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Irish Company Law Guide
(Please note there are significant differences between Irish and Northern Irish Company Law)
The Republic of Ireland By far the largest company registration jurisdiction of the two Irelands and in fact it accounts for more company registrations than any other legal jurisdiction within the islands of Ireland and Britain. The reason for this partly emanates from the recent economic "boom" and the forthcoming introduction of a 12.5% corporate tax but primarily because it is a separate sovereign state unlike both Scotland and Wales.
The principal governing legislation for all Republic of Ireland companies can be found in the Companies Acts', 1963 to 2001, which although similar to the legislation employed in Northern Ireland and the United Kingdom, nevertheless is considered to be more restrictive. The principal features of Republic of Ireland companies are:
1. Directors must be individuals and not corporate entities.
2. At least one of the named individual directors must be resident in Ireland. There are no other constraints on non-resident or foreign directors.
3. A company secretary can be either an individual or company and may or may not be resident in the State.
4. All companies must have at least one subscriber/shareholder at the time of incorporation although as with the other positions mentioned above initially these will be taken by your company registration agent who upon registration will resign and appoint the permanent officers.
5. The company must have a real and substantive presence in Ireland and not merely a local registered office.
6. The company must at the time of incorporation be very specific about its intended objects and complete a NACE Code.
7. Generally ready-made or shelf companies are not available due to the requirement to be specific about a company's intended objects.
8. The Companies Registration Office (CRO) does not offer a same day expedited service as available in the UK and many States in the United States. However, In-a-Minute Companies is part of the Fe Phrainn Scheme, which means that company registration should take no more than 10 working days.
9. Irish law demands that all limited companies have an official seal.
10. Any alterations to a company's structure will normally require the payment of a small government duty.
11. Stamp duty is approximately 1%, which is levied upon issued but not nominal share capital.
12. Shares should ideally be denominated in Euros (€'s) as to denominate shares in Irish Pounds (Ir£'s) will result in such shares having to be cancelled when this currency is no longer legal tender involving potentially significant expense as shares would have to be cancelled and re-issued in the new currency. In-a-Minute only registers its standard companies using €'s.
Duties, Responsibilities & Common Terms Explained
Directors:
Irish companies require at least two individuals over the age of 18 to act in the capacity of director with at least one such director being a permanent resident of the country. In simple terms, the directors constitute the decision making body of a company commonly known as the board of directors and are liable at law for a company's actions. The directors have a duty of care to the shareholder(s) of the company to act in the company's best interests even where doing so might come into conflict with their own personal interests. The concept of a company being a fully separate legal entity to the directors is accepted in Irish law save where they have acted in a fraudulent and/or reckless manner which could not be deemed reasonable by normal standards - In which case, the corporate "veil" can be lifted fully exposing the individuals behind a company to the full rigors of both civil and criminal law. However, in the vast majority of cases this will not occur provided the board of directors have acted in good faith even if their decisions have negative consequences for the company.
The Secretary:
A company secretary occupies a pivotal position in an Irish company and has direct legal responsibility to maintain company records, file annual returns and/or carry out any other functions that may be elucidated within the Memorandum & Articles of Association. Like a Director a Company Secretary has a duty of care to the shareholders/subscribers.
Shareholder(s)/Subscriber(s):
Under Irish law there may be only one initial shareholder/subscriber although it is common to have two or more after the registration of a company by the company registration agents.
Nominal, issued, transferred and allotted share capital:
The nominal share capital of a company is the potential amount of shares that a company has available for future distribution. The issued share capital is literally the amount of shares that a company has issued out of its potential nominal share capital. In the case of most domestic Irish companies the company registration agent will initially issue the minimum number of shares, normally one or two, with an individual nominal value of €1.00 each. After the receipt of the company documentation the permanent company secretary will normally lodge the stock transfer form(s) to officially transfer the shares issued by the company registration agent to the permanent shareholders. This being done, at a nominal charge, by submitting a stock transfer form for stamping with the Revenue Commissioners. Allotted shares are literally those shares that the permanent board of directors has decided to issue over and above those initially issued by the company registration agent. They are referred to as allotted because they are being issued for the first time and therefore are not being transferred from one party to another.
