welcome to “the companies act 2014” a joint presentation by regan solicitors and bck accountants...

WELCOME TO “THE COMPANIES ACT 2014”

A JOINT PRESENTATION BY REGAN SOLICITORS AND BCK Accountants & Statutory Audit Firm

THE COMPANIES ACT 2014

AN OVERVIEW OF THE COMPANIES ACT 2014 FOR COMPANY DIRECTORS

________________________________________________________________________________________________________________________________________________

Regan Solicitors; The Companies Act 2014 – Presentation July 2015; © Regan Solicitors 2015; 2Regan Solicitors I 38/39 Fitzwilliam Square, Dublin 2 I www.regansolicitors.ie I 01 6874100

REGAN SOLICITORS

• Main Changes & Structure of Act

• New Company Types

• Directors Duties & Liability

• Steps to Take & Conclusions

BCK

• Effect on Financial Statements

• Effect on Audit Exemption

• Powers of the ODCE

THE COMPANIES ACT 2014 – AN INTRODUCTION

THE COMPANIES ACT 2014 – OUTLINE & STRUCTURE

The Act can be broken up into Three Blocks, each consisting of different Parts, within which the Sections of the Act are found.

The First Block sets out the basis for the new LTD form of Company, and the overriding company law principles• Parts 1-5: Preliminary & General; Incorporation & Registration; Share Capital & Shares; Corporate Governance; Directors’ Duties• Parts 6-10: Annual Return; Audit; Charges & Debentures; Receivers; Mergers & Acquisitions; Examinership• Parts 11-15: Winding Up; Strike Off; Investigations; Compliance; Enforcement; Registrar & Regulatory Bodies

The Second Block establishes the other company types; DAC, PLC, GC, UC and the procedure for Converting• Part 16: DAC Companies• Part 17: PLC Companies• Part 18: Guarantee Companies• Part 19: Unlimited Companies• Part 20: Re-Registration

The Third Block deals with other company-type entities, and addresses any other issues• Part 21: External Companies• Part 22: Unregistered Companies & Joint Stock Companies• Part 23: Public Offers of Securities & Traded Companies• Part 24: Investment Companies• Part 25: Miscellaneous

• New Company Types – elect to ensure correct type

• New Constitution – draft to ensure appropriate

• Abolishment of Ultra Vires in some cases

• Directors Duties codified

THE COMPANIES ACT 2014 – BRIEF OVERVIEW

MAIN CHANGES (1)

• Audit Exemption extended

• Extension of scope for Personal Liability of Directors

• Directors Compliance Statement

• May register a “registered person” with the CRO


MAIN CHANGES (2)

• Company Secretary must have requisite skills

• New Summary Approval Procedure

• Priority of Securities

• New Company Law Offences – including two new criminal offences• Corporate Manslaughter• Grossly Negligent Management Causing Death

• New White Collar Crime provisions;• including mandatory reporting requirements

• Increase in mandatory electronic filing

There will now be 5 main forms of Company in Irish Law :-

• Private Company Limited by Shares (LTD)

• Designated Activity Company (DAC)

• Company Limited by Guarantee (CLG)

• Public Limited Company (PLC)

• Unlimited Company (UC)


NEW COMPANY LANDSCAPE


NEW COMPANY STRUCTURES – A COMPARISON

Existing Private Limited Companies LTD Companies DAC Companies

Two Directors – One as Company Secretary

Minimum of One Director – Separate Company Secretary Required

Two Directors – One as Company Secretary

No requisite skills for Company Secretary

Company Secretary must have Requisite Skills

Company Secretary must have Requisite Skills

Two Document Memo & Arts Single Document Constitution Has a Two-Document Constitution

Capacity Limited by Memo & Arts. Objects Clause Required.

