Governance & Compliance Update: Irish Companies – Five Helpful Things to Know
09 March 2020
There are various company types available in Ireland. Most enterprises establishing in Ireland choose a private company with limited liability and a share capital, more commonly referred to as the ‘private company limited by shares’. Establishing this type of company is a quick and straight forward process.
1. Flexibility of the private company limited by shares
The benefits of the private company limited by shares are that it has the same legal capacity as a natural person and a number of streamlined governance provisions apply to it. These governance provisions include the ability to have a single director, no requirement to have an authorised share capital and regardless of the number of shareholders, the ability to dispense with the need to have an annual general meeting.
2. Ownership and management
The shareholders of an Irish company typically delegate the management of the affairs of the company to the board of directors. The board of directors, as a collective, then control and direct the company in the interests of its shareholders.
The fiduciary duties of directors in Ireland are similar to the UK and Delaware. Ireland operates a unitary board system unlike the dual board systems that exist in a number of other European jurisdictions.
The board of directors, once its constitution permits it to do so, can delegate its powers, for example to senior managers. While the board of a company can delegate its powers, it cannot delegate its duties or responsibilities. This means that where directors delegate a power, they have a duty to ensure that the power delegated is properly exercised and they will remain accountable for any misuse of the delegated power.
3. Financing and return on investment
An Irish company can be financed by way of debt, subscription for shares, and in some circumstances, contribution of capital without the issue of shares. Shares must be issued with a par value – usually €1, but the par value can be any amount in any currency.
There is no requirement under Irish law for shareholders to be paid a minimum or annual dividend. That said, while the payment of dividends by an Irish company is subject to typical capital maintenance rules, Irish company law provides a number of flexible methods for enabling the distribution of capital to a company’s investors.
An Irish company has a requirement to prepare annual financial statements. The content of the financial statements and the requirement to have them audited depends on the level of the company’s turnover, its balance sheet total and the number of employees in the company. All limited companies must file these financial statements annually in the Irish Companies Registration Office and as a result they are publicly available.
Irish companies are also required to obtain and hold adequate, accurate and current information in respect of their beneficial owners. A beneficial owner is a natural person who ultimately owns or controls the share capital or the voting rights or has control by any other means. A holding, direct or indirect, of 25% plus one share will be indicative of ownership, and control can be determined through voting rights or other criteria. The information required to be held by an Irish company on its beneficial owners must be filed with a centralised register of beneficial owners. Members of the public can access some of the information filed with this centralised register. Items include a beneficial owner’s name, country of residence, nationality, month and year of birth and nature and extent of ownership and control. Individuals acting on behalf of our police force and other competent authorities can access most of the information submitted to the central register.
An Irish private company limited by shares can be incorporated in five business days (and often less) once the process complies with the requirements of the fast-track procedure prescribed by the Irish Companies Registration Office. This process requires the applicant to adopt a pre-approved form of constitution (which can be changed by resolution of the shareholders following incorporation). Irish companies are also required to have, among other things, an EEA resident director (unless the company purchases a two-year surety bond to secure the company’s compliance with company law and tax law), a registered address in Ireland and an address in Ireland where it proposes to carry out its activities.
Ireland has a lot to offer foreign corporations. While its common law regime offers a familiarity of corporate structures and corporate governance principles, our history as a destination for FDI has allowed our skilled workforce to grow up understanding, and thriving within, the culture of global multinational enterprises.
If you are considering establishing operations in Ireland, contact a member of our Corporate Governance & Compliance team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.