Legislation published online today represents most significant reform of company law since 1963Minister for Jobs, Enterprise and Innovation Richard Bruton today [Monday] published on his Department’s website “Pillar A” of the new Companies Bill, which will make it cheaper and easier to start and run a business.
The legislation, which comprises 952 sections and six schedules on over 1300 pages of text, is expected to represent the largest piece of legislation in the history of the State when complete. It is the most significant reform in Irish company law since 1963, and consolidates the 15 existing Company Acts as well as a significant number of statutory instruments and judgments.
Announcing the publication, Minister Bruton stated:
“I have consistently said that if we are going to get the economy growing and if we are going to create and protect jobs, we must focus on three things:
· reducing costs to businesses
· improving access to finance and
· encouraging R&D and innovation.
“This reform, like many others announced recently by my Department, will have a significant impact on reducing business costs. After these reforms are enacted, for example, it will now be possible for a person to start a business without needing to find a second director. Small businesses will no longer have to go to the expense of holding a physical AGM every year. The burden of company legal documentation will be greatly reduced. And crucially, it will be easier for business-owners to find out the nature of their legal rights and duties and will reduce the need consult with lawyers.
“I commend all those involved for their work in the area, and I am determined to press ahead to complete these reforms so that Irish businesses can benefit from them as soon as possible”.
Minister Bruton decided to publish Pillar A of the Bill in advance of the completion of drafting of the entire Bill in order to allow people and businesses who will be affected to prepare for the changes made by the legislation. It is expected that the remainder of the Bill will be published in 2012, with speedy enactment thereafter.
As well as consolidating existing law in the area, Pillar A of the Bill will make important changes which will make it easier and cheaper to start and run a company. The legislation published today contains all provisions relevant to the private company limited by shares, which under the Bill will be known as “cls” instead of “ltd”, and which accounts for over 90% of companies in Ireland. This company type will now be put at the centre of Irish company law, and important reforms will be made to the way this company type operates:
· A cls will be allowed to have only one director
· A cls will only be required to have one document in its company constitution, and the Act provides for a default document to apply in all cases except where the company changes this
· A cls will have the same legal capacity as a natural person, reducing the necessity to prepare long company constitutions, and reducing legal disputes caused by the ultra vires doctrine
· A cls will no longer be required to have a “physical” AGM every year – it will be possible to do this by correspondence
· Other changes include an exhaustive listing of the duties of directors (previously contained in caselaw) and of all criminal offences under company law
Pillar A of the Bill, which comprises 952 sections and six schedules on over 1300 pages of text contains all provisions dealing with the private company limited by shares (“cls”), which is the most common company type in Ireland, accounting for 90% of companies. Pillar B will deal with other company types.
Dr Tom Courtney, chairman of the Company Law Review Group, said:
“The publication of the provisions of Pillar A of the Companies Bill represents a landmark moment in the development of Irish company law. The document which is published today is the product of years of very careful and painstaking work in remodelling Irish company legislation around the entity which uses it most – the private company limited by shares – and in making that legislation more accessible to those who need to be familiar with its provisions, whether in the business community or professional advisers. The publication of “Pillar A” will allow all of these stakeholders the opportunity to become familiar with the provisions of the proposed new law, and to interrogate these provisions from a technical perspective in advance of the Bill being enacted”.
A copy of the bill can be found on the Departments website at the following link:
http://www.deti.ie/commerce/companylawreview/companiesbill.htm