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Significant Changes on the Way for Irish Businesses

irish corporate law

By Sinéad Floody ACG, 12th August 2024

It has been an eventful year for Irish corporate law, marked by the enactment of the Charities Amendment Act 2024 and the unveiling of the General Scheme of Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024. Additionally, the General Scheme of the Registration of Limited Partnerships and Business Names Bill 2024 was recently published. This blog post outlines the various changes proposed by each legislative update and their potential effects on businesses in Ireland.

Companies

The General Scheme of Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 (the Companies Bill) was published in March 2024 and is hoped to be enacted by the end of 2024. When enacted, the Companies Bill will amend the Companies Act 2014 which governs companies registered in Ireland. The Companies Bill introduces the following changes:

  • The Companies Bill inherits certain measures from the Companies (Misc Provisions) (Covid-19) Act 2020, which it is set to supersede. Under this legislation, companies are granted the flexibility to hold meetings in a virtual setting, allowing participants to join remotely without the necessity of a physical venue.
  • The Companies Bill facilitates the execution of documents under seal in counterpart, which collectively will be considered a single document. This provision, which was initially introduced as a temporary measure during the Covid-19 pandemic, will now be established permanently.
  • The Corporate Enforcement Authority will receive enhanced powers and higher status, including expanded surveillance capabilities. These improvements are akin to the surveillance powers currently held by the Revenue Commissioners and An Garda Síochána.
  • The Companies Bill streamlines the receivership process by requiring a receiver’s fees and costs to be disclosed to shareholders or creditors within 7 days upon request. It also requires additional details on Form E8 at the receiver’s appointment and shortens the delivery time for the final Form E9 to the Registrar to 7 days, reduced from 30 days, after ceasing to act as receiver. Receivers are granted the right to remuneration, aligning with liquidators’ rights.
  • Under the Companies Bill, a small company that fails to submit its annual return to the CRO more than once within five years will forfeit its audit exemption, a change from the current rule where a single missed filing results in loss of audit exemption.
  • The Companies Bill stipulates that for a merger involving multiple companies, at least one must be an LTD or a DAC, expanding the current requirement of just a LTD. Additionally, it will enable a single transaction merger for wholly-owned subsidiary groups, simplifying the existing multi-transaction process.
  • The Companies Bill introduces a new system allowing Registered Office Agents to remove their address from a company’s records due to non-compliance or unpaid fees.
  • The Companies Bill introduces three additional reasons for involuntary strike off:
    1. not reporting a change in the registered office;
    2. absence of a recorded company secretary; and
    3. not submitting beneficial ownership details to the central beneficial ownership register.

Limited Partnerships & Business Names

The General Scheme of the Registration of Limited Partnerships and Business Names Bill 2024 (the Partnerships & Business Names Bill) has been recently published by the Department of Enterprise, Trade and Employment and is a significant development in Irish corporate law. It aims to reform the Limited Partnerships Act 1907, and the Registration of Business Names Act 1963 which will have implications for the management of partnerships and business names in Ireland.

The Partnerships & Business Names Bill provides the following changes to current legislation on Limited Partnerships:

  • Currently, upon registration, a limited partnership (LP) may establish its principal place of business outside of Ireland. However, the Partnerships & Business Names Bill suggests a change, mandating LPs to maintain a continuous connection with Ireland, either through an Irish registered office or a principal place of business in the State.
  • Those wishing to register an LP will need to engage in an economic activity within Ireland and at least one general partner will need to reside in the EEA or maintain an EEA principal place of business throughout the LP’s duration. Detailed information regarding the LP’s principal activity must be provided, as opposed to the current requirement of stating the general nature of its business.
  • The Partnerships & Business Names Bill formally acknowledges that a corporate entity can serve as a general partner in an LP, aligning with common practice. Additionally, the name of an LP must have a formal suffix such as ‘Limited Partnership’, ‘LP’, or ‘L.P.’, or the Irish equivalent.
  • Certificates issued by the Registrar will clarify that an LP is a contractual arrangement, not an independent legal entity. The registration of an LP will be effective from the date stated on the registration certificate and no earlier.
  • Upon the enactment of the Partnerships & Business Names Bill, current registrations of LPs will remain intact. The Registrar will have a 30-month period to:
    1. Identify and deregister LPs registered under the 1907 legislation that are no longer operational.
    2. Inform existing LPs registered under the 1907 legislation of the necessary actions to either re-register or voluntarily deregister. An LP will have a 12-month window to re-register following the receipt of this notice, failing which the Registrar may then proceed to remove it from the register.
  • The Partnerships & Business Names Bill mandates the submission of beneficial ownership details for partners managed outside the EEA. For new LPs under this bill, the information must be filed within 6 months, and for LPs registered under the 1907 legislation, within 12 months.

