Companies Act 2014 - Mason Hayes & Curran · PDF fileCompanies Act 2014 Tuesday, 10 March 2015...

Companies Act 2014Tuesday, 10 March 2015

1© 2015 Mason Hayes & CurranThe purpose of this presentation is to assist access to information. It does not constitute legal advice.

Welcome

Emer GilvarryChairpersonMason Hayes & Curran


Introduction

Niamh Callaghan Partner Mason Hayes & Curran


How the Companies Act 2014 will make business easier

Paul EganPartnerMason Hayes & Curran


In brief

• The Act– What’s in and what’s out– Structure– Jargon

• How the Companies Act 2014 will make business easier – 5 Reforms for the LTD– 5 Reforms for Companies Generally

• 5 Reforms affecting Directors


What’s in and what’s out

• Included– All the Companies Acts– All the company law SIs transposing EU Directives

• Excluded– All the securities law SIs transposing EU Directives

» Listing» Market Abuse» Prospectus» Transparency

– Audit Regulations 2010– Removal of unlimited company accounts filing exemption– EU Regulations – SE, Insolvency, EEIG


Structure - First Group of Parts

Part 1: Preliminary & GeneralPart 2: Incorporation and RegistrationPart 3: Share Capital, Shares ,Certain Other InstrumentsPart 4: Corporate GovernancePart 5: Duties of Directors and other Officers Part 6: Financial Statements, Annual Return and AuditPart 7: Charges and DebenturesPart 8: ReceiversPart 9: Reorganisations, Acquisitions, Mergers, DivisionsPart 10: ExaminershipsPart 11: Winding UpPart 12: Strike Off and RestorationPart 13: InvestigationsPart 14: Compliance and EnforcementsPart 15: Functions of Registrar and of regulatory and Advisory Bodies


Structure – Second Group of Parts

Part 16: Designated Activity CompaniesPart 17: Public Limited CompaniesPart 18: Guarantee CompaniesPart 19: Unlimited CompaniesPart 20: Re-RegistrationPart 21: External CompaniesPart 22: Unregistered Companies and Joint Stock Companies Part 23: Public Offers of Securities, Financial Reporting by

Traded Companies, Prevention of Market Abuse, etc.Part 24: Investment Companies Part 25: Miscellaneous


Structure – Schedules – Constitutions

Schedule 1: Private Company Limited by SharesSchedule 7: DAC Limited by SharesSchedule 8: DAC Limited by GuaranteeSchedule 9: Public Limited CompanySchedule 10 Company Limited by GuaranteeSchedule 11: Private Unlimited Company with Share CapitalSchedule 12: Public Unlimited Company with Share CapitalSchedule 13: Public Unlimited Co without Share CapitalSchedule 16: Investment Company


Jargon

CLS = LTD New form private company limited by shares


LTD, DAC, SAP

• LTD– Private company limited by shares– Many reforms in the Act apply only to the LTD.

• DAC– Designated Activity Company– Company limited by shares, with restricted objects– Includes company limited by guarantee and having a

share capital.• SAP

– Summary Approval Procedure– Directors’ declaration of solvency and special resolution.


5 Reforms applying to the LTD

1. Abolition of objects clause2. Single document constitution 3. Single director companies4. Dispensing with AGMs5. Majority written resolutions and EGMs



1. Abolition of objects clause– LTD has

• “full and unlimited capacity to carry on and undertake any business or activity, do any act or enter into any transaction”

• “full rights, powers and privileges” to do so.– LTD has the same legal capacity as a natural person.

2. Single document constitution – A LTD will have a single-document instead of a two document

memorandum and articles of association. – The new form constitution is principally a consequence of the

removal of the obligation to set out objects in a memorandum of association.

– Reflects also the abolition of Table A.



3. Single director companies– A LTD will be permitted to have a single director. – Useful for small companies and groups with large numbers of

subsidiaries4. Dispensing with AGMs

– A LTD may dispense with the holding of an AGM. – Exception available where the company’s members sign a unanimous

written resolution during that year that deals with the mandatory parts of the business of an AGM.

5. Majority written resolutions and EGMs– A company may pass a resolution in writing where it is signed by

the “requisite majority of members.” – Holders of 50% of shares can convene an EGM



1. Abolition of objects clause2. Single document constitution 3. Single director companies4. Dispensing with AGMs5. Majority written resolutions

plus the company does not change its name


5 Reforms applying to all company types

1. Registered Person2. Financial Assistance3. Abolition of Table A4. Simplification of Share Capital Rules5. Reorganisations


1. Registered Person– Board of directors of a company may authorise any person without

restriction to bind the company and file authorisation with the CRO.– Where it is alleged that a transaction fails to bind a company

because of alleged lack of authority, both (a) the board of directors of the company; and(b) the registered person,

– shall each be deemed to have authority to exercise any power of the company and to authorise others to do so.