No Objects Clause; Ultra Vires does not Apply

Must have an objects clause

No requirement to register authorised corporate agents

Option to register those entitled to bind the company

Written Resolutions must be passed by all members

May pass written resolutions by the Relevant Majority

May pass majority written resolutions

Only single member companies may dispense with AGM

Does not need to hold an AGM in certain circumstances

Must hold an AGM where two or more members

Maximum of 99 Members Maximum of 149 Members Maximum of 149 Members

Limited by Shares Limited by Shares Limited by Shares or Guarantee

May decide not to have an authorised share capital

Must have an authorised share capital

May not list or have securities admitted to trading

May list or have admitted to trading certain securities


THE EFFECT ON FINANCIAL STATEMENTS

________________________________________________________________________________________________________________________________________________



FINANCIAL STATEMENTS (1)

• Clarification of authorised approval

• Accounting policy

• True & fair view

• Failure to comply is a category 2 offence



• Remuneration EMPLOYEES AND REMUNERATION The staff costs (inclusive of directors' salaries) comprise: 2014 2013 € € Wages and salaries 200,000 200,000 Social welfare costs 15,000 15,000 Pension costs 20,000 20,000 ─────── ─────── 235,000 235,000 ════ ══════



• Comparatives

• Accounting records


THE EFFECT ON AUDIT EXEMPTION

________________________________________________________________________________________________________________________________________________


• A small company can avail of the audit exemption, “small” defined in S.350

Must fulfil 2 or more of the following criteria for current and previous year (previously for purposes of audit exemption had to meet 3 out of 3)

–Turnover of the company does not exceed €8.8m

–Balance sheet does not exceed €4.4m

–Average number of employees does not exceed 50

• Group Audit Exemption

• Dormant Companies

• Not Available for


EFFECT ON AUDIT-EXEMPTION

Key Considerations

CLGs can now avail of the audit exemption – if a registered charity then the requirements of the Charities Regulator will apply

• Consider carefully the rights of the shareholders (10% of shareholders or one member of a CLG) to require an audit

• Rights of shareholders, are they sufficiently safeguarded by– S.23 MUDS Act (OMCs), S.212 Companies Act 2014? - For consideration by company directors

• Dormant company cannot retrospectively avail of the audit exemption


EFFECT ON AUDIT-EXEMPTION (2)


DIRECTORS & COMPANY OFFICERS…

• Act in Good Faith

• Act Honestly & Responsibly

• Have Regard for the Interests of Members as well as Employees

• Not to use Company Property Unless Approved by the Members or the Constitution


DIRECTORS’ DUTIES NOW EXPRESS RESPOSIBILITIES - IMPACT OF THE NEW LEGISLATION

• Avoid Conflicts of Interest

• Exercise Due Care and Diligence

• Act in Accordance with the Company’s Constitution and Exercise Those Powers only for Lawful Purposes

• Not to Fetter Discretion Unless Permitted by the Constitution or Unless in the Company’s Interest

• Breach of directors duties can result in the director having to personally indemnify and/ or compensate the company

• Shadow Directors and De Facto Directors will be considered to be properly appointed directors

• Board of Directors’ acting under the direction of disqualified Directors may be guilty of a Category 2 Offence

• A Court Judgment that is wilfully disobeyed by a company may be enforced by attachment against personal assets of a director – s.53


DIRECTORS’ LIABILITY (1)

• Directors Compliance Statements-

• Private companies (including both LTDs and DACs) must also include such a report where their balance sheet total is more than €12.5 million and turnover more than €25 million

• Directors must demonstrate that the company has a policy on compliance and has in place structure and arrangements to ensure compliance.



