What is the CEA’s role?
The CEA was established in July 2022 under the enactment of the Companies (Corporate Enforcement Authority) Act 2021, which amended the Companies Act 2014.
The CEA is Ireland’s company law enforcement agency, and is responsible for:
- encouraging compliance with company law;
- investigating suspected breaches of company law;
- taking appropriate enforcement action in response to non-compliance with company law; and
- supervising liquidators and receivers.
The CEA’s enforcement mandate covers:
- conducting financial and related investigations across the full spectrum of companies, from SMEs and not-for-profits to companies whose securities are publicly listed; and
- supervision of the corporate insolvency process, including the responsibilities of liquidators in that process.
The CEA legislative mandate comes from a number of statutes, including:
- the Companies Act 2014,
- the Irish Collective Asset-management Vehicles Act 2015, in respect of certain investment vehicles; and
- the Companies (Statutory Audits) Act 2018, under which the CEA is the competent authority for the purpose of imposing sanctions on company directors.
Further details of what we do can be obtained here
What powers does the CEA have in order to discharge its functions?
In order to enable us to discharge our functions, we have been conferred with certain investigative and enforcement powers, both civil and criminal. These include:
Powers of investigation
- the power to require the production of documents (including electronic documents) by companies and relevant third parties;
- powers of search and seizure;
- the power of arrest; and
- the right to request the Courts to approve/trigger certain additional investigative measures such as, for example, the granting of production orders relating to banking records, orders to comply with the Companies Act, and the appointment of Court-appointed Inspectors.
- the power to offer restriction and disqualification undertakings that become legally binding if accepted;
- the power to apply to the High Court for the disqualification of company directors in certain circumstances;
- the power to apply to the High Court to have a company wound up (liquidated) in certain circumstances;
- the power to initiate summary prosecutions in the District Court; and,
- the right to refer more serious matters to the Director of Public Prosecutions for consideration as to whether criminal charges should be directed on indictment (i.e., before the Circuit Court).
Where can I get further information on the CEA’s activities?
In addition to the information available on this website, which includes details of who we are, what we do and how you can contact us, you can follow us on our social media channels on LinkedIn and Twitter.
Can I make a complaint to the CEA regarding a suspected breach of company law?
Yes. Members of the public should submit complaints, expressions of concern and protected disclosures (where applicable) to us where there may be indications of breaches of company law. We encourage members of the public to use our Complaint Form when submitting their complaint. For further information, please visit our Complaints, Concerns & Protected Disclosures page.
Can I make a complaint on an anonymous basis?
Yes. However, making a complaint on an anonymised basis may limit our ability to progress the examination of the matter and, as such, it is not advised.
Will I need to provide documents to support my complaint?
The CEA will require full details regarding your complaint to be provided in order to assess your complaint. As part of this assessment, and to support the assessment of your complaint, the CEA encourages and may require complainants to provide copies of documents, for example, copies of any letters, emails or contact with the company or its directors etc..
If I make a complaint, will the CEA require my assistance?
Possibly. If we require further assistance or information, we will contact you and outline the nature of the assistance or additional information that we require. Please note this assistance may include giving evidence for and/or attending court.
If the CEA has not sought further information, this should not be interpreted as meaning that the CEA is not investigating your complaint.
Will the CEA take a case on my behalf?
No. We do not take cases on behalf of complainants as that is not our statutory function.
The CEA carefully examines all complaints, expressions of concern and protected disclosures received. Where breaches of company law are identified, we will take the appropriate action in accordance with law and other relevant considerations but will not act on behalf of any individual complainant.
Where a complaint relates to a civil matter, e.g., a dispute over amounts owed, matters internal to a company or matters relating to contract law, we generally do not become involved.
Can the CEA assist with internal disputes between company directors, members etc.?
No. The CEA is a statutory law enforcement agency. It has no role in relation to resolving internal disputes between company directors, members, etc. If there is evidence of a breach of company law, the party may wish to submit a complaint to the CEA. However, in assessing the appropriateness of enforcement action in such circumstances, we will also have regard to the remedies available to the parties in dispute.
Can I monitor the progress of my complaint?
No. Once a complaint is received, it will be examined in accordance with our internal complaint handling process. It is not always possible to provide information about the progress of any investigation as to do so may compromise the conduct of our investigations and any subsequent enforcement action.
Will I be informed of the outcome of my complaint?
Not necessarily. Our complaint handling process is confidential, and we do not routinely issue details of outcomes to individual complainants. On occasion, the outcome may become public, e.g., because of court proceedings initiated by us in enforcing company law.
Does the CEA always act upon complaints and expressions of concern received?
No. We will not act on a complaint that does not come within the scope of our statutory remit. In such cases, we will, however, seek to assist complainants by referring them to the appropriate authorities.
Additionally, even where a complaint does come within our remit, we will consider the issue by reference to a range of considerations including the apparent seriousness (or lack thereof) of the matter and whether the complainant has other available remedies.
Do I have the right to pursue a private action whether or not I have lodged a complaint with the CEA?
Yes. A complainant’s right to take a private action is not dependent upon having made a complaint to the CEA, nor upon the outcome of any complaint made to the CEA.
However, the existence or grant of a private remedy may be considered in terms of the proportionality of the use of any enforcement power by the CEA. Further, the progression of a private action and a CEA investigation may result in a duplication of resources. Where a party does take a private action, it may be appropriate for the private action to proceed while the CEA’s investigation of their complaint remains on hold or is paused.
Will the CEA advise me as to the likely success of my private action?
No. The CEA is an independent law enforcement body and, as such, does not provide legal advice to complainants. You may wish to seek professional advice as to your legal rights, claims and/or responsibilities.
What is a company?
A group of people, or a single person, may create a corporate body, known as a company, that can carry out business acts separately to them, like entering into contracts or obtaining loans for example. Companies are created through the process of “incorporation”. Incorporation commences with the delivery of certain documents to the Companies Registration Office. Once incorporated, a company becomes a separate legal entity, i.e., separate from its members (owners). Further information about companies can be obtained on our Information & Guidance page.
What is company law?
Company law is the legislation (law), rules and standards that govern companies in Ireland. Further information on the applicable law can be found on our Legislation page.
Why do people incorporate companies?
One of the benefits of incorporation is that the company becomes recognised as a separate person under law to the shareholders (members), directors and other officers of the business operation. This concept is known as separate legal personality.
The principal reason for operating a business, or other enterprise, through a company/ incorporating a business as a company, is to benefit from what is known as limited liability. In essence, limited liability is a privilege conferred by the State whereby, in return for complying with certain conditions, an individual cannot be held personally liable for a company’s debts. Other advantages of companies include perpetual succession, i.e., the company continues in existence after its initial founders have passed away, thereby offering continuity.
These advantages arise because the company is a separate legal person, so the liability attaches to the company and not the members/shareholders or officers of the company. By extension, the company as a separate person does not end when the officers retire, or the members move on, etc.
Incorporating a company also comes with certain disadvantages, including that the company, members and officers are subject to company law and their directors are conferred with certain responsibilities and obligations – failure to comply with which can attract civil and/or criminal liability.
Companies are also subject to certain transparency requirements, i.e., certain information, such as financial information, must be made available to the public.
While certain unlimited companies can avail of exemptions from certain of these transparency requirements, their members cannot avail of limited liability.
Incorporation, and limited liability, are privileges extended by statute (law) and these disadvantages are to ensure this privilege is not abused.
Anyone considering incorporating a company should, therefore, take independent professional advice with a view to determining whether a company is the most appropriate legal structure for their needs.
Are there different types of company?
Yes. By far the most common form of company in Ireland is the private company limited by shares (LTD). However, there are several other types of company, including companies limited by guarantee (CLG), designated activity companies (DAC), public limited companies (PLC) and unlimited companies (ULC).
Each of these company types has their own attributes, advantages and disadvantages. Consideration should be given to taking independent advice before deciding upon which company type to opt for.
What is a company's constitution?
A company’s establishment is achieved by a person, or persons, subscribing to a constitution. The constitution is a contract that binds the company and its members. It sets out the basic rules under which the company operates. The constitution is, therefore, internal to the company. The company and its directors and members are, in addition, subject to company law. Every company must have a constitution.
A private company limited by shares (LTD) has a one document constitution. A template constitution for a private company limited by shares is set out in Schedule 1 to the Companies Act 2014.
Every other form of company is required to have a two document constitution, i.e., a Memorandum of Association and Articles of Association. Template constitutions for other forms of company are set out in Schedules 7 to 13 of the Companies Act 2014.
