The long awaited consolidated Companies Act moved a step closer last week with the publication of the first part of the Companies Consolidation and Reform Bill, otherwise known as “Pillar A” by the Minister for Jobs, Enterprise and Innovation, Richard Bruton.
When the consolidated Companies Bill is signed into law (expected to be late 2012 or early 2013) it will dramatically alter the landscape of company law in Ireland.
Modernising Irish company law
The draft legislation, which contains 952 sections and six schedules on over 1300 pages of text, is expected to provide the largest piece of legislation in the history of the State when it is complete. The draft consolidates the 15 existing Company Acts from 1963 as well as a significant number of statutory instruments and judgments. It has been in the pipeline since February 2000, when the Company Law Review Group (CLRG) was set up by Government to reform and modernise the landscape of Irish company law and bring it into the 21st century.
As well as consolidating existing law in the area, Pillar A of the Bill will make important changes which will make irish company formation easier and make it more cost effective to operate a company. The legislation published today contains all provisions relevant to the private company limited by shares, which under the Bill will be known as “CLS” instead of “ltd”, and which accounts for over 90% of companies presently registered in Ireland.
This proposed new company type will now be put at the centre of Irish company law, and important reforms will be made to the way this company type operates:
- A CLS will be allowed to have only one director;
- A CLS will only be required to have one document in its company constitution, and the Act provides for a default document to apply in all cases except where the company changes this constitution;
- A CLS will have the same legal capacity as a natural person, reducing the necessity to prepare long company constitutions, and reducing legal disputes caused by the ultra vires doctrine;
- A CLS will no longer be required to have a “physical” Annual General Meeting (AGM) every year – it will be possible to do this by correspondence; and
- Other changes will include an exhaustive listing of the duties of directors (previously contained in case law) and of all criminal offences under company law.
The section of the bill known as ”Pillar B” which will cover PLC’s, Companies Limited by Guarantee, re-registrations, foreign companies, investment companies, etc. is still being finalised and is expected to be published in late 2012.
Dr Tom Courtney, chairman of the CLRG, said: “The publication of the provisions of Pillar A of the Companies Bill represents a landmark moment in the development of Irish company law. The document which is published today is the product of years of very careful and painstaking work in remodelling Irish company legislation around the entity which uses it most – the private company limited by shares – and in making that legislation more accessible to those who need to be familiar with its provisions, whether in the business community or professional advisers. The publication of “Pillar A” will allow all of these stakeholders the opportunity to become familiar with the provisions of the proposed new law and to interrogate these provisions from a technical perspective in advance of the Bill being enacted”.
A copy of the Bill can be found on the Department of Jobs, Enterprise and Innovation’s website http://www.deti.ie/companiesbill
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