By Philip Hayden. 12th May 2014 (Updated 21st October 2020)
As a result of the unstable financial climate, one of the things asked about by our clients when registering a company in Ireland is the provision of a Golden Share and the reasons to implement it in their Irish Company share structure.
What is a Golden Share?
In Irish company law, a person or individual may seek to obtain the ‘Golden Share’ in a company. This type of share, issued using a special resolution within a company, imbues the holder with complete control over the board of directors of that company. Essentially granting the holder executive power within the company structure, there are a number of reasons a company may choose to, or be directed to, implement a golden share.
Why do companies in Ireland use Golden Shares?
In the vast majority of cases, this share type will be utilised to enable the swift and compliant movement of money between two entities. When it comes to the case of financial institutions lending money directly to a corporate entity, the institution in question may request to be assigned a golden share for the duration of the lending period. In actuality, the financial institution will have the power to oversee any changes (or lack thereof) to a company until the financial agreement is at an end. As such, the money lent to the company is protected to an extent.
The second common reason a golden share may be placed within a company, is when the intention is to form a group structure. By assigning the share within a corporate parent, the companies become linked as part of a group. The golden share overwrites control in any subsidiary, which must be at least 51% + owned by the parent. The major advantage of aligning two or more companies in this way is the opportunity to loan money under ‘Group Exception’. The golden shares held and the granted group structure, allow the companies to loan money within the group and still comply with legislation (as above).
Golden shares are generally assigned as Ordinary ‘A’ shares and can be specifically tailored to suit a company’s needs, or the requirements of a specific transaction.
For more information on the implementation of a golden share in your Irish company and the company secretarial process involved, please don’t hesitate to contact us here at Company Bureau.
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.