Company Law Reforms Affecting the Life Sciences Sector

The Irish Companies Act 2014 was recently amended by the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (the 2024 Act), which largely came into effect on 3 December 2024.

The amendments will affect companies in all sectors. However, they will be of interest to companies operating in the life sciences sector. We outline some of the changes which are likely to have the most practical effect.

Executing documents under seal in counterpart

Irish companies are required to execute certain documents under seal. This requires the company seal to be formally affixed to the document in question and one or two people to sign it (depending on the terms of the company’s constitution). Previously, the seal and signatures had to be in the same page. Now, in a widely welcomed move, a company is permitted to execute documents under its common seal in counterparts – that is, the seal can be affixed to one page, with the signatures on separate pages.

This provision allows for flexibility. It is particularly useful when a life sciences company’s seal and the persons authorised to countersign it are in different locations. It is also useful when the authorised signatories would like to, or have to, sign electronically.

Hybrid and virtual general meetings

A measure originally brought in as a temporary fix during the COVID-19 pandemic which 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 one particular type of company. The 2024 Act now removes that obstacle and allows for a domestic merger to take place involving any kind of private company with a share capital.

A group of subsidiary companies, wholly owned by the same parent company, can now take part in a single merger by absorption. The change eliminates the need for multiple mergers, as was required previously.

These are both welcome amendments that will remove logistical burdens and enable life sciences companies to more easily streamline their merger processes. The domestic merger is a popular method for removing unwanted group companies. It allows for the transfer of assets and liabilities between companies by operation of law. The transferor companies are then dissolved without going into liquidation and without the need for a court application.

More grounds for involuntary strike-off

The grounds for involuntary strike-off by the Registrar of Companies 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

There are a number of additional important provisions which will not come into effect later this year.

Audit exemption amendment

The audit exemption amendment will change the 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 will lose its audit exemption if it fails to file any annual return on time.

Conclusion

The Act introduces significant amendments that will change how Irish life sciences 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.

Life sciences businesses should be 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 in this article. 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.