Company Seal
The temporary measure allowing companies to execute documents under seal in different counterparts has now been made permanent. This provides better flexibility in situations where the seal and signatories are in different locations, and it would be difficult for the seal and the signatures to be placed on the document at the same time. According to the Act, this provision will apply “notwithstanding any provision of the company’s constitution” allowing for a more efficient alternative to any provision regarding the affixing of the company seal which is contained in the company's constitution.
General Meeting held virtually
Now also made permanent is a previously temporary Covid-19 measure allowing General Meetings to be held virtually. A new section 176A is inserted into the 2014 Act, providing companies with the option to conduct General Meetings virtually or by a hybrid meeting with participants present virtually and in person. "General Meeting" extends to AGMs, EGMs, and general meetings of a class of shareholders.. However, this provision only applies if the company's constitution does not prohibit virtual meetings. Therefore, companies should review their constitution to see if they have opted out of the provision to hold meetings virtually. When holding virtual meetings, companies would need to be mindful of the provisions contained at 176A (2) – (11) of the 2014 Act which sets out mandatory rules applicable for virtual General Meetings. One is that anyone participating online will be part of the quorum for that meeting.
Domestic Mergers
The Act amends the 2014 Act as it relates to Domestic Mergers which is the process whereby two private Irish companies merge so that the assets and liabilities of one are transferred to the other by operation of law. Formally, one of the merging entities had to be a Limited Company (LTD). This has now been amended to allow for one of the merging entities to either be an LTD or Designated Activity Company.. For mergers by absorption, the Act now clarifies that provided a group of subsidiary companies are owned by the same parent company, such a merger can be facilitated in one transaction rather than in several transactions which simplifies the process.
Involuntary Strike off
The Act introduces three additional grounds in which an Irish company could be subject to an involuntary strike off:
(a) failure to notify the Registrar of a change of registered office;
(b) failure to record a company secretary with the CRO; and
(c) failure to notify the Registrar of Beneficial Ownership (RBO) of information in relation to the beneficial ownership of a company.
In addition, the RBO may give notice to the Registrar of Companies where a company has failed to deliver relevant information under the RBO Regulations.
Enhanced information sharing powers
The Act has expanded the list of competent authorities to which the Corporate Enforcement Authority (CEA) may disclose information, books or documents obtained in the course of an investigation. This includes the Registrar of Beneficial Ownership, Registrar of Friendly Societies, Charities Regulatory Authority, Competition and Consumer Protection Commission, the Data Protection Commission, the Insolvency Service of Ireland, the Office of the Protected Disclosures Commissioner and the Criminal Assets Bureau.
Privileged Information
While it had been proposed that the 2014 Act would be amended to enable the CEA to make an application of privilege on an 'ex parte' basis, without notice to the individual or company the subject of the material, this has not been provided under the new Act. The Act however increases the period in which the CEA may apply to the Court for a determination from 7 days to 14 days.
New Criminal Offences of Obstruction and Intimidation
The Act has introduced a new criminal offence (Category 2) for obstructing, impeding, or interfering with a CEA officer or staff member in performance of their functions under the Act. A person found guilty could be fined up to €50,000 or imprisonment of up to 5 years (or both).
Some of the provisions which are due to be commenced in the next commencement orders are:
Summary Approval Procedure (SAP) - Amendments have been made to the 2014 Act requiring that SAP declarations are prepared using the forms prescribed by legislation. In many cases companies had previously filed their own bespoke SAP declarations. Once in effect, this will apply to SAP declarations regarding financial assistance, reductions, and variations in share capital, winding up solvent companies and more.
Small Company Audit Exemption – The Act now provides that a small company's audit exemption would only be lost where the company fails to file an annual return for a second or subsequent time within a period of five consecutive years. Presently, the exemption would be lost following a first failure by a company to file its annual return.
Conclusion
The new amendments to the 2014 Act represent a significant update in Irish company law. They recognise the recent economic developments and technological advancements. The enhanced regulatory powers and new administrative processes introduced seem to be welcomed so far. While not all the new provisions are effective now, it is expected that the remaining provisions will be effective later this year. Consequently, it is vital that all companies regardless of their size or sector seek appropriate guidance on their obligations under the Act.