• Specific duty under s. 330 to ensure that auditors have all relevant information-confirmation that each director has taken all necessary steps to make himself aware of the relevant audit information

• The Act significantly increases the penalties where a company and its directors contravene the obligation to keep accounting records; the offence for not doing so is elevated to a Category 1 offence

• Directors may be criminally liable for untrue statements and exposed to a maximum penalty of €50,000 and/ or 5 years in prison

• Directors of insolvent unliquidated companies at higher risk of disqualification proceedings from 2015 onwards – s.160(2)(h)



• Appoint inspectors

• General obligation on officers (including bankers, solicitors, auditors, accountants, book-keepers, tax adviser etc.) and agents to cooperate

• Production of books, documents & registers

• Power to expand investigation into related companies

• Power of examination

• Power to place restrictions on shares

• Power of entry, search & seizure


POWERS OF THE ODCE


SUMMARY

• The Act is now in force and has been since 1st June 2015

• All New Companies must take one of the new company forms

• All existing private limited companies now operate under Part 16 of the Act – treated as DACs until they convert

• There is a transition period of 18 months in which private limited companies may elect to convert to a LTD or re-register as a DAC .

• Within the 15 month period conversion by ordinary resolution; after that it will only be possible to convert by special resolution;

• 31st August 2016: all existing private limited companies wishing to become a DAC must have initiated the conversion process by this date

• 30th November 2016: At the end transition period, existing private limited companies will automatically be deemed to have become an LTD, unless it is required by law to become a DAC, in which case it will be bound by the rules applicable to a DAC

• 30th June 2016: all Public Guarantee companies (CLG’S)must have changed their company name, to include new company type, by this date


DATES FOR YOUR DIARY

• Charities and not-for-profits will come under increased regulation, particularly with the coming into force of the Charities Regulatory Authority. As such it will be important that a proper audit is carried out by such companies to ensure that they are fully compliant and taking the correct company type (CLG)

• Owner Manager Companies will come under greater scrutiny for compliance,

• The combination of the codification of directors duties, new company law offences, empowering of the ODCE, Directors face real dangers of personal liability being imposed for non-compliance,

• The traditional M and A now a Corporate Constitution, greater importance in the future to ensure well drafted shareholder agreements and review Old Shareholder Agreements,

• Practitioners must await the reaction and interpretation of the Courts,


ANTICIPATED EFFECT OF NEW LAWS

• We will review of your corporate structure allowing us to advise as to the most suitable form of company

• We can guide you through the conversion process, managing all necessary documentation and filing.

• We can draft a tailored Constitution for your company

• We can an offer a Legal Audit Statement and Annual Process based on your particular company its activities and needs

• We can provide specific advices to the directors and boards of directors of medium sized Companies regarding the new risks.


REGAN SOLICITORS - HOW WE CAN HELP YOU TO MAKE THE TRANSITION

• What if you do nothing?

• Failure to convert will mean that your company will be subject to the rules applicable to DACs during the transition stage.

• Similarly, failure to take any positive steps to convert will result in your company automatically being converted to a LTD at the end of the transition period; again, this is not recommended due to the increased risk of non-compliance

• There are approximately 150 optional rules in the Act which will apply by default if not dis-applied by preparing a tailored Constitution. Many Table A rules amended and repealed.

• Operating under a deemed Constitution will make corporate governance more difficult and give rise to uncertainty


REGAN SOLICITORS - HOW WE CAN HELP YOU TO MAKE THE TRANSITION

Mark Regan, Managing PartnerRegan Solicitors

[email protected]

087 238 3776

38/39 Fitzwillam Square, Dublin 2.01 687 4100www.regansolicitors.ie

The Companies Act 2014 – A Joint Presentation by Regan Solicitors and BCK AccountantsWe Look Forward to Assisting you with all of your Legal & Accounting Needs

Alison Gray, Partner (Audit)BCK

[email protected]

086 864 4878

28/30 Lower Mount StreetDublin 201 676 5333ww.bck.ie

mailto:[email protected]

mailto:[email protected]

welcome to “the companies act 2014” a joint presentation by regan solicitors and bck accountants...

Documents

company directors

form of company

healthcare company value

introductionthe companies

company types dac

companytype entities

renewable energy company

dac companiespart