The company’s constitution must be delivered to the Companies Registration Office for the company to be incorporated/registered.
What is the Memorandum of Association of a company?
The Memorandum of Association is the principal constitutional document by which the company’s establishment is achieved. The format will be in accordance with the Companies Act 2014 and must contain certain basic information.
What are the Articles of Association of a company?
The Articles of Association are the publicly registered internal rules which bind the company and its members. Standard Articles are codified in relevant Schedules to the Companies Act 2014, which reduces the need to have extensive articles in the constitution.
However, it should be noted that, where a company adopts the standard articles set out in the relevant Schedule to the Companies Act 2014 without any exclusion or modification, all provisions, including standard and optional provisions, will apply.
As this is a complex area, consideration should be given to taking independent advice.
Can a company’s constitution be amended?
Yes. A company may, by special resolution, amend its constitution. The proposed amendments must be placed before the company’s members to vote on at a general meeting (annual or extraordinary). The company’s members, and any other person(s) entitled to attend and vote at the meeting, are entitled to notice of the meeting.
A special resolution is passed when a qualified majority of not less than 75% of the votes cast by members in person, or by proxy, are in favour of the proposal.
Form G1 (special resolution) is required to be filed in the Companies Registration Office.
Are Irish companies required to have a registered office in the State?
Yes. Every Irish company is required to have a registered office in the State, to which all communications and notices may be addressed. Notice of a change to the registered office is required to be filed with the Companies Registration Office with 14 days of the change
Is a business name different to a company?
A company can carry out its business under the name of the company or can use a business name other than the company name. However, if a company carries on business using a business name it must register this business name with the Companies Registration Office.
Partnerships and/or individuals who carry on business in a name other than their own name(s) must also register the business name they are using with the Companies Registration Office.
Links to the relevant forms are available from the Company Registration Office.
Who can be a member of a company?
The company, in its constitution, normally sets out the rules in relation to membership. These rules may state who can be a member, how to become a member and how to cease membership. The initial subscribers to a company’s constitution are deemed to have agreed to become members of the company. All subsequent members agree to become members and their names are entered in the Register of Members. Further information is available on our Information & Guidance page.
Is there a limit on the number of members that a company can have?
All companies are required by law to have a minimum of 1 member and most types of company do not have a maximum limit on membership. There are, however, two exceptions to this rule. Private companies limited by shares (LTD) and designated activity companies (DAC) may both have a maximum of 149 members.
What is a shareholder?
A shareholder is a person (or company) who holds a share or shares in a company. The shareholder becomes a member of the company when their name is entered into the register of members.
How does members’ limited liability work?
In accordance with section 17(2) of the Companies Act 2014, in the event of a company limited by shares (LTD) becoming insolvent (i.e., unable to pay its debts as they fall due), members’ liability is limited to the amount, if any, unpaid on the shares registered in the members’ name at the relevant time.
In the case of a company limited by guarantee (CLG), in accordance with the provisions of section 1176 of the Companies Act 2014, the company’s Memorandum of Association shall state that members’ liability is limited to the amount specified (i.e., guaranteed) in the Memorandum.
How can I cease to be a member of a company?
In a company limited by shares, the process of ceasing membership is by the transfer of the share(s) (i.e., to another person or company). In other company types, the company's constitution should set out the process by which a member can relinquish their membership.
What is a company director?
A company director is a person appointed by the members of the company to manage the company on their behalf.
Further information on company directors is available on our Information & Guidance page
Do companies have to appoint directors?
Yes. Under company law all companies must appoint directors (section 128 of the Companies Act 2014). A private company limited by shares (LTD) must appoint at least 1 director. Other types of companies must appoint at least 2 directors. The responsibility for appointing directors lies with the members and/or shareholders of the company.
A company is obliged to notify the Companies Registration Office of any change in its directors within 14 days.
How are company directors appointed?
The first directors of a company are the persons who gave their consent to become directors and are listed in the incorporation documents filed with the Companies Registration Office. Subsequent appointments and resignations in most companies take place at the company’s Annual General Meeting (AGM), where the members elect the directors. If a director resigns or leaves office during the year, the board of directors may co-opt a person to fill the vacancy until the next AGM when the appointed person is eligible for re-election.
A company’s own constitution (Articles of Association) normally sets out the rules for the appointment and resignation of directors and the minimum and maximum number of directors allowed.
Do company directors have any particular duties or obligations?
Yes. Directors’ duties are dealt with under Chapter 2 of Part 5 of the Companies Act 2014. Set out below are some of the principal duties. As this is a detailed complex area, in the event of doubt, consideration should be given to obtaining independent advice.
Every company director has a duty to ensure that company law is complied with by the company (section 223(1) of the Companies Act 2014).
Under section 224, the matters to which company directors shall have regard in the performance of their functions shall include the interests of the company’s employees in general, as well as the interest of its members. However, this duty is owed by the directors to the company and the company alone.
Section 228 sets out a statement of company directors’ principal fiduciary duties. These include, amongst others, the duty to:
· act in good faith in what the director considers to be the best interests of the company;
· act honestly and responsibly in relation to the conduct of the company’s affairs; and
· exercise care, skill and diligence.
In consenting to act as a company director, every person is required to confirm the following: “I acknowledge that, as a director, I have legal duties and obligations imposed by the Companies Act, other statutes and common law”.
Further information is available on our Information & Guidance page.
Where can I get more information about my duties as a company director?
We have prepared a series of publications to assist, amongst others, company directors in understanding their responsibilities under company law. These documents have been prepared with a view to providing a user-friendly summary of what are more complex legal provisions.
Anyone in any doubt as to their legal obligations should consider seeking independent professional advice.
Further information is available on our Information & Guidance page.
Can a director borrow from a company of which they are a director?
This is a complex area and, if applicable, consideration should be given to obtaining independent advice.
Under Chapter 4 of Part 5 of the Companies Act 2014, a company is generally prohibited from making loans (or quasi-loans) to a director or person connected to a director or entering into a credit transaction or guarantee providing security to the benefit of those persons. This general rule is, however, subject to a number of exceptions. These include where:
- the value of the arrangement does not exceed 10% of the company's relevant assets (relevant assets means the net assets of the company as contained in the last financial statements laid before the members at an AGM or, where no financial statements have been prepared, the called up share capital of the company);
- the arrangement was entered into by the company in accordance with the "Summary Approval Procedure" (section 202 Companies Act 2014 refers);
- the arrangement is an inter-group transaction, that is a transaction with a holding company, a subsidiary, or a subsidiary of its holding company;
- the company enters into the transaction in question in the ordinary course of its business and the value and terms of the transaction are no more favourable than the company ordinarily offers; or
- the transaction relates to directors’ vouched expenses, properly incurred.
What is a connected person?
For the purposes of Part 5 of the Companies Act 2014, a person is connected to a company director if, but only if, the person (not themselves being a director of the company) is:
- the director’s spouse, civil partner, parent, brother, sister or child;
- a person acting in their capacity as the trustee of any trust, the principal beneficiaries of which are the director, the spouse, civil partner, or any children of that director or any body corporate which the director controls; or
- in partnership with the director (section 220(1) of the Companies Act 2014).
Can a director notify the Companies Registration Office of their resignation as a director if the company fails to do so?
Yes. Where a company fails to notify the Companies Registration Office that a director (or secretary) has resigned, that person may serve notice on the company requesting that the company notify the Companies Registration Office of their resignation within 21 days.
If the company fails to comply with that request, the person can forward to the Companies Registration Office a copy of their resignation, together with notice of proof of request to the company.
Can a company director be removed from office?
Yes, generally. The members of the company can, by ordinary resolution, remove a company director. Extended notice of 28 days is required and the director is entitled to be heard on the resolution at the meeting.
However, a director holding office for life (as set out in the company's constitution) can only be removed if the correct procedure for the alteration of the constitution is followed.
Consideration should be given to seeking independent advice on serious and contentious issues
What is a shadow director?
A shadow director is a person, although not formally appointed as a director, in accordance with whose directions or instructions the directors of a company are accustomed to acting. A person who gives the formally appointed directors of the company professional advice in a professional capacity may not be considered a shadow director though.
What is a de facto director?
A de facto director is a person who occupies the position of director but who has not formally been appointed. Unlike a shadow director, a de facto director operates in the open.
Is there a limit on the number of directorships that a person can hold?
Yes. As a general rule, person is not permitted to be a director, or shadow director, of more than 25 companies at any one time. However, there are some exceptions to this rule. For example, groups of companies are treated as one company and companies that have been certified by the Companies Registration Office as having a real and continuous link with an economic activity being carried out in the State are excluded.
