Company law faces sweeping reforms
A far-reaching reform of company law designed to slash the costs of starting a business will be unveiled today by Minister for Jobs, Enterprise and Innovation Richard Bruton.
The Companies Bill 2012, the largest substantive Bill in the history of the State, which contains 1,429 sections, will consolidate 16 separate Bills dating from 1963 to 2012 as well as introducing a range of reforms designed to make it easier to operate a company.
One of those reforms means many of the 12,500 private companies limited by shares that are established every year will be able to incorporate without having to engage a lawyer. That will save on average €1,200 in each case.
All of the law applying to companies of this type, which account for over 90 per cent of new companies registered each year, will be contained in the first 15 parts of the Bill.
Only one director required
It will now be possible for such a company to have one director as there will no longer be a requirement to have a second director merely to comply with a requirement of the law.
Such companies will not be required to hold a physical annual general meeting. Instead the business required to be carried out at an agm can be completed by written procedure.
Such companies will also be permitted to have a one-document constitution. At present every company has to draft detailed articles of association but that requirement will no longer apply.
Another innovation is that such a company will no longer be required to have an objects clause, setting out what the company does and does not have the capacity to do.
This is designed to aid commercial transactions and interaction with banks, which will no longer have to establish whether a company has the legal powers to borrow money for the purpose of the activity it wishes to carry out.
Private firms will also be able, for the first time, to engage in mergers and divisions, and the availability of audit exemption will be extended. Directors’ duties will be codified.
All offences under company law will be streamlined into four categories, with category one being the most serious, carrying a maximum fine of €500,000 and or a maximum prison term of 10 years.
Other company types such as PLCs, guarantee companies and unlimited companies will be covered by other parts of the Bill, making it far easier for everybody involved to more easily find the law that applies to their company.