There’s a new regime in force for the investigation and enforcement of corporate offences in Ireland, and whilst that might sound like it won’t affect you (and we’re sure it won’t!) the changes also have an impact on critical financial and administrative processes that potentially do concern you, such as filing rules, Covid responses, and share management.
What has changed, then, and what could it mean for you and your company?
Legislation that means business
The first thing to be aware of is that these changes have real teeth, because the legislation behind them – the 2021 Companies (Corporate Enforcement Authority) Act – also creates a new statutory and independent agency (the Corporate Enforcement Authority, or CEA) to enforce them.
Because the origins of the Act (but not necessarily all its repercussions) are about fighting corporate crime, the Authority can second members from the Garda – so these laws have a very determined feel to them, and additional powers and other enhancements will be kept under review.
What are the filing changes?
Ignoring the corporate crime focus for a moment, let’s start with some relatively straightforward filing changes **Warning: they get significantly more complex later on!**
From November this year, company directors will have to include an Irish Personal Public Service (PPS) number with their filings in the Companies Registration Office. This number will then have to be included in new incorporation forms, annual return forms, and change in director forms. If you haven’t got a PPS number and need to get one, you can learn more here.
If a non-Irish tax resident director does not have or cannot obtain a PPS number, they will now need to apply for a Companies Registration Office number instead to allow filings to be made.
The exact procedure for this is still to be finalised, but it may require directors to swear a “declaration of identity” which, if made outside Ireland, may also require the presence of a solicitor, notary, or similar.
What are the Covid changes?
Temporary Covid legislation was first introduced by the 2020 Companies (Miscellaneous Provisions) (Covid 19) Act, and though the measures were due to expire at the end of April 2022, they have now been prolonged until the end of December.
Perhaps predictably, they cover Covid-safe obligations with regard to virtual annual and extraordinary general meetings, but they also allow more flexibility over how Irish companies execute deeds under the common seal, essentially facilitating the use of electronic signatures.
Changes for companies in financial difficulty
No doubt driven by the economic effects of Covid, the legislation also introduces a higher degree of debt leniency – temporarily, at least.
The threshold at which a company is deemed unable to pay its debts, and therefore insolvent, has been upped from €10,000 to €50,000. The period of examinership, which offers a company protection from its creditors in order to restructure, has been extended to 150 days rather than the 100 days previously permissible.
It is expected that at least some of these measures may be made permanent.
What are the more technical changes?
This is where things start to get considerably more complicated.
The already dense and complex financial legislation in this area has been overlaid with detailed new additions designed to home in on corporate crime. How this may affect you and your business will be impossible to list here, but for the sake of the record, here are descriptions of the technical changes being introduced:
- The uses to which your company’s share premium account may be put have been redefined.
- If your company transfers its undertaking to another company (e.g. in a group reorganisation) in consideration for a share issue to the transferring company’s shareholders, this is lawful where the transferring company has distributable reserves that are at least equal to the value of the undertaking transferred.
- If your company acquires its own shares through a merger or division, those shares can be treated as treasury shares and may be cancelled or re-issued.
- A reduction of capital effected in accordance with the Act is not to be a distribution under the Act and does not require the rules on distributions to be followed (in addition to the processes to effect the capital reduction).
- The acquisition by an unlimited company of its own shares will not require the use of distributable reserves.
Not sure how this affects you? We don’t blame you. But help is at hand.
Get ahead of the changes
At EFM Ireland, our experienced team of Finance Directors can help you interpret and act on changes in company law to protect your business’s operations, compliance, reputation, and bottom line.
With a broad range of skills across both Financial Management and Business Advisory disciplines, our team has a track record of delivering expert support to growing businesses, and can help simplify the legal and regulatory landscape to drive the performance and value of your company.
Why not get in touch with us to chat through the latest changes in business legislation – and what they might mean to your ongoing business – today?