An overused phrase at the moment but these are challenging times we are living in. Most importantly, we hope you, your family and your colleagues are safe and well.
The COVID-19 pandemic has had a major impact on how companies operate and so survival, paying staff and keeping the business afloat are always the most important tasks in any crisis. The practical realities of complying with company law unsurprisingly often drops way down the order of importance.
Now that companies are starting to settle into the new “normal” we thought it might be helpful to highlight some of the following practical company secretarial points that directors and practitioners should consider and be aware of during this pandemic:-
- CRO are providing a reduced service
- Annual Returns should still be filed on time in CORE
- ICSA submission on digital signatures
- Holding company meetings electronically
- Signing documents on behalf of the company
- Appointing a second or alternate director due to sickness or incapacity
- Importance of documenting key decisions
- Directors loans approval in writing
- Golden shares permitting lending between companies
- District and High Court Applications & Strike Off
The CLS Team are all remote working and continue to provide our services and support so we would be delighted to assist you in any way we can. Please feel free to contact myself, Amy, Elaine, Roisin or Sinead we would be delighted to help.
CRO are providing a reduced service
The CRO have confirmed they are providing a reduced service to presenters. These services include company formations, change of company name, re-registration and receipt of charges.
In relation to Summary Approval Procedure (‘SAP’) filings, if they are emailed to the mailbox (email@example.com) within the 21 days they will be deemed to have been delivered on time.
The CRO offices are still closed to the public however, both offices are accepting post through an Post or the CRO DX number but not by courier. For more information see the CRO news updates
Annual Returns should still be filed on time
The Registrar of Companies has decided that all annual returns due to be filed by any Company from 18 March 2020 and up to 30th June 2020 will be deemed to have been filed on time if all elements of the annual return are completed and filed by that date.
Annual Returns should still be filed within 28 days of the ARD and companies then have until 30 June 2020 to upload the financial statements and file the signature page with CRO. See more information on the FAQ on CRO
ICSA submission on digital signatures
A very common question is regarding CRO accepting electronic copies of signed documentation.
The ICSA: The Chartered Governance Institute made a submission to Ms Maureen O’Sullivan, the Registrar of Companies, following a request from a number of its members, requesting that the CRO temporarily accept electronic copies of signed documentation. The proposed new CORE system would have provided for electronic signed copies however, we are unsure when the new CORE system will be launched as it was scheduled for Q3 in 2020.
We will keep you updated if there is any progress on these items.
Holding company meetings electronically
The government’s guidance on non-essential work and social distancing means that companies may find it difficult to hold director or member meetings and must either rely on holding meetings electronically or passing resolutions by way of written resolution.
If a company is considering holding a meeting or passing written resolution the first step is to review the constitution of the company to see if these methods are provided for and if not the company will have to rely on the default provisions of the Companies Act 2014.
ICSA: The Chartered Governance Institute have collated some useful guidelines on holding an AGM during the COVID-19 pandemic.
Signing documents on behalf of the company
The directors of a company have the capacity to sign on behalf of a company. Where a company is signing under the common seal of the company the signature of a director and either a second director or the company secretary is required unless the constitution of the company provides otherwise.
This may prove difficult for many companies due to social distancing or where directors are working in different areas of the country or in different countries and there is a delay in post or couriers.
Appointing a second or alternate director due to sickness or incapacity
A sole director company or where a director may be sick or incapacitated and are not in a position to carry out their full duties as a director, the company may consider appointing another director or an alternate director.
An alternate director, whose appointment was approved by the majority of the directors of the company, may participate on behalf of the appointing director and it may be useful to appoint such a director in the current pandemic.
The sole director of a company who is also the sole shareholder may also consider putting a will in place to provide for the transmission of their shares in the company in the event of their death or incapacity, if they have not already done so.. The constitution may also include provisions regarding the transmission of shares and the appointment of a new director to avoid any difficulties in the future and so it would be useful to review the current constitution with this in mind.
Importance of documenting key decisions
One of the main directors duties is that all directors are required at all times to act in the best interests of the company and to document all key decisions of the company. In a time of crisis this might not be high on the agenda of directors. However, as we saw in the last recession it is important that directors take the time to document the key decisions they may have to take such as laying off staff, or imposing pay cuts, reducing working hours, applying for loans or changing banking facilities or applying for the COVID-19: Temporary Wage Subsidy Scheme.
If a decision is made by the directors that is not part of the normal course of business this should be made at a directors meeting or by way of written resolution so the directors have evidence they acted in the best interests of the company in the event the company goes into liquidation or a decision is challenged.
Directors Loans Approval In Writing
The Companies Act 2014 requires all loans given to a director or connected person or vice versa, the terms of these loans must be approved in writing. At a time where directors may be under personal financial pressure they may consider using the funds of the company and these loans must be approved or they could be deemed to be repayable on demand and appropriate interest applied.
Golden shares for lending between companies
Companies that are facing cash flow or financial difficulty may seek to provide or obtain loans from associated companies. If these companies are deemed to be connected companies and are not in a group they may breach the provisions of Sec 239 of the Companies Act 2014.
A golden share may be created between two companies to put these companies in a group for company law purposes so they can rely on the group exemption when lending between connected companies.
District Court and High Court Applications & Strike Off
The District Courts and the High Court are currently closed unless there is an emergency application. So any Sec 343 District Court Applications are now being pushed out until September 2020.
The Registrar of Companies have advised that any company facing strike off will not be struck off before 30th June 2020.