WELCOME TO “THE COMPANIES ACT 2014”
A JOINT PRESENTATION BY REGAN SOLICITORS AND BCK Accountants & Statutory Audit Firm
THE COMPANIES ACT 2014
AN OVERVIEW OF THE COMPANIES ACT 2014 FOR COMPANY DIRECTORS
REGAN SOLICITORS
BCK
• Main Changes & Structure of Act
• Effect on Financial Statements
• New Company Types
• Effect on Audit Exemption
• Directors Duties & Liability
• Powers of the ODCE
• Steps to Take & Conclusions
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Regan Solicitors; The Companies Act 2014 – Presentation July 2015; © Regan Solicitors 2015;
Regan Solicitors I 38/39 Fitzwilliam Square, Dublin 2 I www.regansolicitors.ie I 01 6874100
2
THE COMPANIES ACT 2014 – AN INTRODUCTION
THE COMPANIES ACT 2014 – OUTLINE & STRUCTURE
The Act can be broken up into Three Blocks, each consisting of different Parts, within which the Sections of the Act are found.
The First Block sets out the basis for the new LTD form of Company, and the overriding company law principles
• Parts 1-5: Preliminary & General; Incorporation & Registration; Share Capital & Shares; Corporate Governance; Directors’ Duties
• Parts 6-10: Annual Return; Audit; Charges & Debentures; Receivers; Mergers & Acquisitions; Examinership
• Parts 11-15: Winding Up; Strike Off; Investigations; Compliance; Enforcement; Registrar & Regulatory Bodies
The Second Block establishes the other company types; DAC, PLC, GC, UC and the procedure for Converting
• Part 16: DAC Companies
• Part 17: PLC Companies
• Part 18: Guarantee Companies
• Part 19: Unlimited Companies
• Part 20: Re-Registration
The Third Block deals with other company-type entities, and addresses any other issues
• Part 21: External Companies
• Part 22: Unregistered Companies & Joint Stock Companies
• Part 23: Public Offers of Securities & Traded Companies
• Part 24: Investment Companies
• Part 25: Miscellaneous
THE COMPANIES ACT 2014 – BRIEF OVERVIEW
MAIN CHANGES (1)
• New Company Types – elect to ensure
correct type
• New Constitution – draft to ensure
appropriate
• Audit Exemption extended
• Extension of scope for Personal Liability
of Directors
• Directors Compliance Statement
• Abolishment of Ultra Vires in some cases
• Directors Duties codified
• May register a “registered person” with
the CRO
THE COMPANIES ACT 2014 – BRIEF OVERVIEW
MAIN CHANGES (2)
• Company Secretary must have requisite skills
• New Summary Approval Procedure
• Priority of Securities
• New Company Law Offences – including two new criminal offences
• Corporate Manslaughter
• Grossly Negligent Management Causing Death
• New White Collar Crime provisions;
• including mandatory reporting requirements
• Increase in mandatory electronic filing
THE COMPANIES ACT 2014
NEW COMPANY LANDSCAPE
There will now be 5 main forms of Company in Irish Law :•
Private Company Limited by Shares (LTD)
•
Designated Activity Company (DAC)
•
Company Limited by Guarantee (CLG)
•
Public Limited Company (PLC)
•
Unlimited Company (UC)
THE COMPANIES ACT 2014
NEW COMPANY STRUCTURES – A COMPARISON
Existing Private Limited Companies
LTD Companies
DAC Companies
Two Directors – One as Company
Secretary
No requisite skills for Company
Secretary
Two Document Memo & Arts
Minimum of One Director – Separate
Company Secretary Required
Company Secretary must have Requisite
Skills
Single Document Constitution
Two Directors – One as Company
Secretary
Company Secretary must have
Requisite Skills
Has a Two-Document Constitution
Capacity Limited by Memo & Arts.
Objects Clause Required.