– Limitations in constitution irrelevant.

2. Financial assistance– Relaxation of the prohibition on giving financial assistance for the

acquisition of a company’s own shares or shares in a holding company.

– Prohibition applies only where primary purpose of transaction is financial assistance.

17


© 2015 Mason Hayes & CurranThe purpose of this presentation is to assist access to information. It does not constitute legal advice.

3. Abolition of Table A– Table A in the First Schedule to the Companies Act 1963

contains a melange of voluntary, compulsory (and tautological) and historical governance provisions for companies limited by shares, based on he public company as default.

– Default rules are set out in the body of the Act that will apply to each company unless explicitly stated otherwise in its constitution.

– In a small number of cases, such as for written resolutions, previously voluntary rules have been made mandatory.

4. Simplification of Share Capital Rules– Variation of par value by ordinary resolution– Reduction in share capital (other than PLCs) by Summary

Approval Procedure

18



Share capital

Share premium

CRRF

CCRF

Share capital

Share capital

Undenominatedcapital

Company Capital


CCRF

Provided “company capital” remains intact, share capital par value and undenominated capital are interchangeable

Share capital


Reforms applying to all company types

5. Reorganisations– Two or more Irish companies may merge with each other

by means of a “true” merger– Merger relief is available.– Pre-acquisition profits are now more easily distributable.– Three-party shares for undertaking transactions are

possible.


Transferor company Shares or assets Transferee

company

Shareholders

No consideration

Allotment of new securities as consideration for transfer

Directors make detailed statutory declaration as part of SAP

Three-party share for undertaking transaction



1. Registered Person2. Financial assistance3. Abolition of Table A4. Simplification of Share Capital Rules5. Reorganisations

plus easier way to establish what law applies to the company


5 Reforms affecting Directors

1. Directors’ Fiduciary Duties2. Directors’ Compliance Statement 3. Directors’ Audit Statement4. Restriction and Disqualification5. Loans by Directors



1. Directors’ Fiduciary Duties– act in good faith;– act honestly and responsibly;– act in accordance with the company’s constitution;– not use the company’s property, information or opportunities for the

director’s own or anyone else’s benefit;– not agree to restrict the director’s power to exercise an

independent judgement;– avoid any conflict between the director’s duties to the company

and the director’s other interests;– exercise the care, skill and diligence which would be exercised in

the same circumstances by a reasonable person in the same position with the same knowledge; and

– have regard to the interests of its employees and of its members as a whole..

Law is clarified, not changed



2. Directors’ Compliance Statement– Companies with €25m turnover and €12.5m balance sheet – Confirmation that Directors have:

• drawn up of a compliance policy statement as to compliance by company with company law and tax law;

• put in place appropriate arrangements or structures designed to secure material compliance with that law;

• conducted a review, during the financial year of those arrangements and structures.

– Directors may rely on the advice of company employees or advisers, if they have requisite knowledge and experience.



3. Directors’ Audit Statement– When approving accounts, directors must state in report of the

directors:• so far as each director is aware, there is no “relevant audit

information” of which the company’s statutory auditors are unaware, and

• each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company’s statutory auditors are aware of that information.

27


4. Restriction and Disqualification– Undertakings can be accepted by directors to be bound by

restriction or disqualification– Defence to restriction now requires that director has cooperated

with the liquidator5. Loans by Directors

– Undocumented loans by a Director presumed to be a gift to the company

– Documented loans without statement of interest presumed to bear no interest



1. Directors’ Fiduciary Duties2. Directors’ Compliance Statement 3. Directors’ Audit Statement4. Restriction and Disqualification5. Loans by Directors

plus Directors now responsible for procuring company has competent company secretary


Summary

• The Act– What’s in and what’s out– Structure– Jargon

• How the Companies Act 2014 will make business easier – 5 Reforms for the LTD– 5 Reforms for Companies Generally

• 5 Reforms affecting Directors


Transition under the Companies Act 2014

David Mangan Senior Associate Mason Hayes & Curran


The transition period

• a period of 18 months from commencement• which can be extended by the Minister for a further 12

months


What are the implications of commencement of the Companies Act for existing companies?

• public limited companies • companies limited by guarantee• unlimited companies• private companies limited by shares


Transition period –CLGs and Unlimited Companies

New words in names:

• Guarantee companies – “company limited by guarantee” or “cuideachta faoi theorainn ráthaíochta”

• Unlimited companies – “unlimited company” or “cuideachtaneamhtheoranta”


What are the implications of commencement of the Companies Act for existing companies?

