Summary Approval Procedure (SAP)

The Irish Summary Approval Procedure (SAP) is a validation procedure which includes the passing of a special resolution, the swearing by directors to a statutory declaration of solvency and in some cases, an independent expert (auditor) verification. The SAP is an administrative avenue that companies can take to avoid having to apply to the High Court for an order to take part in any of the following seven restricted transactions:

  1. Financial assistance for the acquisition of own shares – Section 82 Companies Act 2014
  2. Loans to directors and connected persons – Section 239 Companies Act 2014
  3. Reduction in company capital – Section 84 Companies Act 2014
  4. Variation of capital on re-organisations – Section 91 Companies Act 2014
  5. Domestic mergers – Section 464 Companies Act 2014
  6. Members’ voluntary winding up – Section 589 Companies Act 2014
  7. The treatment of pre-acquisition profits or losses – Section 118 Companies Act 2014

Who can avail of the Summary Approval Procedure?

The SAP can be availed of by Irish registered private companies for each of the seven restricted transactions listed above. Public companies registered in Ireland may avail of the Summary Approval Procedure but are limited to the following three restricted transactions:

  1. Members’ voluntary winding up
  2. The treatment of pre-acquisition profits or losses
  3. Loans to directors and connected persons

The SAP Process

The members (or shareholders) of a company are required to pass a special resolution to approve and provide the directors with the authority to carry out the restricted activity and move forward with a SAP application. The resolution must be passed no more than 12 months prior to the commencement of the activity. Following this, the directors of the company must then deliver a declaration to the Companies Registration Office containing the information regarding the restricted activity. This declaration states the directors have made a full enquiry into the financial affairs of the company and are satisfied that the company will be able to pay its debts within 12 months of the restricted activity taking place. Should the company become unable to pay its debts within 12 months, the directors will be held personally liable for those debts. For this reason, the decision to take part in restricted activities should not be taken lightly.

The declaration must be submitted to the Companies Registration Office This must be done within 21 days of the activity being carried out or the activity will be declared invalid and a High Court application may be required. Should an auditor discover a restricted activity in a company where no SAP application was made or court order granted allowing the transaction, the auditor is compelled to report said transaction to the ODCE, who will investigate the company and possibly prosecute the directors.

Company Bureau can carry out the Summary Approval Procedure for certain restricted transactions on behalf of your Irish company and ensure it is done in the most efficient and cost-effective way. For more information on the Irish Summary Approval Procedure please do not hesitate to call 01 646 1625 or contact us today, a member of our team will be in contact within 24 hours.

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