Are all directors of Irish companies required to reside in the State?
No. Company law requires that a company should have 1 director resident in the European Economic Area (the EU Member States plus Iceland, Liechtenstein and Norway). If no director is resident in the EEA, the company must hold a bond to the value of €25,000. If companies can prove they have a permanent place of business in the State, they can also avoid this obligation. Further details in relation to these exceptions are available on the website of the Companies Registration Office.
What does it mean if a director is restricted?
Restriction is a public protection measure and relates to insolvent companies, i.e., companies that are unable to pay their debts as they fall due. Where an insolvent company goes into liquidation or receivership, a person who was a director (or shadow director) of the company at the time of the winding up, or in the 12 months prior, who fails to satisfy the CEA or the High Court of a number of matters may be restricted.
Restriction lasts for a period of 5 years and restricted persons’ names appear on a public register maintained by the Companies Registration Office.
The director must demonstrate that s/he acted honestly and responsibly. The director must also establish that they co-operated with the liquidator and there is no other reason why it would be just and equitable to restrict them. The director bears the burden of establishing these matters.
Instead of bringing an application to court to restrict a company director, since the enactment of the Companies Act 2014, the CEA can offer directors of insolvent companies restriction undertakings. Where a director consents to a restriction undertaking this means the director submits themselves to being subject to restriction. The CEA delivers to the director a notice regarding the possibility of consenting to a restriction undertaking and the director must respond to this notice in a specified period of time. The consequences of a restriction undertaking are the same as if the restriction order had been applied to the director by court order.
If restricted, a person may only act as a company director (or secretary) if certain conditions are satisfied. Those conditions include that a company of which the restricted person is a director or secretary has a paid up (in cash) share capital of €100,000 (or €500,000 in the case of a public company).
Breach of a restriction order is a criminal offence.
What does it mean if a director is disqualified?
Disqualification is a public protection measure. If a person is disqualified, they are not permitted to act as a company director (or secretary, officer, auditor, liquidator, receiver or examiner) for the duration of the disqualification period.
There are three ways by which a person can be disqualified, namely (i) automatic disqualification; (ii) disqualification by court order; and (iii) disqualification by accepting a disqualification undertaking from the CEA.
A person is automatically disqualified if that person is convicted on indictment (i.e., before jury) of (i) any offence under the Companies Act or any other enactment in relation to a company as prescribed; or (ii) any offence involving fraud or dishonesty. Automatic disqualification is for a period of 5 years, or such shorter or longer period as the court determines to be appropriate.
Disqualification by court order can arise, for example, as a result of an application having been made to court by a liquidator or the CEA for a person’s disqualification on stated grounds.
In certain circumstances where the CEA considers disqualification to be appropriate, it can offer a person the opportunity to enter into a disqualification undertaking rather than having to go through the court process. If the person accepts the offer and enters into the undertaking, they are deemed to be disqualified for the relevant period.
Disqualified persons’ names appear on a public register maintained by the Companies Registration Office.
Breach of a disqualification order is a criminal offence.
Where can I find details of restricted and disqualified persons?
The Companies Registration Office maintains registers of restricted and disqualified persons.
What is a company secretary?
A company secretary is a person (or company) appointed to oversee the company’s administration and who acts in accordance with the directors’ instructions.
Further information on company secretaries is available on our Information & Guidance page.
Is there a requirement to have a company secretary?
Yes. Every company is required to have a company secretary. While a director may also serve as secretary, that is not permitted where the company has only 1 director. A company may act as secretary to another company.
How is the company secretary appointed?
The first company secretary is the person named in the incorporation documents filed in the Companies Registration Office. The directors of the company normally make the decisions about subsequent appointments of the company secretary. The rules governing the secretary are normally set out in the company’s own constitution.
Do company secretaries have to have qualifications?
Generally, no. There is no requirement for a company secretary to have a formal qualification. However, the directors of the company must ensure that the company secretary has the skills or resources necessary to carry out the role and discharge their duties.
Section 1112 CA 2014 sets out the requirements of a Company Secretary for a PLC. These are:
(1) The directors of a PLC shall have a duty to ensure that the person appointed as secretary has the skills or resources necessary to discharge his or her statutory and other duties and that the person complies with one, or more than one, of the following 3 conditions.
(2) Those conditions are:
a. the person, for at least 3 years of the 5 years immediately preceding his or her appointment as secretary, held the office of secretary of a company;
b. the person is a member of a body for the time being recognised for the purposes of this section by the Minister;
c. the person is a person who, by virtue of his or her—
i. holding or having held any other position; or
ii. his or her being a member of any other body;
appears to the directors of the PLC to be capable of discharging the duties referred to in subsection (1).
What is an Annual General Meeting (AGM)?
A general meeting of a company is a meeting of the company’s members.
In general, companies are required by law to hold an Annual General Meeting (AGM) every calendar year. Furthermore, not more than 15 months should elapse between one AGM and the next (section 175 of the Companies Act 2014).
Can a company dispense with the requirement to hold an AGM?
Certain companies, such as a single member company (i.e., a company having only 1 member) and private companies limited by shares (LTD), may dispense with the requirement to hold an AGM. However, special rules apply where a company decides not to hold an AGM.
In the case of a single member company, the sole member of the company can decide not to hold an AGM. The sole member must write to the company to inform it of the member’s decision not to hold an AGM. The company is required to send the financial statements and other documents that would normally be sent to the member before the AGM to the member (section 196 of the Companies Act 2014).
In the case of a private company limited by shares (LTD), all the members of the LTD (where there is more than 1 member) must approve and sign a written resolution not to hold an AGM. The resolution must be approved before the latest date for holding the AGM, and each member must confirm in writing that they have received the company's financial statements and that they agree all other matters that would normally be decided at the AGM. This resolution is as valid as if it had been passed at the AGM (section 175(3) of the Companies Act 2014).
Companies limited by guarantee (CLG) having more than 1 member cannot dispense with the requirement to hold an AGM (section 1202 of the Companies Act 2014).
What is a receiver?
When a company borrows, the terms and conditions of the loan (the instrument) may provide that:
- as collateral for the loan, a charge is placed over some or all of the borrowing company’s assets; and
- in the event of a triggering event (e.g., loan repayments are not made, collateral is threatened etc.), the lender may appoint a receiver over some or all of the assets of the company.
The receiver’s role is to receive the assets in question and to take whatever steps are necessary (up to and including selling the charged assets) to recover the lender’s funds.
What must an AGM notice include?
The notice of the AGM should include the date, time and venue for the meeting, the agenda (listing items to be discussed and voted on at the AGM), information about any special resolutions to be considered, a copy of the financial statements to be laid before the meeting, and a note advising members of their right to appoint a proxy (including the proxy form).
Should an AGM be held in the State?
Yes. AGMs should be held in the State, except where the Articles of Association allow otherwise and, additionally, all the members agree that the meeting be held outside the State.
Can a company be required to hold an AGM if it fails to do so?
Yes. If a company fails to hold an AGM, any member of the company may apply to the CEA to seek the calling of an AGM. Details of how to make a complaint can be found here .
Who may appoint a receiver?
Receivers are usually appointed by the lender in accordance with the loan instrument.
In addition, the High Court has the power to appoint a receiver in an appropriate case.
Who may be appointed as a receiver?
The Companies Act 2014 sets out a list of those who cannot be appointed as a receiver, including:
- a body corporate;
- an undischarged bankrupt;
- a person who is, or was, an officer or employee of the company within 12 months of the receivership;
- a person connected (parent, spouse, civil partner, brother, sister or child) to the company’s officers;
- a partner or employee of an officer or employee of the company; and,
- anyone disqualified from being a receiver of the company’s subsidiary or holding company.
What are the powers of a receiver?
A receiver appointed by court order’s powers will be specified in the court order. Receivers have powers set out under section 437 of the Companies Act 2014. These powers include power of possession or control of property, power to lease a property, power to repair a property, power to engage or discharge employees etc.
Can a company be liquidated when a receiver is appointed?
Yes. A receiver is appointed over the assets of the company whereas a liquidator is appointed to bring the life of the company generally to an end. In general, a receiver and liquidator can act at the same time over the assets of the company and the company. However, a liquidator can apply to court to seek an order limiting the receivership.
Does a company have any obligation to advise the public that it is in receivership?
Yes. Where a receiver is appointed, every invoice, order and business letter issued by, or on behalf of, the company must contain a statement advising that a receiver has been appointed.
