The Consolidated Companies Bill (or Companies Bill 2012) is a long time coming, and understandably so.  It currently stands at 1,429 sections and is the largest substantive Bill in the history of the state.  Not only is it consolidating all of the Companies Acts to date, it is overhauling, restructuring and reforming our company legislation.

It was presented to the Dail on 13^th December 2012 and is currently at Committee Stage, with at least 6 more stages to go including Seanad and at least one more Committee.  Progress for this large piece of legislation has been slow, but at the end of it all, on its enactment, what will it mean for corporate life in Ireland, particularly the SME sector?

Following are generally the type of companies proposed under the new Bill:-

                CLS         Company Limited by Shares

                DAC       Designated Activity Company

                CLG        Company Limited by Guarantee

                UC          Unlimited Company

                PLC         Public Limited Company

                SE           Societas Europaea

Of these, only CLS and DAC entities will be relevant to the SME sector and of these the vast majority of companies will opt for CLS.  So what will be different about a CLS when compared to current Private Limited Companies?

For a start a CLS will no longer require a Memorandum and Articles of Association.  These will be replaced by a single Constitution document. There will be no specified objects for the company and the company can therefore conduct any trade it wishes, within the law.

Also a CLS entity,

-          will require only one director,

-          can have a minimum of 1 member and up to a maximum of 149 members (shareholders)

-          will no longer be obliged to formally hold a physical AGM.  A written AGM will suffice.

-          can avail of a new summary approval procedure for certain transaction including capital reductions and solvent winding –ups, and

-          will be permitted to engage in domestic mergers.

The Bill also consolidates and codifies Director’s common law and equitable duties, with the intention of making the law more transparent and accessible.

Companies Limited by Guarantee (CLG) will still require at least 2 directors but will be eligible for audit exemption on the passing of the Bill.

The legislation will impact on all corporate entities on enactment, but there will be a transition period to allow existing companies to adapt to the new structures.

Should you have any queries on the above or any Corporate and Audit matters please contact me at eocallaghan@quintas.ie .