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24 de ago de 2015
An overview of the Companies Act 2014 as it pertains to Irish registered limited companies, with the information and practical knowledge necessary to ensure that such companies comply with the Act.
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Audit | Tax | AdvisoryAudit | Tax | Advisory
The Companies Act 2014: An Overview
16 June 2015
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Background to the Companies Act 2014
The Companies Bill was published on 21 December 2012 by the Minister for Jobs, Enterprise
It also introduces a number of reforms, which are designed to make it easier to operate a
company in Ireland.
Set out across 25 Parts its aim is to ease accessibility of the law for each different company
Consolidates the 16 Companies Acts as well as the many statutory instruments and court
The aim is to make it easier for companies to know and understand their legal obligations.
It will also implement a series of major reforms to reduce red tape and make it easier and
cheaper to run a company in Ireland
The Companies Act 2014 was signed into law on 23 December 2014 and commenced on 1
The Companies Act 2014 is available for download at http://www.oireachtas.ie
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New Company Types
LTD Private Limited by Shares DAC- Designated Activity Company
It may have just one director but it must have a separate secretary if
it has only one director.
It must have at least 2 directors
It can have between 1 and 149 members It can have between 1 and 49 members
Both single and multi member companies can dispense with the
need to hold an AGM
Multi member companies are required to hold AGMs
It has a one-document constitution that replaces the need for a
memorandum and articles of association.
It has a constitution document which includes a memorandum and
articles of association.
It will not have an objects clause because it has full unlimited
capacity to carry on any legal business, subject to any restrictions in
It has stated objects for which the company was incorporated.
It has limited liability and has a share capital. It is a Private company It is a Private company and has limited liability. It has a share capital
or is a private company limited by guarantee with a share capital.
It can pass majority written resolutions (special and ordinary). It can pass majority written resolutions
Name must end in “Limited” or “Teoranta” Name must end in “Designated Activity Company” or “Cuideachta
Ghníomhaíochta Ainmnithe” unless qualified for an exemption
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New Company Types
PLC- Public Limited
Guarantee Companies Unlimited Companies
Will retain objects clause Will retain objects clause Will retain objects clause
No name change required Name change may be
required (if no exemption is in
Name change may be
required (if no exemption is in
Can have a single member Can now have a single
Can now have a single
Minimum of two directors Minimum of two directors Minimum of two directors
Can offer shares to the public Can now avail of audit
exemption if the criteria is met
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Directors’ Fiduciary Duties
To act honestly
A Director will not use
or opportunities for
their own interest
care, skill and
Have regard to
the interests of
To act in good
faith for the
Not to restrict
the power of
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The Role of Company Secretary
All Companies required to have a Company Secretary (section 129(1))
Duty placed on the Director to appoint a Company Secretary who has the:
“skills or resources necessary to discharge his or her statutory and other duties.” (section 129(4))
To comply with new requirement Directors may seek to:
appoint a Company Secretary who has the necessary skills.
obtain Company Secretarial Services.
Single Director Companies will require that Company Secretary to be a different person (section 129(6)).
Some other key duties:
Duties delegated by the Board of Directors without deviating from the secretary’s statutory and other legal duties
the skills necessary so as to enable him or her maintain (or procure the maintenance of) the records (other than
accounting records) (section 226(2)).
Secretaries will also be obliged to acknowledge their duties and obligations
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The provisions contained in Volume 1 Part 6 Financial Statements, Annual Return and Audit.
The directors of a company are required to arrange for audit unless the company is entitled to
and chooses to avail itself of the audit exemption. (Sec 333)
Members may requisition an audit
For dormant company audit exemption, the Act does state the directors must be of the
opinion that the company will satisfy the conditions and hold the board meeting in the
One significant change to the old legislation is if the company files the first annual
return late it cannot avail of audit exemption for the first financial year.
Companies that can avail
Company Limited by Shares (LTD) that is a small company
Designated Activity Company
Company Limited By Guarantee
Dormant companies that have no significant accounting transactions or permitted assets & liabilities
Non-designated Private Unlimited Company (ULC)
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Companies that cannot avail
Certain Unlimited companies
A company, holding or subsidiary company that falls within Schedule 5 or is a credit
institution, insurance undertaking, relevant securitisation or body with securities admitted to
Late filing the current or preceding annual return with financial statements annexed
Late filing the first annual return
All companies in the group must have filed their returns on time
A notice is received 1 month before the end of the financial year by one or more members
holding 10% or more of the voting rights or for Companies Limited By Guarantee 1 member
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The consolidation of the law in this area is an improvement in accessibility and transparency,
and is set out in Part 6.
Part 6 refers to “financial statements” and “accounting records”, where legislation previously
referred respectively to “accounts” and “books of account”. This reduces the risk of confusion
arising from the use in practice of “accounts” to refer both to “financial statements” and
CLG can for the first time claim audit exemption should they meet the required criteria.
However, be careful of the Charities Act 2009 requirements!
Ability to fix defective Financial Statements with the new B1 X Form.
Auditors’ reporting of offences- no longer ambiguous
They will now be Category 1 and 2 offences only.
Directors’ report to confirm (so far as directors are aware) auditors have relevant information
increases directors’ accountability for audit.
