IRISH COMPANIES ACT 2014 - KEY CHANGES TO CARRYING OUT BUSINESS
The Companies Act 2014 (the “Act”) consolidated sixteen existing Companies Acts dated from 1963 to 2013 into one single piece of legislation. Further it included undertakings from EU legislation, which harmonises laws across the EU. The Act became operational on 1 June 2015. There is an eighteen month transition period before certain provisions apply.
The Act greatly benefits business operations in Ireland as the main changes included gave Irish companies greater flexibility in a number of ways:
1. Companies only now require one Director and not two as currently was the case.
2. Director's common law and equitable duties were codified making the law more transparent and accessible.
3. The disclosure of Director's interest now have a de minimis threshold.
4. The doctrine of ultra vires was removed which results in there being no requirement for a company to have an objects clause. A company wishing to retain or restrict an objects clause has to re-register as a Designated Activity Company ("DAC").
5. The default form of company following the transition period is a private company limited by shares, with no objects clause. For structures employing joint ventures it may be desirable to consider re-registering the relevant Company as a DAC.
6. There is no requirement to hold an actual, physical, annual general meeting and this may now be conducted in writing.
7. A new limited company only has to have a single documentation constitution, rather than a Memorandum of Association and Articles of Association.
8. Should the annual turnover / balance sheet of a Private Co reach a certain threshold then the directors of the Private Co must include a statement in the annual report which affirms inter alia, the obligations of the director(s) to ensure the Private Co complies with its tax and company law obligations.
9. There is a variance validation procedure which applies to regulated activities including transactions with directors giving financial assistance, members’ voluntary liquidations and capital reductions.
10. The Act provides a statutory mechanism for mergers and acquisitions between Private Cos.
Other changes include streamlining the regime for external companies operating in Ireland, enabling them to register a "branch" in Ireland. Previously, a foreign company which operated in Ireland from a fixed address had to file a list of its directors and the address of its "place of business" in Ireland with the Companies Registration Office ("CRO") and its constitutional documents. Under the Act as long as a Company is registered in the EU, then a "branch" need only to file any returns with the CRO.
Registration of Charges under the Companies Act 2014
o Implications for ship finance transactions over Irish borrowing Companies
Under the Act there are now two ways in which a charge can be registered in the CRO. Registration can be completed either through the one stage procedure (which has been used under the previous Companies Acts) or by the use of the two stage procedure available under the 2014 Act at the same filing fee of €40. Under the two stage procedure all particulars of the charge must be completed on line and as such submission of a charge can only be affected using CORE (www.core.ie) the CRO's on line facility.
Under Section 410 of the Act, the two step procedure allocates priority to a form C1(a) which may be completed by giving notice of the intention to create a charge and within 21 days of receipt of a correctly completed C1(a), a form C1(b) must be filed confirming completion of charge. If a form C1(b) is not submitted within the time frame (within 21 days of the creation of the charge) the C1(a) will be rejected. The particulars on a form C1(a) cannot be altered after filing without leave of court.
o Implications for ship finance transactions over Foreign borrowing Companies
Similar to Irish companies, there are also two ways in which a charge can be registered for a foreign company with the procedure, filing fee and time limits all being the same as applicable to the Irish company. The only difference is the form used, in these circumstances a form F8(a) and form F8(b) are used in the two stage procedure and in the one stage procedure a form F8 is used.
External limited liability companies which have an established branch in the State are obliged to register with the CRO under Section 130(1) of the Act. When a foreign company creates a charge over property in the State, which charge requires to be registered with the CRO and as such particulars of the charge are required to be delivered to the Registrar of Companies. A certificate of registration will be issued to the presenter in due course on completion of such charges registered by the CRO.