The Companies Bill:
Consolidation and Change.
Prof. Irene Lynch Fannon, Law School.
A Long Time Coming……
“ A Single Comprehensible Code”
1998: McDowell Report from the Group on Company Law, Compliance
and Enforcement called for a number of initiatives including the creation
of “one single comprehensible code” for Irish company law.
[Report: Para. 5.4.1]
LTDs; DACs; and other companies.
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Parts 1-15
Parts 16- 25
LTD : Parts 1-14
DACs: Parts 1-14 and 16
PLCs: Parts 1-14 and 17
CLGs: Parts 1-14 and 18
Schedule 1
Schedule 7
Structure of the Act described in s.9.
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“Subject to subsection (3) and(4) all of the law in this
Act in relation to private companies limited by
shares is to be found in Parts 1-14 (or instruments
under them) and Schedules 1 to 6…
and the law “ in relation to other types of company is
to be found amongst the provisions of –
Parts 16 to 25 ….and Schedules 7 to 17 and
Parts 1 to 14 …and Schedules 1 to 6 as applied or
adapted by Parts 16 to 25.”
Consolidation or Reform?Innovations.
1.
2.
3.
4.
5.
6.
The introduction of the Summary Approval Procedure in
Part 4, Chapter 7. (In relation for example to financial
assistance and reduction of capital ss. 202 and 203).
Codification of Directors Duties in Part 5, Chapter 2-s.
228 in particular.
Categorisation of Offences.
Capacity and Authority of Agents.
Governance. Articles as statute; meetings and resolutions.
Finally there are a set of Transitional Obligations regarding
initial obligations under the legislation once it is enacted.
Part 16 -DACs
s. 966. (1) “The provisions of Parts 1 to 14 apply to a DAC except
to the extent that they are
disapplied or modified by—
(a) this section; or
(b) any other provision of this Part.”)
DACs and LTDs
When is a DAC required? S. 56
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Where the company, or the members of a company wish to
agree specific activities and limit the company to those activities.
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Where a company wants to list debt securities on a stock
exchange.
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Where a company is operating as a credit institution or insurance
undertaking.
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DAC may be a private company limited by shares or a private
company limited by guarantee.
Capacity- no more ultra vires.
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S. 38 for LTDs. -private company limited by shares has full and unlimited
capacity
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S. 975 for DACs. “A DAC shall have the capacity to do any act or thing
stated in the objects set out in its memorandum. “
S. 1014 for PLCs. “A PLC shall have the capacity to do any act or thing stated
in the objects set out in its memorandum. “
The Reno Weekly Gazette And Stockman, May 1893:
"We know some men who are always looking for a sledge hammer
to crack a peanut."
Objects clause is now a rule of internal
discipline.
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S. 976. (1) of the Bill provides that:
“The validity of an act done by a DAC shall not be called
into question on the ground of lack of capacity by reason of
anything contained in the DAC’s objects.”
“(2) A member of a DAC may bring proceedings to restrain
the doing of an act which, but for subsection (1), would be
beyond the DAC’s capacity but no such proceedings shall
lie in respect of any act to be done in fulfilment of a legal
obligation arising from a previous act of the DAC.”
S. 976 (4) addresses question of liability of directors and
absolution from such liability.
Authority- ‘still a bit tricky’
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Section 40 provides that the “board of directors of
the company; and b) any registered persons” shall
be deemed to have authority to exercise any power
of the company and to authorise others to do so.
Any person who is authorised by the Board to bind
the company must be registered.
Section 40(9) – ‘no reference to the constitution’
and 40(11) ‘ in addition to and not in substitution
for Rule in Turquand’s case’
Governance
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Meetings of Board
Part 4: Chapter 4
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Meetings of Shareholders/Members
Part 4: Chapter 6.
Governance- Part 4 : Chapter 4.
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S. 157 - “Each subsequent provision of this
Chapter (other than sections 166 and 167) applies
save to the extent that the company’s constitution
provides otherwise.”
S. 166 refers to minutes of proceedings of
directors and s. 167 concerns audit committees.
Articles of Association now statutory provisions
for example s. 158 (Article 80) s. 159 (Managing
Director-Article 101).
Governance Part 4-Chapter 6
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For private companies limited by shares AGMs
can be dispensed with under the terms of s.
175(3) as long as the unanimous written
resolution procedure is followed under s. 193.
S. 176 allows for meetings to be held outside the
state but imposes duty to provide ‘technological’
means of participation.
S. 194 provides a structure for majority written
resolutions as provided for in previous legislation’nothwithstanding anything to the contrary’
Help !- The Transition Period-Options
Register as a LTD- private company limited by shares using
adapted existing Memo and Arts. – s. 60(2).
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Register as a LTD-private company limited by shares by
adopting a new constitution under s. 59 (1).
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Re-register as a DAC- designated activity company where a
resolution has been passed under s. 56(1).
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Re-register as a DAC- a designated activity company where
required to do so under s. 56 (2).
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Re-register as a DAC where required to do so under s. 56 (3)
or s. 57.
In the three cases where an existing company re-registers as a DAC
this can only be as a DAC limited by shares. [s. 54(2) and
s.967(3)(a)].
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Transition Period-Saving provisions.
Section 5.
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S. 5(1) states that the repeal of any previous enactments by
the Bill once passed will not affect the incorporation of any
company registered under any such act.
S. 5(3) states that any document which refers to any former
companies enactment ‘shall be read as referring to the
corresponding enactment of this Act.’
S. 5(6) states that any funds and accounts constituted under
the Bill (‘this Act’) ‘shall be deemed to be a continuation of
the corresponding funds and accounts constituted under
the former enactments relating to companies.’
Future Seminars???