Further, the party appointing the receiver must arrange for the publication of a notice of the appointment of the receiver in Iris Oifigiúil and deliver a notice to the Companies Registration Office.
Do receivers have any reporting obligations to the CEA?
Yes. If it appears to a receiver in the course of the receivership that any past or present officer of the company, or any member, has been guilty of an offence in relation to the company, the receiver is required to report the matter forthwith to the Director of Public Prosecutions (DPP).
Where a receiver makes such a report to the DPP, the receiver shall also report the matter to the CEA (section 447(3) of the Companies Act 2014).
Can the CEA require production of a receiver’s books?
Yes. Under section 446 of the Companies Act 2014, the CEA can require a receiver to produce their books for examination – either with regard to a particular receivership or all receiverships undertaken by the receiver.
What is an examiner?
An examiner is a person appointed by a court to conduct an examinership. An examiner is responsible for assessing the company’s affairs and reporting on the company’s prospects of survival and the conditions needed to ensure that survival of the company.
What is examinership?
Examinership is a process under which a company that is in financial difficulty is placed under the protection of the High Court while efforts are made to rescue to company. The protection of the court means that parties cannot take steps to end the life of the company or enforce their security during the protection period of the examinership. Further, any other proceedings cannot be initiated against the company without the court’s permission.
Who can apply for the appointment of an examiner?
The following can apply to the High Court to have an examiner appointed to a company in financial difficulty:
- the company itself;
- the directors of the company;
- any creditor and contingent or prospective creditor (including an employee) of the company; and
- a member or members of the company holding not less than 10% of the paid up share capital that carries voting rights an general meetings.
On what basis can the High Court appoint an examiner?
Section 509 of the Companies Act 2014 provides that:
- where it appears to the Court that a company is, or is likely to be, unable to pay its debts;
- the Court may (but does not have to – the Court has discretion in that regard) appoint an examiner for the purpose of examining the state of the company’s affairs;
- the Court shall not appoint an examiner to a company unless satisfied that there is a reasonable prospect of survival of the company as a going concern.
Does the Circuit Court have a role in examinership?
Yes. In accordance with section 509(7) of the Companies Act 2014, where a company falls to be treated as a “small” company (in accordance with section 350), the Circuit Court has jurisdiction for dealing with examinership matters. All other companies come within the jurisdiction of the High Court.
Can a receiver be appointed during an examinership?
No. While a company is in examinership, and is under the protection of the court, parties cannot initiate proceedings or appoint a receiver.
However, if a receiver has already been appointed over company property and three days have passed prior to the petition to appoint an examiner, the court will not appoint the examiner.
What is an Extraordinary General Meeting (EGM)?
All general meetings of a company, other than the AGM, are EGMs.
The directors may convene an EGM whenever they think fit. A member, or members, of the company holding at least 50% of the paid up share capital of the company may also convene an EGM.
Can a liquidation and examinership run together?
The court will not appoint an examiner if there is a resolution to wind up the company, including if a liquidator has been appointed over the company.
What requirements are in place to ensure that the public is made aware that company is in examinership?
Where an application for the appointment of an examiner is made, the applicant is required to notify the Companies Registration Office of that fact.
Where an examiner is appointed, the examiner is required to publish a notice of that fact in Iris Oifigiúil and in at least two daily newspapers.
Where a company in placed in examinership, every invoice, order and business letter issued by, or on behalf of, the company is required to include the words “in examination under Part 10 of the Companies Act 2014” immediately after the company’s name. The same requirement applies to the company’s website and to every email issued by it (section 531 of the Companies Act 2014).
What are the notice periods for general meetings?
Unless a company’s constitution provides for longer periods:
- an AGM requires 21 days’ notice;
- an EGM requires 7 days’ notice; and
- an EGM at which at which a special resolution is to be considered requires 21 days’ notice.
These notice periods exclude the day that notice of the meeting is issued and the day of the meeting.
However, a meeting called at shorter notice than referenced above shall be deemed to have been duly called if it is agreed by (i) all members entitled to attend and vote at the meeting; and (ii) the company’s auditors (unless no auditors stand appointed because the company has availed of audit exemption).
Where a meeting is to consider the removal of a director, extended notice of 28 days is required for such a meeting.
How should members receive notice of meetings?
A company may serve the written notice on members as follows:
i. hand the notice to the member;
ii. send the notice by post; or
iii. send the notice electronically, if the company’s rules allow.
If the company’s rules do not allow the company to send notices electronically, the members may change the rules in that regard. To do this, the company must put a proposal to the members to vote on at an AGM or an EGM. For the proposal to pass, at least 75% of those voting at the meeting must approve the change (section 218 of the Companies Act 2014 ).
What is SCARP?
The Small Company Administrative Rescue Process (“SCARP”) is a process that was introduced by the Companies (Rescue Process for Small and Micro Companies) Act 2021 (“SCARP Act”) to meet the needs of small and micro companies in financial difficulties. While the process mirrors that of examinership, it is in a simplified form, thus reducing court involvement. The intention behind SCARP is to make the process faster and less expensive than examinership for small and micro companies.
What is a meeting quorum?
A quorum is the minimum number of members who must attend a meeting (in person or by proxy) for it to be a valid meeting. The quorum for a single member company is 1 member and for all other company types is 2 members.
However, a company can, in its constitution, set a higher number as its quorum (section 182 of the Companies Act 2014).
What is the position if a quorum is not present at a meeting?
If a quorum is not present within 15 minutes of the scheduled start time of the meeting, no business can be transacted and the meeting stands adjourned.
If a quorum is not present at the reconvened meeting within 30 minutes of the scheduled start time, the members present will be the quorum and the meeting can proceed.
What is a proxy?
Any member of a company entitled to attend and vote at a meeting of the company is entitled to appoint another person as their proxy to attend the meeting (section 183 of the Companies Act 2014).
What rights does a proxy have?
A proxy has the same rights as the member that appointed them to attend, speak and vote at the meeting (section 183 of the Companies Act 2014). However, a proxy does not have a right to chair the meeting.
Are there any requirements regarding minutes of general meetings?
Yes. Minutes are evidence of a company’s meetings and of the decisions taken at those meetings. Minutes of general meetings are required to be kept under section 199 of the Companies Act 2014. The company decides who will keep the minutes of meetings (usually the company secretary) and where the minutes are to be kept (all minutes should be kept in the same place).
Any member of the company has a right to inspect, and to get copies of, the minutes of general meetings and resolutions of the company (sections 215-217 of the Companies Act 2014).
If a company fails to comply with a request from a member for a copy of the minutes of a general meeting, the company and any officer of it who is in default shall be guilty of a category 3 offence (section 217 Companies Act 2014).
Under section 199(5) of the Companies Act 2014, the CEA may require that a company’s minutes of general meetings be produced to it. Failure to comply with such a direction is an offence.
What is an ordinary resolution?
An ordinary resolution is a resolution (or decision) that is passed by a simple majority of the votes cast by the members of the company who vote in person or by proxy at a general meeting of the company.
What are the eligibility criteria for availing of SCARP?
A central feature of SCARP is that it is initiated by the company directors, without the need to make an application to court. Before it is initiated, as a first step, the company’s directors must assess the company’s eligibility.
In order to be eligible to avail of SCARP, a company must meet the following criteria:
- it must be a small or micro company, as defined by the Companies Act 2014. A small or micro company is one that meets two of the following criteria:
- not more than 50 employees;
- turnover not exceeding €12m;
- balance sheet total not exceeding €6m.
- the company is, or is unlikely to be, unable to pay its debts;
- the company is not in liquidation;
- the company must not have appointed an examiner or process adviser in the last 5 years; and
- if a receiver has been appointed to the company, the company is only eligible for SCARP if the receiver has been appointed for a period of less than 3 working days.
What is a special resolution?
A special resolution is a resolution (or decision) that is required (i.e., by the Companies Act 2014, by the company’s constitution or otherwise) to be passed by not less than 75% of the members of the company who vote in person or by proxy at the meeting.
What is the initial role of the process advisor?
The process adviser is a suitably qualified professional who is appointed by the company’s directors to prepare and arrange a rescue plan for the company to ensure its survival. Their initial role though is to assess if the company has a reasonable prospect of survival and what steps need to be taken to achieve that survival.
To be eligible for appointment as a process adviser, a person must be qualified, in accordance with section 633 of the Companies Act 2014, to act as a liquidator.
On what basis does the process adviser determine whether the company has a reasonable prospect of survival as a going concern?
In forming an opinion as to whether the company has a reasonable prospect of survival as a going concern, the process adviser will examine the financial and other relevant information provided to be company.
