The Companies (Corporate Enforcement Authority) Bill allows for the establishment of a new independent statutory authority, the Corporate Enforcement Authority (“CEA”) The CEA will replace the Office of the Director of Corporate Enforcement (“ODCE”) and continue its role in the investigation and enforcement of corporate crime.
The current functions of the ODCE will be transferred to the CEA with some modifications. The new structure of the CEA includes:-
- the Bill provides for up to three full time Members, one of whom will be appointed Chairperson of the CEA;
- the CEA will be able to appoint its own staff with the required skills and expertise it deems necessary to perform its functions instead of having staff assigned to it by the Department of Business, Enterprise and Innovation; and
- the Bill provides for the secondment of members of An Garda Síochána to the CEA.
It is intended to have the CEA operational by 1 January 2022.
Miscellaneous Amendments to the 2014 Act
The Bill also contains some important amendments to the Companies Act 2014 reflecting a number of recommendations of the Company Law Review Group.
- A company will once again be able to use its share premium account for, among other things, the writing off of the company’s preliminary expenses, or the expenses of, or commission paid on, any issue of shares or debentures by the company (e.g. in an initial public offering).
- Three-party share-for-undertaking transactions will be able to proceed even if there is no reorganisation on the company’s capital. The Bill also adds a new condition where such transactions can occur where a company has distributable reserves at least equivalent to the value of the transferred or disposed assets and deducts an amount, equivalent to the value of those assets, from its reserves.
- The definition of treasury shares will be amended to include shares acquired by a company pursuant to a merger or division. This will clarify post-merger treatment of merging/dividing companies’ shares acquired by a successor company.
- Confirmation that ULCs and PUCs are not required to purchase or redeem shares out of distributable profits.
- A new provision will permit directors (save where the constitution provides otherwise) to decline to register the transfer of a share in a range of circumstances, including to a person of whom they do not approve; or where the share is one on which the company has a lien; or where the transfer of a share would, in their opinion, “imperil or prejudicially affect the status of the company”.
- Directors will be required to provide their PPSNs (or other information if they do not have PPSNs) when incorporating a new company (CRO Form A1), filing an annual return (CRO Form B1) or notifying a change of director (CRO Form B10). This is a safeguarding measure designed to mitigate the possibility of (deliberate and inadvertent) breaches of company law where a director has used different versions of their name on company documentation.
- Removal of the Minister’s power to grant exemptions to companies from the requirement to show the names of directors on business letters of company (current exemptions will not be affected).
- Clarification that members of a company limited by guarantee (CLG) will not be entitled to appoint proxies to attend and vote at meetings where the constitution of the CLG does not permit it.
- Restoration of the obligation to register resolutions in a creditors’ winding-up with the Registrar (an unintentional omission in the 2014 Act).
- The CEA will have the power to request evidence from a person that they are qualified to act as liquidator. Failure to comply will be an offence.
- Liquidators may be required to make more frequent reports to the CRO where this is required by the Registrar.
- Introduction of new grounds for a restriction order to be made by the High Court against a director who has failed to meet certain procedural requirements in the course of a company becoming insolvent: failure by a director to convene a general meeting of shareholders for the purpose of nominating a named liquidator; failure to table a notice to nominate such liquidator; and failure to provide the required notice to employees of the company in the winding up of the company.
Note: The content of this article is provided for information purposes only and does not constitute legal or other advice.