No requirement to register authorised
corporate agents
Written Resolutions must be passed
by all members
Only single member companies may
dispense with AGM
Maximum of 99 Members
No Objects Clause; Ultra Vires does not
Apply
Option to register those entitled to bind
the company
May pass written resolutions by the
Relevant Majority
Does not need to hold an AGM in certain
circumstances
Maximum of 149 Members
Must have an objects clause
Limited by Shares
Limited by Shares
Limited by Shares or Guarantee
May decide not to have an authorised
share capital
May not list or have securities admitted to
trading
Must have an authorised share capital
May pass majority written resolutions
Must hold an AGM where two or more
members
Maximum of 149 Members
May list or have admitted to trading
certain securities
THE COMPANIES ACT 2014
THE EFFECT ON FINANCIAL STATEMENTS
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Regan Solicitors; The Companies Act 2014 – Presentation July 2015; © Regan Solicitors 2015;
Regan Solicitors I 38/39 Fitzwilliam Square, Dublin 2 I www.regansolicitors.ie I 01 6874100
2
THE COMPANIES ACT 2014
FINANCIAL STATEMENTS (1)
• Clarification of authorised approval
• Accounting policy
• True & fair view
• Failure to comply is a category 2 offence
THE COMPANIES ACT 2014
FINANCIAL STATEMENTS (2)
• Remuneration
EMPLOYEES AND REMUNERATION
The staff costs (inclusive of directors' salaries) comprise:
Wages and salaries
Social welfare costs
Pension costs
2014
€
2013
€
200,000 200,000
15,000
15,000
20,000
20,000
─────── ───────
235,000 235,000
════ ══════
THE COMPANIES ACT 2014
FINANCIAL STATEMENTS (2)
• Comparatives
• Accounting records
THE COMPANIES ACT 2014
THE EFFECT ON AUDIT EXEMPTION
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Regan Solicitors; The Companies Act 2014 – Presentation July 2015; © Regan Solicitors 2015;
Regan Solicitors I 38/39 Fitzwilliam Square, Dublin 2 I www.regansolicitors.ie I 01 6874100
2
THE COMPANIES ACT 2014
EFFECT ON AUDIT-EXEMPTION
• A small company can avail of the audit exemption, “small” defined in S.350
Must fulfil 2 or more of the following criteria for current and previous year (previously for
purposes of audit exemption had to meet 3 out of 3)
–Turnover of the company does not exceed €8.8m
–Balance sheet does not exceed €4.4m
–Average number of employees does not exceed 50
• Group Audit Exemption
• Dormant Companies
• Not Available for
THE COMPANIES ACT 2014
EFFECT ON AUDIT-EXEMPTION (2)
Key Considerations
CLGs can now avail of the audit exemption – if a registered charity then the requirements of the Charities
Regulator will apply
• Consider carefully the rights of the shareholders (10% of shareholders or one member of a CLG) to
require an audit
• Rights of shareholders, are they sufficiently safeguarded by– S.23 MUDS Act (OMCs), S.212 Companies Act
2014? - For consideration by company directors
• Dormant company cannot retrospectively avail of the audit exemption
THE COMPANIES ACT 2014
DIRECTORS & COMPANY OFFICERS…
THE COMPANIES ACT 2014
DIRECTORS’ DUTIES NOW EXPRESS RESPOSIBILITIES - IMPACT OF THE NEW LEGISLATION
• Act in Good Faith
• Avoid Conflicts of Interest
• Act Honestly & Responsibly
• Exercise Due Care and Diligence
• Have Regard for the Interests of
Members as well as Employees
• Act in Accordance with the Company’s
Constitution and Exercise Those
Powers only for Lawful Purposes
• Not to use Company Property Unless
Approved by the Members or the
Constitution
• Not to Fetter Discretion Unless
Permitted by the Constitution or
Unless in the Company’s Interest
THE COMPANIES ACT 2014
DIRECTORS’ LIABILITY (1)
• Breach of directors duties can result in the director having to personally indemnify and/ or
compensate the company
• Shadow Directors and De Facto Directors will be considered to be properly appointed
directors
• Board of Directors’ acting under the direction of disqualified Directors may be guilty of a
Category 2 Offence
• A Court Judgment that is wilfully disobeyed by a company may be enforced by attachment
against personal assets of a director – s.53
THE COMPANIES ACT 2014
DIRECTORS’ LIABILITY (2)
• Directors Compliance Statements• Private companies (including both LTDs and DACs) must also include such a
report where their balance sheet total is more than €12.5 million and turnover
more than €25 million
• Directors must demonstrate that the company has a policy on compliance and
has in place structure and arrangements to ensure compliance.
