As part of the Government’s approved measures to enhance Ireland’s Corporate, Economic and Regulatory Framework, “Ireland combatting white collar crime” the General Scheme of the Companies (Corporate Enforcement Authority) Bill 2018 was published in December 2018.
Based on a number of recommendations proposed by the Company Law Review Group in its 2017 report, the draft provisions propose to make a number of amendments and additions to the Companies Act 2014 in the aim that Ireland remains a solid and stable business environment while retaining its excellent reputation for investment competitiveness.
It may be some time before the proposals form part of the Companies Act 2014 as they will be subject to further consultation and will need to progress through the usual legislative process, however in the meantime we have summarised the proposals as follows.
Corporate Enforcement Authority
In order to achieve this aim, the Bill proposes the establishment of the Office of the Director of Corporate Enforcement as an agency to take the form of a commission structure named the Corporate Enforcement Authority (the “Authority”).
Responsible for its own recruitment, budget and corporate governance, this new Authority will be more independent and through a more flexible approach in managing its workload it is proposed that the new Authority will have more far reaching investigative powers that its predecessor.
In addition to the creation of the Authority, the Bill takes into account the recommendations of the Company Law Review Group and proposes some technical amendments to the Act, providing some clarification and a more practical approach to matters concerning shares and share capital.
Shares and Share Capital
The Bill proposes to deal with a number of ambiguities within the Act with regards to shares and share capital to include:-
- Restoring a provision permitting a company to use its share premium account for various expenses including writing off a company’s preliminary expenses.
- Providing greater clarity around certain company re-organisations.
- Dis-applying the requirement for private unlimited companies and public unlimited companies to have distributable reserves to redeem their own shares.
- Excluding a capital reduction from the definition of a distribution under the Act.
Corporate Governance Matters
The Bill also includes some provisions to enhance corporate governance within companies such as:-
- Extending the requirement for a director to be 18 years of age or over to the company secretary.
- Align the statutory solvency test which applies to the summary approval procedure declarations in the case of specified restricted activities.
- Adds to the grounds on which a director may be restricted due to failing to meet certain requirements during the course of a company becoming insolvent.
Providing the Companies Registration Office with Directors Personal Public Service Number (PPSN)
In order to encourage greater accuracy and enable the Companies Registration Office to verify that a director is a real person the Bill seeks to oblige directors to provide their PPSN to the Companies Registration Office when incorporating a company for the first time, notifying the Companies Registration Office of a change of director or their particulars, or submitting an annual return.
Directors who do not have a PPSN shall instead submit a copy of the photo page of a valid passport to the Companies Registration Office.
Currently there exists an exemption from the requirement to include particulars of directors on its business letters, relevant to those entities that have frequent movements within their boards, the Bill proposes to remove this exemption due to developments in technology that allow for stationery to be updated without large print runs.
If you have any queries on the above or require clarification on any of the proposals, please contact Donna Carey, Corporate Compliance Manager or Catherine Sweeney, Corporate Consultancy Manager on (090) 6480600.