In accordance with section 558C of the Companies Act 2014 (as inserted by section 3 of the SCARP Act), the process adviser shall have regard to the Statement of Affairs (in essence, a list of the company’s assets and liabilities prepared by the directors) and to certain other specified matters insofar and they appear relevant to the process adviser. Those specified matters include:
- the nature of, and prospects for, the company’s business;
- the availability of funding;
- the company’s cost structure; and
- the wider economic climate.
What happens next if the process adviser forms the view that the company has a reasonable prospect of survival as a going concern?
If the process adviser forms the view that the company has a reasonable prospect of survival as a going concern, s/he will prepare a report to that effect and submit that report to the directors. The report must also set out the:
- process adviser’s recommendations as to the course of action that should be taken and the matters that should be taken into account in developing a rescue plan;
- details of the extent of funding required to enable the company to continue to trade during the rescue period (and the source(s) of that funding); and
- process adviser’s recommendations as to which liabilities incurred before appointment of the process adviser should be paid.
Where the process adviser submits such a report to the directors, they may call a meeting of the directors at which a resolution to appoint the process adviser shall be considered. Any such meeting shall be held within 7 days of receipt of the report.
What happens if a process adviser is appointed by the directors?
It is important to note that, throughout the process, the process adviser is under a duty to keep under review their determination that the company has a reasonable prospect of survival as a going concern. If, at any point during the process, the process adviser determines that there is no longer a reasonable prospect of survival, s/he is under a duty to (i) notify the directors accordingly; and, (ii) resign their position as process adviser.
As soon as practicable following appointment by the directors, the process adviser is required to request email addresses from the following parties:
- the company’s employees;
- the company’s members;
- the company’s creditors; and
- the Revenue Commissioners.
The process adviser is also required, within 2 days of having been appointed, to notify both the Companies Registration Office and the relevant court (i.e., the Circuit Court or High Court, depending on the size of the company) of their appointment and to make arrangements for notice of their appointment to be published in Iris Oifigiúil.
The directors are required, within 48 hours of the appointment, to place a notice (in the prescribed form) of the appointment of the process adviser on the company’s website (in a prominent and easily accessible location). This notice is required to remain on the website for the duration of the rescue process.
Within 5 days of appointment, the process adviser is required to issue a notice (in the prescribed form) to the company’s employees and creditors, and to the Revenue Commissioners, setting out certain information and requiring those parties to provide details of outstanding debts. The process adviser is also required to contact all excludable creditors (typically, State creditors) to establish whether their debts can be included in the rescue plan. The grounds on which an excludable creditor can object to their debt being included in the rescue plan are set out in section 558L of the Companies Act 2014 (as inserted by section 3 of the SCARP Act).
What are the Process Adviser’s obligations regarding a rescue plan?
As soon as practicable after appointment, the process adviser is required to prepare a rescue plan for the company. The rescue plan is required to:
- specify each class of members and creditors of the company;
- specify any class of members or creditors whose interests would not be impaired by the proposed rescue plan;
- provide equal treatment to the members of each class of members and creditors, unless a particular member of a class agrees to less favourable treatment;
- if the process adviser considers it necessary to do so in order to facilitate the survival of the company, specify any changes that should be made in relation to the management or direction of the company;
- if the process adviser considers it necessary to do so in order to facilitate the survival of the company, specify any changes that should be made to the constitution of the company; and
- provide for its implementation and the associated timeframe.
What happens if the process adviser is unable to prepare a rescue plan?
If the process adviser is unable to prepare a rescue plan, as soon as practicable upon becoming aware of that fact, the process adviser is required to prepare a report to that effect and provide a copy of that report to the directors. The process adviser is also required to notify the company’s employees and creditors, and the Revenue Commissioners, of the fact that it has not been possible to prepare a rescue plan.
What is the process for consideration and approval of a rescue plan?
As soon as practicable following preparation of a rescue plan, the process advisor is required to convene meetings of the company’s members and creditors to consider the rescue plan. The meetings are required to be convened no later than 49 days following the process adviser having been appointed by the directors.
The notice requirements for the meeting(s) are set out in section 558U of the Companies Act 2014 (as inserted by section 3 of the SCARP Act). In summary, notice of the meeting(s) is required to be accompanied by:
- a copy of the rescue plan
- a statement of the company’s assets and liabilities as at the date on which the rescue plan was prepared;
- a description of the likely financial outcome of a winding up or of a receivership for each class of members and creditors; and
- a statement by the Process Adviser setting out:
- the effect of the rescue plan;
- the reasons as to why it is fair and equitable and not unfairly prejudicial;
- the likely consequences of a failure to approve the plan (including winding up or receivership);
- information regarding any changes in management or the direction of the company that are specified in the rescue plan;
- a statement outlining any material interests of the directors of the company and the effect of the rescue plan of those interests to the extent that those effects differ from the effects on like interests of other persons;
- information about the procedure for agreeing to, proposing amendments to or objecting to the rescue plan at the meeting;
- a statement of the fees payable to, and costs and expenses incurred by, the Process Adviser (at both the preliminary assessment stage and post-appointment by the directors);
- a statement of the additional fees that would be payable to, and costs and expenses that would be incurred by, the Process Adviser if the rescue plan were/were not to be approved.
Subject to the quorum requirements being met (which are set out in section 558V of the Companies Act 2014 (as inserted by section 3 of the SCARP Act), and in accordance with section 558Y(4), a rescue plan shall be deemed to have been accepted at a meeting of the members or creditors where 60% in number representing a majority in value of the claims represented at the meeting have voted in favour of the resolution for the rescue plan.
A rescue plan, if approved and in the absence of an objection, shall be binding on:
- all the members affected by the rescue plan;
- all the creditors affected by the rescue plan;
- the company; and
- the company’s directors.
To be approved, the rescue plan must be accepted by at least one class of creditors whose interests or claims would be impaired by the implementation of the rescue plan. It is important to note, therefore, that a rescue plan does not require to be approved by all classes of creditors. Rather, it merely needs to be approved by one class of affected creditors.
What are the process adviser’s obligations if the rescue plan is approved?
If the rescue plan is approved, the process adviser shall, within 48 hours:
- give notice of approval to the company’s employees, the Revenue Commissioners and any creditor or member whose interests would be impaired if the plan were implemented. Such notice must be accompanied by, amongst other things, a copy of the rescue plan, information regarding the procedure to be followed to lodge an objection to the rescue plan (which must occur within 21 days) and notification that, in the absence of an objection within the 21-day period, the rescue plan will become binding;
- deliver notice of the approval of the rescue plan to the Companies Registration Office; and,
- file notice of the approval of the rescue plan with the relevant court.
Can a potentially affected member or creditor object to a rescue plan?
Yes. In accordance with section 558ZC of the Companies Act 2014, a potentially affected member or creditor can object to a rescue plan within 21 days of the plan having been approved.
An objection must be set out on the prescribed form and sent to both the process adviser and the relevant court. While there are a number of grounds on which an objection can be based, in essence they centre on assertions that the plan is unfair or inequitable or that there has been some impropriety or irregularity in the process.
If an objection has been raised, that automatically triggers a process by which the relevant court will hear the objection.
Does a rescue plan have to be approved by the court?
In accordance with section 558ZB of the Companies Act 2014 (as inserted by section 3 of the SCARP Act), a rescue plan becomes binding 21 days after the notice of approval has been filed with the relevant court, provided that no objection has been lodged.
Where an objection is lodged within the 21-day timeframe, the matter will be heard by the relevant court.
Can a party object to the rescue plan after the 21-day period to lodge an objection ends?
Yes. The company and/or an interested party can apply to court to revoke the rescue plan within 180 days after it takes effect on grounds that the plan was procured by fraud. If a court revokes the rescue plan on these grounds, as soon as practicable after the revocation, a person directed to do so by the court must deliver a certified copy of the court order to the Companies Registration Office and to the CEA.
Is there the same protection from proceedings under SCARP as there is for examinership?
No. SCARP includes the possibility for specified parties (the process adviser, company and company’s directors) to apply to the relevant court to stay proceedings or restrain proceedings issued against the company; prevent a receiver being appointed over company property; prevent the repossession of any company property; prevent shareholders seeking protection from oppression, etc. This protection from proceedings is not automatic as it is with examinership.
Do process advisers have any reporting obligations to the CEA?
Yes. A process adviser is required to provide the CEA with a copy of their report, as prepared in accordance with section 558ZA of the Companies Act 2014 (as inserted by section 3 of the SCARP Act).