• public limited companies • companies limited by guarantee• unlimited companies• private companies limited by shares


• elect to register as an LTD or as a DAC

• the directors must prepare a new-form constitution

36

Obligations during the transition period –existing private company limited by shares


Options during the transition period –existing private company limited by shares

(i) register as an LTD by submitting a new-form constitution

(ii) register as a DAC or another form of company

(iii) do nothing, and be deemed to register as an LTD


LTD or DAC?

(i) DAC remains limited by its objects

(ii) certain reforms in the Act will not apply to DACs

(iii) DAC must alter its name

(iv) certain companies are not permitted to register as an LTD

38

Relief for members and creditors

(i) Member(s) holding more than 25% of the total voting rights may require re-registration as a DAC upon notice

(ii) Member(s) holding not less than 15% of issued share capital or 15% of debentures entitling the holders to object to alterations of its objects – may apply to court for an order directing re-registration as a DAC

(iii) Any member may apply to court where it considers that its rights have been prejudiced by the exercise or non-exercise of a power by a company or its directors


How will the various options affect the Company?

Looking at the Company’s constitution


What will new-form constitutions look like?

Example 1: Deemed constitution


Deemed Constitution

Deemed to comprise:

• the provisions of its existing memorandum, other than provisions that—▫ contain its objects; or▫ provide for, or prohibit, the alteration of all or any of the

provisions of its memorandum or articles

• the provisions of its existing articles


Unanimous written resolutions

Scope

• mandatory for CLSs• voluntary for DACs, CLGs and unlimited companies

• prohibited for PLCs

43

Unanimous written resolutions

Features

• must be unanimous• take effect immediately

45


Example 2: Preparation of a new-form constitution by the directors


Preparation of a new-form constitution by the directors

Must consist solely of:

• the provisions of its existing memorandum, other than provisions that—▫ contain its objects; or▫ provide for, or prohibit, the alteration of all or any of the

provisions of its memorandum or articles

• the provisions of its existing articles


Mergers

50


Example 3: Adoption of a new-form constitution by the members


Adoption of a new-form constitution by the members

• The name of the Company• That it is a private company limited by shares, registered

under Part 2 of the Companies Act 2014• [That the liability of the members is limited]• Either:

– its authorised share capital and division into shares of a fixed amount

– division into shares of a fixed amount• Supplemental regulations


Adoption of a new-form constitution by the membersMust comply with the requirements of Section 19 and Schedule 1:

• The name of the Company• That it is a private company limited by shares, registered under

Part 2 of the Companies Act 2012• [That the liability of the members is limited]• Either:

– its authorised share capital and division into shares of a fixed amount– division into shares of a fixed amount

• Supplemental regulations

58

Mergers

Types of merger• “merger by acquisition”—an operation in which a company acquires all

the assets and liabilities of one or more other companies that is or are dissolved without going into liquidation in exchange for the issue to the members of that company or those companies of shares in the first‐mentioned company, with or without any cash payment;

• “merger by absorption”—an operation whereby, on being dissolved and without going into liquidation, a company transfers all of its assets and liabilities to a company that is the holder of all the shares representing the capital of the first‐mentioned company; and

• “merger by formation of a new company”—an operation in which one or more companies, on being dissolved without going into liquidation, transfers all its or their assets and liabilities to a company that it or they form – the “other company” – in exchange for the issue to its or their members of shares representing the capital of the other company, with or without any cash payment.

59

Mergers

Types of merger• “merger by acquisition”—an operation in which a company acquires all

the assets and liabilities of one or more other companies that is or are dissolved without going into liquidation in exchange for the issue to the members of that company or those companies of shares in the first‐mentioned company, with or without any cash payment;

• “merger by absorption”—an operation whereby, on being dissolved and without going into liquidation, a company transfers all of its assets and liabilities to a company that is the holder of all the shares representing the capital of the first‐mentioned company; and

• “merger by formation of a new company”—an operation in which one or more companies, on being dissolved without going into liquidation, transfers all its or their assets and liabilities to a company that it or they form – the “other company” – in exchange for the issue to its or their members of shares representing the capital of the other company, with or without any cash payment.

60

Advantages of updating a company’s constitution


Adoption of a new-form constitution after the transition period

• On incorporation

• By special resolution


Summary

Reform, not revolution


Q&A


Companies Act 2014 - Mason Hayes & Curran · PDF fileCompanies Act 2014 Tuesday, 10 March 2015...

Documents

Transcript of Companies Act 2014 - Mason Hayes & Curran · PDF fileCompanies Act 2014 Tuesday, 10 March 2015...