Company Law Reform

A number of changes to the existing Companies Act 2014 were recently proposed which will impact how Irish companies are managed and governed. Our Corporate Governance team outlines some of the key proposals across four areas of Irish company law including corporate governance, company law enforcement and supervision, company law administration, and corporate insolvency.

The General Scheme of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 proposes numerous changes, some of which are significant, to the existing Companies Act 2014 (the 2014 Act). The proposed changes are focused on four areas of company law: corporate governance, company law enforcement and supervision, company law administration, and corporate insolvency. While this article does not contain an exhaustive list of the proposed changes, we highlight some of those which might be most of interest.

Corporate Governance

Mergers

In the case of private limited companies, it is proposed to change the current law to facilitate a merger by absorption of a group of subsidiary companies wholly owned by the same parent company in one transaction. This differs from the current arrangement where a different merger transaction is required for each subsidiary.

An amendment is proposed to the 2014 Act regarding statutory mergers involving ‘designated activity companies’ (DACs) only. The planned change would facilitate the merger of two or more DACs. Currently, the 2014 Act requires that at least one party to a merger must be a private company limited by shares.

Increased disclosure and notification requirements

The General Scheme proposes that the Registrar of Beneficial Ownership may notify the Registrar of Companies where a company fails to provide information. On foot of this failure, the Registrar may initiate involuntary strike off proceedings against the company.

Two further grounds for involuntary strike off are proposed in the General Scheme:

1. Failure to notify a change of registered office, and
2. Failure to record a company secretary

The General Scheme provides that companies may voluntarily provide information on the gender of its board of directors. This may be disclosed on the company’s annual return. The information, if provided, would be disclosed in the company’s annual return, or Form B1, and would be for statistical purposes only.

Audit exemption

The General Scheme proposes changes to the audit exemption regime for small and micro companies. Currently, a company will lose its exemption from an audit if it fails to file any annual return on time to the Companies Registration Office. Under the General Scheme a company will lose its audit exemption where it fails to deliver its annual return for a second or subsequent time within a period of five consecutive years.

Company law administration

In terms of company law administration, the General Scheme proposes that:

• A process be permanently reinstated, previously provided for on an interim basis under Covid-19 legislation, which will allow companies to execute documents under seal by applying their seal to one page, and have the signatories sign on different pages of the same document, as opposed to the seal and signatories having to be on the same page, which is the current requirement.

• Companies be permanently allowed to conduct general meetings entirely online, with all attendees participating virtually. This means that there is no requirement for a physical meeting location. Hybrid meetings with attendees participating both online and in-person may also be legitimately facilitated. This is currently allowed on an interim basis only.

• Where a company is using the summary approval procedure under the 2014 Act, a copy of any various declarations be delivered to the Registrar in a prescribed form rather than in bespoke forms.

Corporate insolvency

• The General Scheme also proposes a legislative requirement where details of receivers’ fees must be made available to members and creditors within seven days of a request. The current provisions dealing with the remuneration of receivers will be aligned to those already in existence for liquidators.
• Certain returns required to be made by liquidators to the Registrar are currently made using forms issued by the Registrar. It is proposed that these forms will now be prescribed in legislation instead.

The General Scheme proposes significant changes to existing company law in Ireland which, if implemented, would have a lasting impact on how Irish companies are managed, governed and regulated. The General Scheme will now be referred to the Office of Attorney General for priority drafting.

We have set out only a few of the proposed changes. Should you have any further questions on this subject, please get in touch.

For expert legal guidance on post incorporation obligations, please contact a member of our Corporate Governance team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.