The value of shares:
The term "nominal" value is used for a company's shares since the true value will depend on how much a third party or even an existing shareholder is willing to pay for shares in the company at any given point in time. Thus, the value of a company's shares will depend on market forces in exactly the same way as witnessed with the stock market. It is therefore possible that someone could pay 1 cent for a share with a nominal value of €1.00 or €100.00 depending on a company's viability. Nevertheless, it must be remembered that all shares with a particular nominal value must have had at least the nominal value paid into the company coffers that nominal sum no matter which way the value may end up. If required, an individual/company may partly pay for their share issue but this is done simply to allow for flexibility, eventually the full amount must be paid up within a certain period of generally no more than 5 years or as laid down in the company's Memorandum & Articles of Association (see below).
The types of shares:
In general there are two types of shares "ordinary" and "preference". Preference shares as the name suggests provide a benefit over and above those available to those holding ordinary shares. In most cases, the preference will relate to either voting rights and/or payment of company dividends depending on the provisions of the Articles of Association.
Memorandum & Articles of Association:
The Memorandum of Association of a company aims to set out what the company may do which traditionally was very extensive to allow for future flexibility. However, with the recent introduction of NACE Codes it now seems that the Revenue Commissioners are indirectly compromising the automatic flexibility hitherto enjoyed by Irish companies. The Articles of Association literally lay down how a company is to be governed normally by choosing a standard set of Articles provided within the Companies Acts' 1963-2001 with appropriate amendments/alterations. Most Irish private limited companies are governed by Table "A" Articles there being a choice between "A-F".
Annual & Extraordinary General Meetings:
These are meetings held by the shareholders to either review the performance of the board of directors (if different from themselves) or assist them take major decisions. In simple terms, all companies have Annual General Meetings (AGM's) to review such things as a company's annual accounts and related matters. Extraordinary General Meetings (EGM's) as the name suggests, can be called at any time of the year when there is a matter of sufficient gravity. It should be remembered that at all times the ultimate control will vest in the shareholders but unless they/it is/are the same as the directors day to day executive decisions remain the domain of the board of directors.
"Special" and "Ordinary" resolutions:
As stated above, all companies are bound by their Memorandum and Articles of Association. However, where it is deemed desirable changes can be made and/or meetings called by the shareholder(s) provided the applicable majority exists. In the case, of "ordinary" resolutions, which generally deal with day to day and/or matters of lesser importance, a simple majority is all that is normally required. In the case of "special" resolutions, which tend to deal with structural and matters of greater importance, majorities of either two thirds or three quarters are the norm depending on the particular Memorandum and Articles of Association used.
The Registered Office Address (ROA):
This is the address where a company is officially located and where all service of process/official documents arrive. It does not have to be the address where the business is actually carried out and in is fact very often the address of a company's solicitor/accountant or company registration agent. Who provides your registered office address is very important since they will receive all documents from both the Revenue Commissioners and the Companies Registration Office (CRO) and should be capable of advising and or dealing with such official correspondence. In addition, a copy of a company's official books must always be kept at the ROA for the benefit of both shareholders and other interested parties. Finally, the ROA is where all documents relating to a legal action should first be submitted.
Powers of attorney (POA):
Powers of attorney are documents granted by the board of directors in favour of third parties, known as attorneys-in-fact, in order to allow them to carry out functions deemed desirable by the board of directors. In general terms there are two main types of attorney, a General Power of Attorney (GP0A) and a Special Power of Attorney (SPOA). The first can give a wide range of powers to an attorney-in-fact whilst the second, tends to be very specific and time delimited. When looking at any POA it must always be remembered that no matter what terminology may be used in the document (i.e. such as irrevocable) all POA's General or Specific can be cancelled/abrogated at any point in time by the grantors, the board of directors.