THE COMPANIES ACT 2014
DIRECTORS’ LIABILITY (3)
• Specific duty under s. 330 to ensure that auditors have all relevant information-confirmation
that each director has taken all necessary steps to make himself aware of the relevant audit
information
• The Act significantly increases the penalties where a company and its directors contravene
the obligation to keep accounting records; the offence for not doing so is elevated to a
Category 1 offence
• Directors may be criminally liable for untrue statements and exposed to a maximum penalty
of €50,000 and/ or 5 years in prison
• Directors of insolvent unliquidated companies at higher risk of disqualification proceedings
from 2015 onwards – s.160(2)(h)
THE COMPANIES ACT 2014
POWERS OF THE ODCE
• Appoint inspectors
• General obligation on officers (including bankers, solicitors, auditors, accountants, book-keepers, tax
adviser etc.) and agents to cooperate
• Production of books, documents & registers
• Power to expand investigation into related companies
• Power of examination
• Power to place restrictions on shares
• Power of entry, search & seizure
THE COMPANIES ACT 2014
SUMMARY
THE COMPANIES ACT 2014
DATES FOR YOUR DIARY
•
The Act is now in force and has been since 1st June 2015
•
All New Companies must take one of the new company forms
•
All existing private limited companies now operate under Part 16 of the Act – treated as DACs until they convert
•
There is a transition period of 18 months in which private limited companies may elect to convert to a LTD or re-register as a
DAC .
•
Within the 15 month period conversion by ordinary resolution; after that it will only be possible to convert by special
resolution;
•
31st August 2016: all existing private limited companies wishing to become a DAC must have initiated the conversion process
by this date
•
30th November 2016: At the end transition period, existing private limited companies will automatically be deemed to have
become an LTD, unless it is required by law to become a DAC, in which case it will be bound by the rules applicable to a DAC
•
30th June 2016: all Public Guarantee companies (CLG’S)must have changed their company name, to include new company type,
by this date
THE COMPANIES ACT 2014 – BRIEF OVERVIEW
ANTICIPATED EFFECT OF NEW LAWS
• Charities and not-for-profits will come under increased regulation, particularly with the coming into
force of the Charities Regulatory Authority. As such it will be important that a proper audit is carried
out by such companies to ensure that they are fully compliant and taking the correct company type
(CLG)
• Owner Manager Companies will come under greater scrutiny for compliance,
• The combination of the codification of directors duties, new company law offences, empowering of
the ODCE, Directors face real dangers of personal liability being imposed for non-compliance,
• The traditional M and A now a Corporate Constitution, greater importance in the future to ensure
well drafted shareholder agreements and review Old Shareholder Agreements,
• Practitioners must await the reaction and interpretation of the Courts,
THE COMPANIES ACT 2014 – BRIEF OVERVIEW
REGAN SOLICITORS HOW WE CAN HELP YOU TO MAKE THE TRANSITION
• We will review of your corporate structure allowing us to advise as to the most suitable
form of company
• We can guide you through the conversion process, managing all necessary
documentation and filing.
• We can draft a tailored Constitution for your company
• We can an offer a Legal Audit Statement and Annual Process based on your particular
company its activities and needs
• We can provide specific advices to the directors and boards of directors of medium
sized Companies regarding the new risks.
THE COMPANIES ACT 2014 – BRIEF OVERVIEW
REGAN SOLICITORS HOW WE CAN HELP YOU TO MAKE THE TRANSITION
• What if you do nothing?
• Failure to convert will mean that your company will be subject to the rules
applicable to DACs during the transition stage.
• Similarly, failure to take any positive steps to convert will result in your company
automatically being converted to a LTD at the end of the transition period; again,
this is not recommended due to the increased risk of non-compliance
• There are approximately 150 optional rules in the Act which will apply by default if
not dis-applied by preparing a tailored Constitution. Many Table A rules amended
and repealed.
• Operating under a deemed Constitution will make corporate governance more
difficult and give rise to uncertainty
Mark Regan, Managing Partner
Regan Solicitors
mark@regansolicitors.ie
087 238 3776
38/39 Fitzwillam Square, Dublin 2.
01 687 4100
www.regansolicitors.ie
Alison Gray, Partner (Audit)
BCK
alison@bck.ie
086 864 4878
28/30 Lower Mount Street
Dublin 2
01 676 5333
ww.bck.ie
The Companies Act 2014 – A Joint Presentation by Regan Solicitors and BCK Accountants
We Look Forward to Assisting you with all of your Legal & Accounting Needs