In accordance with section 558ZR of the Companies Act 2014 (as inserted by section 3 of the SCARP Act), where it appears to a process adviser at any time during the rescue period that any past or present officer, or any member, of the company has been guilty of any offence in relation to the company, the process adviser shall report the matter forthwith to the Director of Public Prosecutions.
Where such a report is made, it must also be sent to the CEA. Where such a report is made to the CEA, the process adviser is required to provide the CEA with such information as the CEA requires.
Does the CEA have any other powers in relation to the SCARP process?
Yes. In accordance with section 558ZN of the Companies Act 2014 (as inserted by section 3 of the SCARP Act), the CEA may, at any time during the rescue period or after its conclusion, where considered necessary or appropriate, require an appropriate person to produce to it the books and records for examination.
In the context of the above:
- an appropriate person includes the company, the process adviser, an officer of the company and a receiver appointed to any property of the company; and,
- books and records means the books and records of the company and, in addition, where a request is made of a process adviser, the books and records of the process adviser.
An appropriate person also has other obligations under the section. Failure to comply with the obligations provided for by the section constitutes a criminal offence.
What are a company director’s obligations for and during SCARP?
The obligations of a director during the SCARP include the below, which is a non-exhaustive list. Consideration should be given to obtaining professional advice if you are a director seeking to engage in the SCARP.
A director who makes a false or misleading statement in their statement of affairs in seeking to have a process adviser appointed over the company shall be guilty of a category 2 offence.
Once a process adviser is appointed, during the rescue period (i.e., until the process advisers resigns/is terminated) the directors must co-operate with the process adviser and disclose any information to aid the process adviser in their functions.
If a director fails to publish notice of the appointment of the process adviser on the company’s website within 48 hours of the appointment and to keep the notice on the company’s website for the duration of the process adviser’s appointment, they shall be guilty of a category 3 offence.
Once a process adviser is appointed and resigns/is terminated, the directors have an obligation to take such steps as they consider appropriate to protect the interests of the employees of the company.
A director who intentionally:
- fails to disclose any relevant information available to them or that they are required to produce to the process adviser,
- provides any false or misleading information to the process adviser, or
- fails to disclose information to the process adviser that the director knows, or ought to know, is relevant information,
shall be guilty of a category 2 offence.
Company directors must implement any provision of a rescue plan which takes effect and imposes a requirement on the directors of the eligible company within the time for implementing the rescue plan (as specified in the rescue plan).
Where can I obtain further information on SCARP?
What does the winding up / liquidation of a company mean?
The winding up of a company takes place when its corporate existence is legally dissolved through a formal process commonly referred to as liquidation. The methods of ending a company’s existence are either a members’ voluntary winding up, a creditors’ voluntary winding up, or a compulsory Court winding up/liquidation.
Further information on winding up can be accessed on our Information & Guidance page.
<br>What is a members’ voluntary liquidation?
The essential feature of a members’ voluntary liquidation (MVL) is that the company must be solvent (i.e., can pay its debts as they fall due) and the members decide to end the company’s existence.
The process is commenced in accordance with the Summary Approval Procedure by way of a special resolution as set out in section 579 of the Companies Act 2014. Where the company is of a fixed duration or is a specific purpose company, an alternative method is by way of ordinary resolution in accordance with section 580 of the Companies Act.
A vital element of a members’ voluntary winding-up is the declaration of solvency. The directors are under a duty to make an accurate declaration of solvency (sections 207 & 579 of the Companies Act 2014 refer). The declaration must state the total amount of the company’s assets and liabilities (within the last 3-month period) and that a full inquiry into the affairs of the company has been carried out by the declarants (directors) who have formed the opinion that the company will be able to pay its debts and other liabilities within the next 12-month period.
The declaration must be drawn up in the correct format and accompanied by a report by a person who is qualified to act as a statutory auditor of the company, who states whether, in their opinion, the declaration is not unreasonable.
Details of the process and the statutory filing requirements are available from the Company Registration Office.
Is there a requirement to hold directors’ meetings?
There is no statutory requirement to hold directors’ meetings. However, section 160 of the Companies Act 2014 states that the directors of a company may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit.
The company’s constitution (Articles of Association) will usually contain certain basic rules governing directors’ meetings, but they generally leave a considerable degree of flexibility to the directors to regulate their meetings as they think fit.
Directors’ meetings are important to both the running of the company and to directors being in a position to demonstrate that they are discharging their duties with due care and that they are acting responsibly.
Are there any requirements regarding minutes of directors’ meetings?
Yes. A company is required to keep minutes of directors’ meetings and of meetings of any committee of the directors (section 166 of the Companies Act 2014).
Company members do not have a right to inspect minutes of directors’ meetings.
Under section 166(5) of the Companies Act 2014, the CEA may require the production of a company’s minutes of directors’ meetings. Failure to comply with such a direction is an offence.
Is a company required to maintain certain statutory registers?
Yes. In addition to minutes of meetings and adequate accounting records, companies are required to maintain the following registers and other documents:
i. Register of Directors and Secretaries, past and present (section 149 of the Companies Act 2014);
ii. Directors’ service contracts (section 154 of the Companies Act 2014);
iii. Register of Members, past and present (section 169 of the Companies Act 2014);
iv. Register of Disclosable Interests (Part 5, Chapter 5 of the Companies Act 2014); and
v. Instruments Creating Charges (section 418 of the Companies Act 2014).
What is required to be recorded in the Register of Directors and Secretaries?
In general, the Register is required to record the following in respect of each director: name, date of birth, usual residential address, nationality, business occupation, other directorships (past and present) in the State or elsewhere.
In general, the Register is required to record the following in respect of the Secretary:
i. in the case of an individual, name and any former name, usual residential address and date of birth; or
ii. in the case of a body corporate, registered office, the register in which the body corporate is registered and its registration number.
In addition to the above, all business letters on which the company’s name appears are required to include the directors’ names and nationalities (if not Irish).
What is required to be maintained in respect of directors’ service contracts?
Every company is required to keep:
- in the case of a director whose contract of service is in writing, a copy of that contract;
- in the case of each director whose service contract is not in writing, a written memorandum setting out the terms of the contract; and
- in the case of a director who is employed under a contract of service with a subsidiary of the company, a copy of that contract or, if it is not in writing, a written memorandum setting out the terms of the contract.
If there are any variations to the above documents, copies or a memorandum about the variation(s) should also be kept.
What is required to be recorded in the Register of Members?
Every company is required to maintain a Register of Members, in which the following should be recorded in respect of each member:
- name, address, shares held by each member;
- the date on which the member was entered on the register as a member; and
- the date on which the person ceased to be a member of the company.
What is required to be recorded in the Register of Disclosable Interests?
Under section 267 of the Companies Act 2014, every company is required to maintain a Register of Disclosable Interests.
A disclosable interest, as defined in section 257, is any interest of any kind in shares or debentures of a company.
Persons required to disclose interests in the company’s shares and debentures include directors and the secretary of the company (Part 5, Chapter 5 of the Companies Act 2014 refers).
What is required to be maintained in respect of instruments creating charges?
Every company is required to keep a copy of every legal instrument creating a charge over the company’s property
Where should the company registers be kept?
Registers, as specified under section 216 of the Companies Act 2014, should be kept at the registered office of the company, the principal place of company business in the State or another place within the State.
Where the registers are not kept at the company’s registered office, the company must notify the Companies Registration Office where they are kept.
Who may gain access to the company’s registers?
The following shall be open to inspection by any person upon the payment of the relevant fee:
- Register of Directors and Secretaries;
- Register of Members;
- Register of Disclosable Interests.
Copies of instruments creating charges shall be available to any creditor of the company without charge.
Any member of company may (on payment of the relevant fee) request a copy, or a copy of any part of:
- Register of Directors and Secretaries;
- Register of Members;
- Register of Disclosable Interests; or
- Minutes of General Meetings of the company.
Any other person may (on payment of the relevant fee) request a copy, or a copy of any part of:
- Register of Directors and Secretaries;
- Register of Members; or
- Register of Disclosable Interests.
See section 216 of the Companies Act 2014.
What is a creditors’ voluntary liquidation?
A company may be wound up voluntarily as a creditors’ voluntary liquidation (CVL) where the following circumstances occur:
- the members of the company in general meeting resolve that the company cannot by reason of its liabilities continue its business and that it be wound up as a creditors’ voluntary liquidation and a creditors’ meeting is held;
- a members’ voluntary liquidation is converted to a creditors voluntary liquidation (see preceding paragraph); or
- where a declaration in relation to a members’ voluntary winding-up is not made in accordance with the relevant provisions of the Companies Act 2014.
