09 December 2013
The above mentioned Act, which was signed into Law on 24th December 2013, allows SMEs to apply to the Circuit Court for Examinership.
These much welcomed proposals were originally contained in the Companies Bill 2012 when the Bill was published. The Government decided to fast track the enactment of the proposals as it forms part of the Government’s Action Plan for Jobs that will allow small companies to seek the protection of the Court to facilitate the restructuring of debts and most importantly to save jobs.
The Government recognised that the number of jobs that could be saved in the SME sector by extending the provisions of Examinership to the Circuit Court was significant. By reducing the costs of seeking Court protection it gives companies in financial difficulty a viable alternative to going straight into liquidation with the loss of jobs. This will benefit businesses with large potential for growth and job-creation that may be held back by legacy debt or unsustainable rents.
The main provisions of the 2013 Act are:
The Act amends the existing Examinership legislation for small private companies. The Act will allow small private companies to apply directly to the Circuit Court to have an examiner appointed instead of having to apply to the High Court first, as is currently the case. This will lower costs and provide greater accessibility for small private companies to the Examinership process by eliminating the need for High Court involvement. Small companies are those defined as such in the Companies Acts, meaning that they satisfy two out of the following three conditions:
The second provision of the Act will provide for a more efficient electronic filing of accounts with the Companies Registration Office by removing a true copy requirement. When filing accounts at the Companies Registration Office there is currently a requirement for a director and secretary to sign a statement to verify that the accounts are a true copy. This will allow type signed accounts to be electronically filed using CORE. It will also reduce the administrative burden associated with the filing of accounts by companies.
This provision allows specified regulatory authorities to disclose information relating to offences under the Companies Acts to the Director of Corporate Enforcement.
The fourth provision would enable the Irish Auditing and Accounting Supervisory Authority (IAASA) impose a levy on relevant statutory auditors and audit firms to defray the costs of carrying out the quality assurance function, which it is proposed will be transferred from the Recognised Accountancy Bodies to IAASA.
The final provisions of the Act relate to the application of investigation and penalty systems to certain third country auditors/audit entities who carry out audit on companies incorporated in specific third countries and territories. Two Commission Decisions, 2011/30/EU, as amended by Commission Decision 2013/288/EU, set out regimes to be applied by Member States to the auditors and audit entities that carry out audits of the annual or consolidated accounts of companies incorporated in certain third countries, whose transferable securities are admitted to trading in the State. These regimes are based on evaluations carried out by the EU Commission on the public oversight systems for auditors and audit entities of particular territories which have concluded that these are not equivalent to the systems applicable in the EU. The facility for IAASA to apply powers in respect of auditors of the accounts of companies based in these territories is therefore considered prudential.