Northern Ireland The legal jurisdiction of Northern Ireland, which in fact only consists of 6 of the 9 historical counties of Ulster, enjoys similar company legislation to the Republic but is virtually identical to that of the United Kingdom. Although company registration costs and bureaucracy are significantly less than in the Republic of Ireland, the number of companies registered each year is proportionally less than in the Republic or England & Wales.
The governing legislation for Northern Irish companies is based upon the United Kingdom's Companies Acts' of 1985 and 1989 and are referred to as Company Ordinances. The principal features of Northern Irish companies are:
1. Directors can be either an individual or corporate entity and there need only be one director to form a company.
2. There are no residency or nationality requirements for company directors.
3. A company secretary can be either an individual or company and may or may not be resident in Northern Ireland.
4. All companies must have at least one subscriber/shareholder, corporate or individual, at the time of incorporation although as with the other positions mentioned above initially these will be taken by your company registration agent who upon registration will resign and appoint the permanent officers.
5. Northern Irish companies must have a registered office address located within the 6 counties.
6. Companies can have very general objects although they require specific trading details using an identical listing system to the Republic's NACE Code, which needs to be submitted at the end of each financial year.
7. Technically, there is no impediment to maintaining both ready-made/shelf and own name companies. However, because of the limited size of the market ready-made/shelf company lists are either short or non-existent.
8. Companies House in Belfast (CHB) normally takes 710 working days to register a new limited company.
9. Although commonly used, company seals are not legally compulsory for limited companies.
10. Most alterations to a company's structure will normally not incur any extra government duties.
11. Shares should ideally be denominated in British Pounds Sterling (UK£'s), as this is still the local legal currency. However, it is also possible to issue shares denominated in Euro's (€'s) which may have significant merit should the UK decide to join the Euro in a few years time.
Duties, Responsibilities & Common Terms Explained
Directors:
Northern Irish companies require at least one individual over the age of 18 to act in the capacity of director with at least one other person also acting as either the company secretary, shareholder and/or a second company director. In other words, in all cases there must always be at least two legal entities to form a Northern Irish company. In simple terms, the director/s constitute(s) the decision making body of a company commonly known as the board of directors and is/are liable at law for a company's actions. The director/s have a duty of care to the shareholder(s) of the company to act in the company's best interests even where doing so might come into conflict with their/one's own personal interests. The concept of a company being a fully separate legal entity to the directors is accepted in Northern Irish law save where they have acted in a fraudulent and/or reckless manner which could not be deemed reasonable by normal standards - In which case, the corporate "veil" can be lifted fully exposing the individuals behind a company to the full rigors of both civil and criminal law. However, in the vast majority of cases this will not occur provided the board of directors have acted in good faith even if their/one's decision(s) have negative consequences for the company.
The Secretary:
A Company Secretary occupies a pivotal position in a Northern Irish company and has direct legal responsibility to maintain company records, file annual returns and/or carry out any other functions that may be elucidated within the Memorandum & Articles of Association. Like a Director a Company Secretary has a duty of care to the shareholders/subscribers.
Shareholder(s)/Subscriber(s):
Under Northern Irish law there may be only one initial shareholder/subscriber although it is common to have two or more after the registration of a company by the company registration agents.
Nominal, issued, transferred and allotted share capital:
The nominal share capital of a company is the potential amount of shares that a company has available for future distribution. The issued share capital is literally the amount of shares that a company has issued out of its potential nominal share capital. In the case of most domestic Northern Irish companies the company registration agent will initially issue the minimum number of shares, normally one or two, with an individual nominal value of UK£1.00 each. After the receipt of the company documentation the permanent company secretary will normally lodge the stock transfer form(s) to officially transfer the shares issued by the company registration agent to the permanent shareholders. This being done, at a nominal charge, by submitting a stock transfer form for stamping with the Stamping Office. Allotted shares are literally those shares that the permanent board of directors has decided to issue over and above those initially issued by the company registration agent. They are referred to as allotted because they are being issued for the first time and therefore are not being transferred from one party to another.