In the first set of circumstances as outlined above, a liquidator is usually appointed at the members’ meeting and the company calls a meeting of its creditors for the day on, or the day after, the winding-up resolution is proposed. The company must advertise the creditors’ meeting in at least in two daily newspapers and give at least 10 days’ notice.
The principal difference between a members’ and a creditors’ voluntary winding up is that the creditors can choose the liquidator. The directors must prepare and present a full statement of the company’s affairs at the meeting, together with a list of the creditors and the estimated amounts of their claims. The liquidator will call any subsequent meetings and will present their final account before the final meeting of members and creditors.
The company will be deemed to be dissolved 3-months following delivery of the liquidator’s final account and a return of this final meeting to the Companies Registration Office.
Details of the process and the statutory filing requirements are available from the Companies Registration Office.
What is an official liquidation?
The High Court can order the liquidation of a company on various grounds (section 569 of the Companies Act 2014) including:
- where the company has by special resolution resolved that the company be wound up by the Court;
- where the company has not commenced business within 1 year of incorporation or suspends its business for a whole year;
- where the members of the company are all deceased or, in the case of a member that is a company, no longer exists;
- where the company is unable to pay its debts;
- where the Court is of the opinion that it is just and equitable that the company should be wound up;
- where the company’s affairs are being conducted, or the powers of the directors are being exercised, in a manner oppressive to any member or in disregard to their interests as a member; or,
- where the Court is satisfied, on a petition of the CEA, that it is in the public interest that the company should be wound up.
A range of parties can petition the High Court for the appointment of a liquidator, including: the company itself, any creditor of the company and members or persons required to contribute to the assets. The petition must be advertised.
Details of the process and the statutory filing requirements are available from the Companies Registration Office.
Does the CEA have powers in relation to the winding up of companies?
Yes. Where a company is being would up or dissolved the CEA may request an appropriate person to produce the books and records relating to the liquidation for examination by the CEA and the appropriate person must comply with this request.
Appropriate persons are the company’s liquidator, the company itself, an officer or auditor of the company and any receiver appointed over company property. The appropriate person must also answer any of the CEA’s questions arising from the examination of the books and records requested. The appropriate person must give the CEA access to inspect or take copies of the books and records also.
When will a company be struck off the Register of Companies?
Once a company is incorporated and the process is complete, details about the company are entered onto the Register of Companies. The Companies Registration Office maintains the Register of Companies. There are certain instances where a company can be struck off the Register of Companies.
A company can voluntarily be struck off the register if:
- the Registrar believes the company has never carried on business or has ceased to carry on business;
- the company has resolved to apply to the Registrar to be struck off the register by passing a special resolution;
- all annual returns filed with the Companies Registration Office for the company are up to date;
- the company delivers a certificate of its assets and liabilities to the Registrar;
- the Revenue Commissioners do not object to the company being struck off the register; and
- the company advertised its intention to be struck off the register 30 days before the date of the application in 1 daily newspaper.
A company may be involuntarily struck off the register by the Registrar if:
- the company has failed to make an annual return to the Companies Registration Office;
- the Revenue Commissioners give the Companies Registration Office a notice that the company has failed to notify the Revenue Commissioners of the name and registered address of the company, the name of the company secretary, the date the company commenced trade, the nature of the company’s trade/business, and the date the company will first make up its accounts;
- the Registrar believes the company does not have one EEA resident director;
- the company is being wound up and the Registrar has cause to believe no liquidator is acting;
- the company is being wound up and the Registrar has cause to believe the liquidator has failed to make their required returns for a period of 6 consecutive months; or,
- no person is currently recorded as a company director.
What powers does the CEA have when it comes to a company being struck off the Register of Companies?
The CEA may require the directors of a company that has been involuntarily struck off the register to produce a statement of affairs for the company and the directors must comply within the time limit set by the CEA. The CEA can apply to the High Court to require a director who prepared a statement of affairs to appear before the court to answer questions about the statement under oath.
Further, a director whose company has been struck off the register may be the subject of a disqualification undertaking or order.
Are companies required to keep accounting records?
Yes. Section 281 of the Companies Act 2014 requires that every company keep adequate accounting records. Furthermore, records must be retained for at least 6 years.
A company that fails to comply with these requirements shall be guilty of an offence.
What are company directors’ obligations in relation to accounting records?
Any director of a company who fails to take reasonable steps to secure the company’s compliance with its obligation to keep adequate accounting records shall be guilty of an offence (section 286(2) of the Companies Act 2014).
Can a company be restored to the Register of Companies?
Yes. There are two processes by which a company may be restored to the register, namely, (i) administrative action; or (ii) court order.
Consideration should be given to obtaining independent professional advice if you wish to have a company restored to the Register of Companies.
What does “adequate accounting records” mean?
Adequate accounting records are those that are sufficient to:
- correctly record and explain the transactions of the company;
- enable, at any time, the assets, liabilities, financial position and profit or loss of the company to be determined with reasonable accuracy;
- enable the directors to ensure that any financial statements of the company, and directors’ report that are required to be prepared, comply with company law and applicable accounting standards; and,
- enable the financial statements to be audited (section 282(2) of the Companies Act 2014).
What is an inspection of a company?
In addition to the investigatory powers of the CEA, there is provision for the appointment of an Inspector to investigate aspects of the company such as the company’s affairs or the true interests of persons in a company.
A court-appointed Inspector investigates the affairs of the company, and the CEA may also appoint an Inspector to investigate aspects of a company shares and people’s involvement with the company.
The CEA can apply to court to have an Inspector investigate the affairs of the company. Appointment is entirely at the discretion of the court and, where the Inspector is appointed by the court, they report to the High Court.
What is a “management company”?
A so called “management company” is a company registered with the Companies Registration Office - usually as a company limited by guarantee (CLG) or a designated activity company (DAC), with an object clause (i.e., a central purpose of the company being) to manage a multi-unit development.
The management company typically owns the common areas of the development such as car parks, green spaces, stairwells, lifts, and communal hallways and maintains them for the benefit of all property owners and typically provides for insurance cover etc.
On acquiring a unit within a development, in addition to the apartment or house, such person also shares ownership of the common areas. Stemming from this, it is usually a condition of the purchaser's contract that they sign a co-ownership agreement which obliges them to become a member of the management company. These co-ownership agreements are essentially rooted in the laws of contract and private property, rather than in company law or any other particular Act of the Oireachtas. Following on from this, it is important to understand that the requirement to become a member of a management company is not a requirement under company law.
There is no special body of company law which applies only to so called management companies, or which is applied differently insofar as management companies are concerned. The requirements of company law generally apply in relation to “management companies” as they do to other companies in Ireland.
Most of the issues arising in the so-called management companies are not in fact company law issues (but, rather, relate to contract law etc.). Further, non-company law-related, information relating to management companies can be obtained from the Citizens’ Information website.
Where can I find the legal source from which management companies operate?
The legal source from which management companies derive their operational and functional role is set out in the title deeds of the property as well as the contract of purchase of the property. The fact that the intended functions of a management company have their roots in the title deeds is one from which important legal consequences flow. They do not flow from the company law relationship that exists between the management company and its members.
Is it possible to commit a criminal offence under company law?
Yes. There are two types of criminal offence under company law:
- a summary offence, i.e., an offence that is triable only in the District Court; and
- an indictable offence, i.e., an offence that can be tried in the District Court or in the Circuit Court.
While the CEA can initiate a summary prosecution in the District Court, a decision to initiate a prosecution on indictment can only be taken by the Director of Public Prosecutions.
Are there any special measures in place having regard to the challenges and difficulties posed by Covid-19?
Yes. In response to the Covid-19 pandemic, the Oireachtas enacted the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 (“the 2020 Act”) [insert link], which amended the Companies Act 2014. The 2020 Act introduced certain measures designed to recognise the challenges and difficulties arising from the Covid public health emergency.
Some of the principal provisions of the 2020 Act include:
- the Act introduced an “interim period”, during which the temporary measures introduced by the Act would remain in effect. The interim period has been extended by the Government on a number of occasions and is currently due to expire on 31 December 2022;
- General meetings: a company need not hold a general meeting at a physical venue but may conduct the meeting wholly or partly by the use of electronic communications technology as long as all attendees have a reasonable opportunity to participate in the meeting in accordance with the section (section 174A(5) of the Companies Act 2014, as inserted by section 6 of the 2020 Act);
- Creditors’ meetings: a similar provision whereby creditors’ meetings can be held virtually is contained in section 690A of the Companies Act 2014, as inserted by section 19 of the 2020 Act;
- Examinerships: subject to court approval, the examinership process, and the period of protection for the company, can be extended to a maximum of 150 days (compared with the standard maximum period of 100 days); and,
- Winding up by a court: under normal circumstances, a company is deemed to be unable to pay its debts if (i) a creditor who is owed more than €10,000, or two or more creditors who are owed more than €20,000, has/have served a notice on the company demanding that the sum outstanding be paid and (ii) the company has failed in the following 21 days, to pay the sum due. During the interim period, both amounts above, i.e., the €10,000 and €20,000, are increased to €50,000.