Introduction of Directors Compliance Statement: “Comply or Explain”
Changes in respect of Financial Statements
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Directors Compliance Statement- “Comply or Explain”
New Provision in the Act
Compliance with Statement for “Large Companies” i.e. balance sheet €12.5 million and an
annual turnover of €25 million.
Compliance Statement must have:
that the directors have drawn up a compliance policy statement;
That the directors have put in place appropriate arrangements or structures that are, in directors’
opinion, designed to secure material compliance with the company’s obligations under company law
and tax law; and
that the directors have conducted a review during the relevant financial year of the arrangements and
structures and have taken such steps to ensure the company’s compliance with the Companies Act
2014 and Tax law, or explain why this has not been done.
However, explanation must be given for non compliance with these obligations.
Non Compliance with this Act or tax law, a failure to comply can be considered to be an
offence (Section 225) This will be a category 1 or a category 2 offence if not complied with or
a serious Market abuse offence or a serious prospectus offence.
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Changing Financial Year
•288. (1) A company's first financial year must be no 18 months after incorporation
• (a) Each subsequent financial year must not be in excess of 12 months, or
•(b) such other period, not being more than 7 days shorter or longer than 12 months, as the
directors may determine to its next financial year end date,
•Changes to a company’s year end must be notified to CRO on a designated form B83 and will
not be accepted if:-
•if it result in a financial year in excess of 18 months
•the previous financial year has expired.
•if the alteration would result in a gap in the periods covered by the company's financial
•if it results in a company not filing an annual return in a given year
•if the new B83 notice is made less than 5 years after a previous B83 notice.
•there is an exemption to the 5 year rule under section 288(10):-
•To bring the financial year end in line with a parent or subsidiary
•The company is being wound up.
•Direction from Director of Corporate Enforcement.
to the five
S. 288 (10)
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Summary Approval Procedure
The Summary Approval Procedure is covered in Chapter 7 of Part 4 of the Companies Act 2014.
It is a new procedure and it covers several different areas of the Act and the procedure permits certain
restricted activities that would otherwise be prohibited.
It is a means by which companies can engage in restricted activities by ensuring that the persons those
restrictions are designed to protect, consent to the action.
The summary approval procedure requires that the members pass a special resolution (and in the case
of mergers, a unanimous resolution) approving the transaction and a director’s declaration in relation to
the post-completion solvency of the company.
New summary approval procedure will provide a general validation process for overcoming the following
restricted types of transaction:
the financial assistance for the acquisition of shares (section 82),
reduction in company capital (section 84),
variation of company capital on re-organisations (section 91),
prohibition on pre-acquisition profits or losses being treated in holding company’s financial statements as profits
available for distribution (section 118),
prohibition of loans to directors and connected persons (section 239),
domestic merger (section 464),
members voluntary winding up (section 579).
Charges: New two tier process introduced for registering a charge where notice of a lender’s intent to
create a charge may be provided to the CRO. This would allow the lender the opportunity to secure
priority (up to 21 days in advance) before the charge is created.
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Companies Act 2014- Summary
A company’s capital will now be made up of the following elements:
The aggregate value of the consideration received by the company in respect of shares allotted by the
Un-denominated capital which includes the share premium account, the capital conversion reserve fund
and the capital redemption reserve fund.
A company will be entitled to vary its capital in advance of reorganisations where it is disposing of one or
more assets, an undertaking/part of an undertaking, or a combination of assets and liabilities to a body
corporate where the consideration meets certain criteria.
Such reorganisation must have been approved using the Summary Approval Procedure.
Where the criteria has been met, the company may, by ordinary resolution, vary the structure of its
capital by reducing the reserves and company capital by an amount equal to the book value of the
transferred assets and undertakings.
It is expected that this will make reorganisations much simpler and will facilitate the completion of
reorganisations by companies that would have been prohibited from doing so in the past by virtue of
having negative or low reserves.
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Companies Act 2014
Provided that the Company Capital remains intact, share
capital par value and un-denominated capital are
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Companies Act 2014- Summary
Must now be properly documented and approved in writing.
Mergers of Private Companies
In the past, private companies could only merge with companies in other EU jurisdictions under the EU Cross Border
Merger Regulations. This has been amended by the new Act and private companies may choose to merge with another
company using either the Summary Approvals Procedure or through the Courts.
Persons binding the company
There is an option to register the names of individuals who are authorised to bind the company with the CRO.
Recording of Residential address
In cases where the personal safety or security of a director or secretary is in question, an exemption to recording the
usual residential address of that officer in the register of directors and secretaries may be allowed
It will no longer be necessary to maintain a non-redeemable portion of the issued share capital (there was a 10%
Any disclosure of interest in shares and share options below 1% of the nominal issued share capital is no longer
It will be possible to approve a members’ winding-up using the new Summary Approval Procedure. In general the Act
has made the legislation in relation to the different methods that may be employed to wind up a company more
intelligible and logical
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For further details on Companies Act 2014 ,SORP, or any other financial or advisory services:
Sharon Gallen, Audit Partner email@example.com | 01 488 2200
Roseanna O’Hanlon, Audit Partner firstname.lastname@example.org | 01 488 2200
Shane McQuillan, Advisory Partner email@example.com | 01 488 2200
John Byrne, Tax Partner firstname.lastname@example.org | 01 488 2200
Grainne Howard, Company Secretarial Manager email@example.com | 01 488 2200