The Partnerships & Business Names Bill provides the following changes to current Irish corporate law on Business Names:

  • A requirement will be introduced for an individual’s PPSN to be used on statutory forms to register business names. The PPSN requirement came into law in Ireland in June 2023 for company directors and it was only a matter of time before the registration of business names followed suit.
  • The Partnerships & Business Names Bill will grant powers to the CRO to request evidence that the business name registrant will be trading from a ‘substantial place of business in the State’. A PO box or letterbox address will not be acceptable. The CRO will also have the power to refuse business name applications where the name chosen is ‘undesirable’.
  • Category offences will be introduced into this legislation, indicating that non-compliance with certain legislative requirements could lead to severe repercussions. For example, it will be a category 3 offence if changes relating to a business name are not notified to the CRO.
  • The Partnerships & Business Names Bill specifies a standard format for headed business letters, similar to the guidelines provided in the Companies Act 2014 for companies.
  • A renewal period will be implemented of 5 years to ensure the active use of registered business names and to maintain an orderly register. It requires every business name holder to reapply for their business name certificate every 5 years.
  • A requirement for business name removal within 3 months of cessation of business operations is also set to be introduced.

Charities

On 10th July 2024, the Charities (Amendment) Act 2024 (the Act) was signed into law, revising the Charities Act 2009, Charities Act 1961, and the Taxes Consolidation Act 1997. These modifications to the law represent a positive shift towards improving the transparency and governance of Irish charities. The Charities Regulator is engaging with the Department of Rural and Community Development on the implementation of the changes set out in the Act, which are summarised below:

  • The recent legislation now recognises ‘the advancement of human rights’ as a charitable purpose. Companies Limited by Guarantee that are established for this purpose soon will be able to apply for charitable status.
  • The thresholds for audit exemptions have been raised, along with other modifications to the annual accounts requirements for charities.
  • Constitutional amendments now require approval from the Charities Regulator, and there is a new obligation for charities to notify the Regulator of certain events, aligning with common practice.
  • The definition of a charity trustee has been updated to exclude the role of company secretary, making the role more attractive to company secretarial firms and chartered secretaries. The Act also defines a Member of a Charity and mandates the maintenance of a Register of Members, aligning unincorporated charities with charities that are companies, ensuring the same requirement for both types.
  • The Act also clarifies the duties and responsibilities of charity trustees and provides indemnity for trustees appointed by the Court. Lastly, it enhances the Charities Regulator’s authority and enforcement powers concerning the safeguarding of charitable organisations.

The above changes aim to improve corporate governance and transparency across the different types of business in Ireland. Additionally, they support the Companies Registration Office in maintaining the integrity of the registers for companies, business names, and limited partnerships. We welcome the above additions to Irish corporate law, partnership and business name law and the changes for charities.

Should you require any assistance with any of the aforementioned Irish corporate law updates, or if you have any questions regarding how these updates may affect your already established business, please do not hesitate to get in touch! Contact the Company Bureau team at +353(0)1 6461625 or fill out our online contact form.

Disclaimer: This article is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Company Bureau for any action taken or not taken in reliance on the information set out in this article. Professional or legal advice should be obtained before taking or refraining from any action as a result of this article. Any and all information is subject to change.

Sinéad Floody ACG

Corporate Services Manager - Sinéad is a Chartered Secretary and is an Associate Member of the Governance Institute, formerly known as the ICSA. Sinéad achieved a first-class honours in the MSc. in Management & Corporate Governance at Ulster University and holds a Bachelor of Irish Law (LLB). Sinéad is an integral part of our team heading up our Company Secretarial Department and has worked for the company for over 7 years. As a leader of good governance, Sinéad is skilled and approachable as she assists her team to provide exceptional services to our customers. We are pleased to share that Sinéad has been appointed to the ICSA Company Secretarial Practice Committee. As a Chartered member, she holds an important role in upholding the Code of Professional Standards and Ethics. Sinéad often lends her knowledge and experience, having had articles published with the ICSA. Sinéad has assisted thousands of Irish companies with their quest for good governance and compliance.