New Summary Approval Procedure

The Companies Act 2014 (the “Act”) came into operation on 1 June 2015 and has introduced significant reforms in company law in Ireland. One of the key innovations is the summary approval procedure (“SAP”), a new streamlined process for the authorisation of up to seven different types of activities that would otherwise be prohibited or, in some cases, require a High Court order.

Restricted Activities
Financial assistance for the acquisition of shares
Share capital reduction 
Variation of company capital on reorganisations
Pre-acquisition profits or losses being treated in a holding company’s financial statements as profits available for distribution
Loans to directors and connected persons
Domestic merger
Members’ voluntary winding up


Section 82 of the Act prohibits any Irish company from directly or indirectly providing financial assistance for the purpose of an acquisition (by subscription, purchase, exchange or otherwise) of shares in itself or in its holding company. Section 82 can be breached by providing financial assistance by way of a loan, guarantee, security or otherwise and such assistance is not lawful unless exempted, or validated using the SAP. The SAP is only available to private limited companies, designated activity companies or companies limited by guarantee. Notably it may not be used by a “private limited subsidiary” of a public company in relation to the acquisition of shares in its parent public company.


To validate the giving of financial assistance by SAP, certain steps must be taken by the company:

Board Meeting

Held not more than 30 days before passing of the shareholder resolution

The directors make a declaration at the meeting


All/ a majority of the directors make a declaration setting out:

  • the circumstances and nature of the transaction or arrangement giving rise to financial assistance
  • the person(s) to or for whom the financial assistance is to be given
  • the purpose for which the company is providing the financial assistance
  • the nature of the benefit which will accrue to the company directly or indirectly from providing the financial assistance
  • their opinion, having made full inquiry, that the company will be able to pay or discharge its debts and liabilities in full as they fall due for a period of 12 months following the giving of the financial assistance. It should be noted that in determining whether the company will be able to pay or discharge its debts and other liabilities in full, the directors will not be required to assume (where relevant) either that the company will be called upon to pay moneys under a guarantee that it has given or, that security that it has given will be realised

The declaration must be lodged with the Companies Registration Office within 21 days of the financial assistance being given

The declaration must be provided to the shareholders so that they can approve the giving of financial assistance

Shareholder Approval

Shareholders must pass a special resolution (i.e. at least 75% of members entitled to vote must vote in favour of it) approving the financial assistance not more than 12 months prior to the financial assistance being given and within 30 days of the declaration above being made

If the resolution is unanimously passed, it takes effect immediately and the financial assistance can be given immediately

If the resolution is passed by a majority, rather than by all members entitled to vote, it will not be treated as having been passed until 21 days after the last member signs unless an earlier effective date is referred to in the resolution and all voting members agree to waive the 21 day period

Unless members holding at least 90% of each class of voting shares in issue vote in favour of the special resolution the company must wait 30 days from the resolution being passed before giving the financial assistance

The Shareholder resolution must be lodged with the Companies Registration Office within 15 days


An accountant or auditor’s report is not required for the financial assistance SAP. However, given the potential liability for directors in carrying out a SAP (discussed below), directors will require financial information on which to base their declaration and, in particular, projections for a 12 month period.


Where a director makes a declaration without reasonable grounds for the opinion as to the solvency of the company, the director may be found to be personally liable for all of the debts of the company. If the company is wound up within 12 months of the date of the declaration and its debts are not paid or provided for within 12 months of the winding up commencing, it will be presumed, until the contrary is shown, that each director who made the declaration did not have reasonable grounds for doing so.

Practical steps that can be taken by the directors to support their opinion include the review at board level of projected cash-flow and working capital for the coming 12 months (at a minimum).

Transactions in breach of Section 82 are voidable at the instance of the company against any person who had notice of the facts constituting the breach.


The revisions to the treatment of financial assistance brought about by the Act have been largely welcomed. Section 82(5) of the Act clarifies that financial assistance in relation to the acquisition of shares in a company or its holding company is not prohibited if the company’s principal purpose in giving the assistance is not to give it for the purpose of any such acquisition. This has brought transactions which in the past, might have been “whitewashed” as a precautionary measure outside the scope of the prohibition. The changes to the wording of the refinancing exemption have also been helpful for companies and their advisors. In addition, the fact that directors will not be required to assume (where relevant) either that the company will be called upon to pay moneys on foot of a guarantee given or, that security given will be realised in determining its solvency is informative and helpful.