New Company Law Provisions in Focus

Just in time for year-end, the majority of provisions of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 recently came into effect on 3 December 2024.

We have been following the evolution of this 2024 Act from when it was first published as a General Scheme back in March of this year, to when it was officially published in July. The 2024 Act is seen as a welcome development in Irish company law. This is due to the fact that it aims to enhance the regulatory, governance and enforcement provisions of the Companies Act 2014.

Our Corporate Governance team outlines some of the main provisions that came into effect from 3 December, some provisions that have not yet commenced, and how the Act will change how Irish companies are governed and regulated.

Executing documents under seal in counterpart

What began as an interim measure introduced during the pandemic, the ability to execute documents under a company’s common seal in counterparts has now been put on a permanent footing. While this is a widely welcomed and much-anticipated provision, it does not apply to any variation of the statutory sealing provisions made by a company’s constitution. Even where a company’s constitution states that only one signature is required when affixing the seal, that company will need to obtain an additional countersignature to avail of this provision.

The provision allows for flexibility and is particularly useful where a company’s seal and the persons authorised to countersign it are in different locations. It is also useful in scenarios where the authorised signatories would like to sign electronically.

Hybrid and virtual general meetings

Another pandemic-era measure that now finds itself having permanent footing is the provision permitting companies to conduct general meetings virtually or in a hybrid format. This is a popular measure that also promotes flexibility by allowing individuals to attend meetings from various locations.

Changes to mergers

Previously under the Companies Act 2014, at least one of the companies participating in a domestic merger had to be an LTD. The 2024 Act now removes that obstacle and allows for a domestic merger to take place involving only DACs.

Subsidiary companies wholly owned by the same parent company can now participate in a single merger by absorption, simplifying the process compared to the previously required multiple mergers.

These are both welcome amendments that will remove logistical burdens and enable companies to streamline their merger processes.

More grounds for involuntary strike-off

The grounds for involuntary strike-off by the Registrar will be extended to include the following:

1. Failure to provide confirmation of the registered office
2. Failure to appoint a company secretary, and
3. Failure to comply with registration of beneficial ownership information requirements

Further awaited provisions

There are a number of additional important provisions which did not come into effect on 3 December, these include:

Prescribed form documents

New provisions introduced will require director declarations signed for the purpose of a summary approval process to carry out restricted transactions to be filed with the CRO in a “prescribed form.” This will eliminate the use of bespoke forms being sent to the Registrar.

Audit exemption amendment

This provision will change the audit exemption regime for small and micro companies. It states that 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. At the moment, a small or micro company would lose its audit exemption if it fails to file any annual return on time.

Comment

The Act introduces significant amendments that will change how Irish companies are governed, regulated and managed. It will streamline procedures making them more flexible and adaptable enabling companies to fulfil their company law obligations in a more modernised and contemporary fashion.

It is unknown when the rest of the provisions will be commenced. We will continue to monitor developments so our clients can ensure their businesses are ready to adapt to the new legal landscape. In the meantime, businesses need to ensure they are aware of these changes to stay compliant with their company law obligations and also to enjoy the benefit of these more efficient procedures.

We have only outlined a couple of provisions here. Should you require more information, 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.