to effect transactions such as certain capital reductions without court approval.
All company law offences will be streamlined and categorised from 1 to 4. A category 1 offence will be the most serious and will carry a maximum fine of €500,000 or imprisonment up to a maximum of 10 years.
Any company may convert to another type of company provided for in the Bill. An existing private company which does not wish to convert into a private company under the Bill will have a six month period from the time when the relevant section of the Bill is commenced to convert into a “designated activity company”. After that six month period, every private company will have a 12 month “transition period” to adopt a new constitution. Directors are required to adopt the constitution if the shareholders do not do so. Otherwise, at the end of the transition period, the company will automatically be deemed to have adopted a “default” constitution.
The remaining parts of the Bill are, for the first time, dedicated to other types of company including; unlimited companies; public limited companies and guarantee companies.