ICSA Ireland


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Proposed new changes to the Companies Act 2014

18 July 2019

 

Proposed new Changes to the Companies Act 2014

The General Scheme of the Companies (Corporate Enforcement Authority) Bill 2018 was published in December 2018. The purpose of the Bill is to make a number of amendments to the Companies Act 2014 (the “Act”) including:-

·            The establishment of the Office of the Director of Corporate Enforcement (ODCE) as a stand-alone agency, to be called the Corporate Enforcement Authority (the "Authority")

·            Changes to Share Capital as recommended by the Company Law Review Group

·            Amendments to Corporate Governance provisions

·            New grounds for restriction of directors

·            Directors to supply PPSN to the CRO for verification purposes

·            End of exemption from including particulars of directors on business letters

 

Corporate Enforcement Authority

The Bill provides for the establishment of the Corporate Enforcement Authority as an independent agency to investigate suspected offences under the Act and to enforce the Act. The powers of the agency are to be enhanced.

 

Changes to Share Capital

The Company Law Review Group recommended its 2017 Report Relating to Shares and Share Capital a number of amendments to the Act including:

·            Restores a provision enabling a company with a share premium account to use the account for various purposes including the writing off of the company’s preliminary expenses

·            Amendment to Sec 91 of the Act clarifying that a transaction can proceed even if there is no reorganization on the company’s capital and only where the company has adequate distributable reserves

·            Disapplies the requirement for distributable reserves to redeem own shares for a private unlimited companies (ULCs) and public unlimited companies (PUCs)

·            Sets out capital reduction as an exclusion or exception from the definition of distribution in Sec 123 of the Act.

 

Amendments to Corporate Governance provisions

The Act makes a number of amendments to the Corporate Governance provisions in the Act

·            A secretary of a company, where it is an individual, must be at least 18 years of age

·            Align the provisions relating to the instrument appoint a proxy with the proxy’s right to demand or join in demanding a poll

·            Align the statutory solvency test which applies for the purposes of the Summary Approval Procedure declaration with the test applicable under Sec 203(2)

 

New grounds for restriction of directors

The Bill proposes new grounds for a restriction order to be made by the High Court where a director who has

·            Failed to convene a general meeting of shareholders[JO1]  for the purpose of nominating a named liquidator; or

·            At such a meeting fails to table a motion to nominate a named liquidator;

·            Has failed to provide the required notice to employees in a winding up

 

Directors to supply PPSN to the CRO for verification purposes

It is proposed to oblige directors of companies to supply PPSN to the Registrar (in data format only) when filing the following forms-

·            A1 – Application to incorporate a company

·            B1 – Annual Return

·            B10 – Change of directors/secretaries or their particulars

The proposal is to assist the Registrar of Companies to support the accuracy of the Register and to address duplication on the Register. For directors who do not have a PPSN they shall supply a copy of the photo page of their passport.

 

End of exemption from including particulars of directors on business letters

The exemption allowed by the Minister for Business, Enterprise and Innovation will be removed from the Act.

 

Conor Sweeney, ICSA Practice Committee member and Managing Director of CLS Chartered Secretaries


 

ICSA’s Excellence in Governance Awards is judged by two independent judging panels. Judging takes place in July and August, with the shortlist announcement in early September.

 

Transparency in governance categories

Transparency in governance categories are judged by Hermes and ISS. Hermes helps institutional shareowners around the world to meet their fiduciary responsibilities and become active owners of public and private companies. Their team of engagement and voting specialists monitor its clients' investments in companies and intervene where necessary with the aim of improving performance.

 

Our judging criteria for these categories stipulate good and poor practice within each category area.

 

Ø  Download the transparency in governance category judging criteria. [LINK]

 

Company secretary award categories

Company secretary award categories are judged by a select panel of five judges, all highly experienced in company secretarial and governance fields, spanning private and not-for profit sectors.

To allow our judges to assess nominations fairly and objectively, all nominations are judged on the same criteria. Nominators will be asked to submit biographical information of the nominee and a general statement in support of the nomination, plus specific examples or evidence of achievement across the following six areas:

1.       Company law, regulation and compliance. Demonstration of the meeting of their organisation’s legal obligations and keeping on top of legislative development and change; examples of excellence in the design and maintenance of efficient and effective control systems for ensuring compliance.

2.       Corporate governance and shareholder relations. Demonstration of measures implemented to improve the effectiveness of corporate governance and shareholder communication within their organisation.

3.       Corporate restructuring. Demonstration of having undertaken acquisitions, disposals and any other significant restructurings or transactions.

4.       Information management and communication. Examples of excellence in the management, retrieval and dissemination of information, including the harnessing of information technology to aid performance; evidence of timely and effective communication with both internal and external stakeholders.

5.       Leadership and management. Evidence of circumstances where an individual has shown exemplary leadership and management.

6.       Innovation. Examples of achievements using new thinking to solve issues and problems.

We ask nominators to include evidence of achievement in at least three of these six areas.