The commencement of the new Companies Act is planned for 1 June 2015. In this, the first of two articles, I outline the background to the Companies Act 2014 (the Companies Act) and examine its main features. My second article will consider the effects of the Companies Act on the types of corporate transaction that we deal with on a day-to-day basis, such as group restructurings, reorganisations and corporate lending.
Background to the Companies Act
The reasons why the Companies Act has been proposed are manifold and obvious. Irish company law was most recently consolidated in 1963, 55 years after the Companies Consolidation Act of 1908. The drafting of the 1963 Act basically comprised copying the UK’s 1948 Act, as well as borrowing some ideas from the UK Jenkins Committee on Company Law, which had reported in June 1962.
Our companies legislation has not dovetailed with the UK for quite some time, as the UK, after consolidating its Acts in 1948, did so again in 1985 and 2006. This has meant that UK parent companies/acquirers of Irish companies are having to deal with issues (such as “financial assistance”) that have been abolished in the UK.
What Will the Companies Act Achieve?
The Companies Act will repeal more than two dozen statutes, effectively, the entire of the Companies Acts 1963 to 2013, with the exception of EU-derived securities law, and will consolidate them in a single statute. For the most part, the Companies Act simply restates the existing law, but it is also a reforming statute that contains streamlining reforms in areas such as governance, legal capacity and mergers.
The unusual aspect of the Companies Act is that it will require a proactive step to be taken by existing companies: they will need, after its enactment, to prepare a new-form constitution and elect either to re-register as a “designated activity company” or register (or be deemed to register) as a new-form private company limited by shares.
Structure of the Companies Act
The Companies Act sets out the rules applying to all company types. “Pillar A” of the Bill had set out a full rulebook for the private company limited by shares (the LTD). The fourteen parts of the pillar were:
›› Part 1: Preliminary and Interpretation
›› Part 2: Incorporation and Registration
›› Part 3: Share Capital
›› Part 4: Corporate Governance
›› Part 5: Directors and Other Officers
›› Part 6: Financial Statements, Annual Return and Audit
›› Part 7: Debentures and Charges
›› Part 8: Receivers
›› Part 9: Reorganisations and Takeovers
›› Part 10: Examinerships
›› Part 11: Winding-Up
›› Part 12: Strike-Off and Restoration
›› Part 13: Investigations, Compliance and Enforcement
›› Part 14: Powers and Duties of Minister and of Regulatory and Advisory Bodies
The content of this article is provided for information purposes only and does not constitute legal or other advice.