23 September 2024
Recently the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 was published. The Bill will deal with issues in the Companies Act 2014, some of which had been raised by the Company Law Review Group (of which Salvador Nash of KPMG Law is a member) and others and considers issues identified in a public consultation launched by the Department of Enterprise, Trade and Employment in May 2023.
Arising out of the temporary provisions inserted into the 2014 Act by the Companies (Miscellaneous Provisions) (Covid-19) Act 2020, the Bill seeks to put on a permanent basis, unless a constitution says otherwise, the ability to hold hybrid or wholly virtual general or shareholders meetings (AGMs and EGMs). The technology to be used must ensure that participants can hear, speak, and submit questions and that the security is sufficient. By putting these provisions on a permanent basis, not only is continued clarity provided in this area but it also reflects a modern and up to date company law code.
However, although provided for by the 2020 Act, but perhaps in acknowledgement of the seriousness of such meetings, these provisions are not being extended to creditors meetings and meetings to consider a scheme of arrangement between a company, its members and/or creditors.
Again, arising out of the 2020 Act, the Bill re-introduces the ability of companies to execute documents under seal in different counterparts, with all these documents regarded as one instrument, once the final document is executed. Once again, a welcome continuation of a provision from the 2020 Act that also reflects a modern and up to date company law code.
A domestic merger will be possible between two or more designated activity companies, thereby removing the current requirement that at least one party must be a private company limited by shares. Multiple subsidiaries with a common parent will be able to merge in one transaction with that parent. Both these proposed changes provide welcome clarifications.
Currently, if auditors during an audit, obtain information that leads them to form an opinion that an indictable offence may have been committed, then the auditor must notify the CEA.
The Bill seeks to enhance those obligations by requiring the auditors to provide copies of relevant information in their possession to the CEA.
Additionally, any person who obstructs or interferes with an officer of the CEA will be guilty of an indictable offence.
The Bill proposes three new situations in which the Registrar of Companies can involuntarily strike a company from the register. These are failure to:
Interestingly, if a company is struck off on any of these new grounds, the directors will not be subject to disqualification proceedings. These proposals should further assist the Registrar to keep a register of companies that is current and up to date.
Currently, audit exemption for small and micro companies is lost on the first occasion a company files its annual return late. It is proposed that it will only cease to apply if, after filing an annual return late, a company had also been late in filing an annual return within the previous five years.
Although audit exemptions can apply in a group situation, as initially drafted, the change to being two years late has not been made in the case of a group.
To act as the electronic filing agent will require the provider (individual or a company) to be a trust and company service provider acting under an authorisation by the Department of Justice. In the case of a firm (e.g., solicitors and accountants), as they are regulated for anti-money laundering purposes by their governing bodies, it is assumed that that fact is sufficient to permit their partners act as an EFA.
Additionally, it is proposed that the Registrar can request verification of a company’s registered office address, thereby ensuring that it exists and that statutory notices can be delivered to a company.
When a company is submitting its annual return, it will be able to voluntarily submit information on its board of directors by reference to gender.
The record date of the original general meeting will also be the record date if the meeting is adjourned, and the adjourned meeting is held within 14 days of the original meeting.
Amendments have also been proposed to the provisions governing receivers, liquidators, and rescue process for small and micro companies (SCARP).
The Bill is making important updates to company law. It contains recommendations from both the company law review group and from other stakeholders and as such the Department is hopeful it will be enacted by December 2024.
