Proposed Amendments to the Companies Act 2014

Corporate governance and administration

1. Execution under Seal 

The Proposed Bill will reinstate the mechanism, first introduced on a temporary basis during the Covid-19 pandemic, allowing documents under seal to be executed in counterpart, with the different counterparts being considered one document once fully executed. 

2. Virtual General Meetings and Shareholder Proxies 

During the Covid-19 Pandemic, the Government also temporarily amended the Companies Act to allow Irish companies to hold their General Meetings virtually. The Proposed Bill will solidify this as a permanent feature of the amended Companies Act. 

The Proposed Bill further proposes amending the 48-hour notice period for notifying a company when appointing a proxy for General Meetings. It will discount weekends and public holidays from that notice period. 

3. Companies Registration Office submissions

The Proposed Bill requires Summary Approval Procedures to be submitted to the Companies Registration Office (the “CRO”) in a prescribed form. 

Corporate service providers will also have to apply to the CRO in order to be registered as the electronic filing agent and/or the registered office address provider for their clients. 

4. Audit Exemption

Now, a company availing of a small company audit exemption automatically loses the right to claim this exemption for the following two years if they fail to file their Annual Return/ Financial Statements within 56 days of their Annual Return Date. 

Under the Proposed Bill, a company availing of the exemption would lose their right to claim it for the following two years only if they file two late Annual Returns within a five-year period. 

5. Additional voluntary disclosures on the Annual Return

The Proposed Bill introduces a new voluntary element of the Annual Return, allowing companies to disclose the gender identity balance of their Board of Directors. The government would use this voluntary additional disclosure for statistical purposes.

6. Mergers

Under the current Companies Act, when two companies merge — and their assets, liabilities and identity transfer by operation of law into another entity — the surviving entity must be a private company limited by shares.. 

Under the Proposed Bill, the surviving company may be a private company limited by shares or a designated activity company. 

The current Companies Act also requires wholly owned subsidiaries of the same parent company to be transferred under individual, separate transactions. The Proposed Bill allows those subsidiaries to be transferred within a single merger transaction.

This welcome change would significantly reduce the administrative and legal burden of merging wholly owned subsidiaries and simplify the merger procedure overall. 

7. Public Limited Companies (“PLCs”)

A PLC has the right to request information from any person the company knows — or has reasonable cause to believe — to have had an interest in the company at any time in the past three years. 

That person must reply to the PLC within a reasonable period of time. The Proposed Bill changes the timing from ‘a reasonable period’ to within five days.  

To clarify matters where a central securities depository (CSD) holds shares, the Proposed Bill further attempts to address queries regarding required shareholder majorities when approving a scheme of arrangements. 

The Proposed Bill also provides for at least a 72-hour period before a general meeting of a PLC that has shares registered with a CSD. This allows time to provide the instructions of investors at the General Meeting. The amendment aims to prevent new proxy forms being submitted in the event of any adjourned meetings.

Disposal of companies 

I. Insolvency 

Under the Companies Act, liquidators must apply to the Courts for the restriction of a director (or directors) of insolvent companies. The Proposed Bill allows the Corporate Enforcement Authority to relieve a liquidator of this obligation. It also obligates liquidators to defend against any directors’ appeals over restriction or disqualification. 

II. Strike Offs

The Proposed Bill introduces three new grounds for involuntary strike off: 

• a failure to notify the CRO of a change in registered office address

• not having a company secretary appointed 

• a failure to file the beneficial ownership information with the Central Register of Beneficial Ownership. 

Interestingly, the Proposed Bill states that if a company is involuntarily struck off under the new grounds, its directors will not be liable for disqualification from acting as a director going forward. 

Regulatory Enforcement 

I. Enhanced Powers for Corporate Enforcement Authority 

The Proposed Bill includes additional powers for the Corporate Enforcement Authority (“CEA”) when it comes to obtaining information from, and sharing information with, other state bodies.  

With additional powers as well as the CEA’s increased activity over recent months in relation to breaches of company law, it’s vital that all companies, no matter their size, complexity or charitable status, seek proper advice about their requirements and obligations under the Companies Act and other relevant legislation.

Paul James Cashman-Roberts contributed insights to this guidance.