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Some lesser spotted details in Companies Act 2014

09 September 2015 by Guest

Much has been written about and commented upon both on this website and at the ICSA conference about the profound changes brought on by the new Companies Act 2014 (the Act). Once the dust has settled, I’m sure that members will agree that if not perfect (can it ever be?) the new Act is definitely an improvement and better reflects today’s commercial realities.

I have written a more extensive article for Governance and Compliance magazine that can be read in full here; http://bit.ly/1NfHLiR

For this blog though I’ve chosen just to highlight some small, but interesting areas that have been passed over in the main coverage such as the issue of a director’s health.

  • Section 148(8) states that a director’s post shall be vacated if the health of the director is such that he/she can no longer be reasonably regarded as having an adequate decision-making capacity.

And in the era of data protection, in particular where directors may be targeted by various types of pressure groups the following is good to know:

  • Section 150(11) and (12) states that the minister may make regulations of which an exemption may be granted to an office from disclosing his/her usual residential address in circumstances where it is considered the personal safety or security of the person to warrant such an exemption. This will include CRO filings and the Register of Directors and Secretaries. The company secretary should be aware of this.

In the last couple of years we have seen some high profile court cases where directors were claiming they signed documentation that they shouldn’t have, and in at least one case a person with multiple directorships claimed he was illiterate, so couldn’t have known what he was signing. Part 5 of the new Act will now make sure that all directors, including shadow directors and de facto directors (one who occupies the position of director but has not formally been appointed as such), comply with the Act.

To make sure they can demonstrate they understand their duties and obligations they must, on appointment as a director, sign a declaration acknowledging those legal duties and obligations. A company secretary is also required to do so under the provisions of the Act.

The requirement that a director will have to sign a declaration acknowledging his or her duties will place a new statutory emphasis for directors on their obligations and duties to comply with the provisions of the Act. Directors will have signed a similar declaration when signing a Form B10 for filing at the Companies Registration Office; however it would not have had the same statutory obligations. It is now the sole responsibility of directors to ensure their companies are fully compliant. Directors therefore now carry greater liability than ever before for breaches of compliance and duty.

Although the Act states that it is the ultimate responsibility of directors to ensure compliance, it also gives directors the power to delegate responsibilities to officers, which includes the company secretary, who will also need to have an expert knowledge of the company’s compliance obligations.

It is fair to say that company secretaries have already spent a huge amount of time looking at, and discussing, the issues raised first in the Bill and then in the final Act. Given the extent of changes however, the Act must be re-read by all a good many more times – especially the parts relating to company secretaries’ obligations and the obligations of company directors.

Author: Brendan O’Connor, Manager, Entity Governance and Compliance at PwC is also a member of ICSA Irish Region Council