The value of shares:
The term "nominal" value is used for a company's shares since the true value will depend on how much a third party or even an existing shareholder is willing to pay for shares in the company at any given point in time. Thus, the value of a company's shares will depend on market forces in exactly the same way as witnessed with the stock market. It is therefore possible that someone could pay 1 penny for a share with a nominal value of UK£1.00 or UK£100.00 depending on a company's viability. Nevertheless, it must be remembered that all shares with a particular nominal value must have had at least the nominal value paid into the company coffers that nominal sum no matter which way the value may end up. If required, an individual/company may partly pay for their share issue but this is done simply to allow for flexibility, eventually the full amount must be paid up within a certain period of generally no more than 5 years or as laid down in the company's Memorandum & Articles of Association (see below).
The types of shares:
In general there are two types of shares "ordinary" and "preference". Preference shares as the name suggests provide a benefit over and above those available to those holding ordinary shares. In most cases, the preference will relate to either voting rights and/or payment of company dividends depending on the provisions of the Articles of Association.
Memorandum & Articles of Association:
The Memorandum of Association of a company aims to set out what the company may do which traditionally was very extensive to allow for future flexibility. The Articles of Association literally lay down how a company is to be governed normally by choosing a standard set of Articles provided within the Companies Ordinance 1986 with appropriate amendments/alterations. Most Northern Irish private limited companies are governed by Table "A" Articles there being a choice between "A-F".
Annual & Extraordinary General Meetings:
These are meetings held by the shareholders to either review the performance of the board of directors (if different from themselves) or assist them take major decisions. In simple terms, all companies have Annual General Meetings (AGM's) to review such things as a company's annual accounts and related matters. Extraordinary General Meetings (EGM's) as the name suggests, can be called at any time of the year when there is a matter of sufficient gravity. It should be remembered that at all times the ultimate control will vest in the shareholders but unless they/it is/are the same as the directors day to day executive decisions remain the domain of the board of directors.
"Special" and "Ordinary" resolutions:
As stated above, all companies are bound by their Memorandum and Articles of Association. However, where it is deemed desirable changes can be made and/or meetings called by the shareholder(s) provided the applicable majority exists. In the case, of "ordinary" resolutions, which generally deal with day to day and/or matters of lesser importance, a simple majority is all that is normally required. In the case of "special" resolutions, which tend to deal with structural and matters of greater importance, majorities of either two thirds or three quarters are the norm depending on the particular Memorandum and Articles of Association used.
The Registered Office Address (ROA):
This is the address where a company is officially located and where all service of process/official documents arrive. It does not have to be the address where the business is actually carried out and in is fact very often the address of a company's solicitor/accountant or company registration agent. Who provides your registered office address is very important since they will receive all documents from the Inland Revenue, H.M. Customs & Excise and Companies House Belfast and should be capable of advising and or dealing with such official correspondence. In addition, a copy of a company's official books must always be kept at the ROA for the benefit of both shareholders and other interested parties. Finally, the ROA is where all documents relating to a legal action should first be submitted.
Powers of attorney (POA):
Powers of attorney are documents granted by the board of directors in favour of third parties, known as attorneys-in-fact, in order to allow them to carry out functions deemed desirable by the board of directors. In general terms there are two main types of attorney, a General Power of Attorney (GP0A) and a Special Power of Attorney (SPOA). The first can give a wide range of powers to an attorney-in-fact whilst the second, tends to be very specific and time delimited. When looking at any POA it must always be remembered that no matter what terminology may be used in the document (i.e. such as irrevocable) all POA's General or Specific can be cancelled/abrogated at any point in time by the grantors, the board of directors |
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