Who can be charged with a criminal offence under company law?
An individual, a company or both can be charged with a criminal offence under company law.
Why are adequate accounting records so important?
Without a proper record of the company’s transactions, the directors will be unable to determine the company’s financial position (i.e., whether it is making a profit or loss and whether its assets exceed its liabilities).
In addition to being important to the responsible management of any company that the directors know whether the business is profitable and generating cash, knowing the company’s financial position is particularly important if the company might be moving towards a situation where it might be unable to pay its debts as they fall due. In those circumstances, accurate information will enable the directors to make informed decisions in a timely manner.
Who has access to a company’s accounting records?
Every company shall make its accounting records available at all reasonable times for inspection by any officer of the company and by any other person entitled under company law to inspect the records.
Do the company’s members have a right to inspect the accounting records?
No, a member of the company (who is not also a director) does not have a right to inspect the accounting records unless (i) that right is conferred by the company’s constitution; or (ii) they have been authorised by the directors or by the company in general meeting (section 284(3) of the Companies Act 2014).
The directors shall from time to time determine whether and, if applicable, at what times and under what conditions or regulations the accounting records shall be open to inspection by members who are not directors (section 284(4) of the Companies Act 2014).
What are statutory financial statements?
Statutory financial statements are the company’s financial accounts for each financial year. They set out the company’s profit or loss for the year and its assets and liabilities at year end.
Are company directors required to prepare statutory financial statements?
Yes. Under section 290 of the Companies Act 2014, the directors of every company are required to prepare statutory financial statements in respect of each financial year.
Are statutory financial statements required to be prepared in accordance with specified accounting standards?
Yes. Companies’ statutory financial statements are required to be prepared in accordance with either (i) section 291 of the Companies Act 2014; or (ii) international financial reporting standards (IFRS) and section 292 of the Companies Act 2014.
What is meant by statutory financial statements are required to give “true and fair view”?
Under section 289 of the Companies Act 2014, the directors of a company shall not approve the statutory financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities, and financial position of the company.
While the term “true and fair view” is not defined, it is generally accepted that a company’s financial statements will give a true and fair view if they have been prepared in accordance with law and applicable accounting standards.
Who approves and signs the statutory financial statements?
The board of directors approve the statutory financial statements when they are satisfied the financial statements give a true and fair view.
Following approval, (a minimum of) two directors nominated by the board will sign the statutory financial statements on behalf of the board (section 324 Companies Act 2014 refers).
It should be noted that section 324(7) states that, "every director of the company at the time the statutory financial statements are approved shall be taken to be party to their approval unless he or she shows that he or she took all reasonable steps to prevent their being approved."
Is there a requirement for the statutory financial statements to be laid before the AGM?<br>
Yes. The directors are required to lay the statutory financial statements for each financial year before the company’s members at the AGM. The financial statements shall be laid before the AGM no later than 9 months after the financial year end (section 341 of the Companies Act 2014).
Are a company’s members entitled to see the statutory financial statements?
Yes. Every member has a right to receive a copy of the statutory financial statements not less than 21 days before the general meeting of the company at which they are to be laid (sections 338 and 339 of the Companies Act 2014 refer).
Is it an offence not to prepare statutory financial statements?
Yes. Under section 291(9) of the Companies Act 2014, if a company fails to comply with the obligation to prepare statutory financial statements, the company and any officer who is in default shall be guilty of an offence
What is the difference between statutory financial statements and management accounts?
Statutory financial statements are required by the Companies Act 2014 and must be prepared in accordance with law and appliable accounting standards. Typically, they are prepared once a year.
“Management accounts” is a term used to describe internal financial information prepared periodically for the purposes of assisting decision making. Management accounts are not required to be prepared in accordance with legal or accounting standards requirements and, typically, are prepared more frequently than annually.
Can a company change its financial year end?
Yes, subject to compliance with section 288 of the Companies Act 2014. Application should be made to the Companies Registration Office on the prescribed form (Form B83).
What is an audit?
An audit is an examination of the company’s statutory financial statements as prepared by the directors. The audit is performed by a suitably qualified person who is independent of the directors and the company. The auditor is required to provide an opinion as to whether, amongst other things, the financial statements give a true and fair view of the company’s financial performance and position.
Are all companies required to have an audit performed annually?
Yes. The directors of a company must arrange for the statutory financial statements to be audited annually unless the company is entitled to, and chooses to, avail itself of audit exemption (section 333 of the Companies Act 2014).
What is audit exemption and how does a company avail of it?
In certain circumstances, certain companies may be permitted to avail of an exemption from the general requirement to have the statutory financial statements audited.
The conditions necessary to avail of audit exemption are set out in sections 356 to 365 of the Companies Act 2014. As they are detailed in nature, if in doubt consideration should be given to obtaining independent advice.
In summary, the conditions necessary in order to avail of audit exemption are as follows:
- the company qualifies as a small company (whether a company is a small company is determined by reference to section 350);
- the company is not a group company (i.e., a member of a group of companies) (unless the group is a small group in accordance with section 359);
- the company is not excluded from exemption eligibility by section 362 of, and Schedule 5 to, the Companies Act 2014; and,
- the company is up to date with the filing of its annual returns to the Companies Registration Office.
The following categories of company are, subject to meeting the necessary requirements, eligible to avail of audit exemption: private company limited by shares (LTD), designated activity company (DAC), company limited by guarantee (CLG), unlimited company (ULC).
Despite a company being eligible for audit exemption, can the company’s members insist that an audit be performed?
Yes. In the case of an LTD, DAC or ULC, one or more members representing at least 10% of the voting rights can insist that an audit be performed. In the case of a CLG, one member can insist that an audit be performed.
How do I know whether a person is qualified to act as an auditor?
The Companies Registration Office maintains registers of persons qualified and authorised to act as statutory auditors. The registers can be accessed here
How are auditors appointed?
The directors of a company usually appoint the auditor for the first year, thereafter, the members must appoint, or reappoint, the auditor at each AGM.
What is an Audit Committee?
An Audit Committee is a committee of a company’s board of directors.
Does every company require an Audit Committee by law?
No. Only certain companies are required under company law to have an Audit Committee.
All public limited companies (PLCs) as well as other companies that come within the definition of “public interest entities” are required to establish an Audit Committee.
Public interest entities are: companies with shares quoted on a stock exchange, banks and certain other credit institutions, and insurance companies.
The directors of other “large” companies (i.e., companies whose balance sheet total exceeds €25m and whose annual turnover exceeds €50m) can decide whether or not to establish an Audit Committee. However, they must report their decision in that regard, and the reason for that decision, in their Directors’ Report (required to be included with the company’s financial statements).
The requirements regarding Audit Committees are set out in section 167 of the Companies Act 2014 while Regulation 115 of Statutory Instrument No. 312 of 2016 sets out the requirements for “public interest entities”.
What are the functions of an Audit Committee?
In accordance with section 167(7) of the Companies Act 2014, the responsibilities of an Audit Committee (without prejudice to the responsibilities of the board of directors) include:
- monitoring the financial reporting process;
- monitoring the effectiveness of the company’s systems of internal control, internal audit and risk management;
- monitoring the statutory audit of the statutory financial statements; and,
- reviewing and monitoring the independence of the statutory auditors, in particular the provision of additional services to the company.
Are there different categories of criminal offence under company law?
Yes. There are 4 categories of criminal offence under company law. Category 1 relates to the most serious offences, whereas Category 4 relates to the least serious. In accordance with section 871 of the Companies Act 2014, the maximum penalties relating to each category of offence are as follows:
Category 1 (Indictable)
- on summary conviction, a class A fine (i.e., a fine not exceeding €5,000) and/or a term of imprisonment of up to 12 months
- on conviction on indictment, a fine not exceeding €500,000 and/or a term of imprisonment of 10 years.
Category 2 (Indictable)
- on summary conviction, a class A fine (i.e., a fine not exceeding €5,000) and/or a term of imprisonment of up to 12 months
- on conviction on indictment, a fine not exceeding €50,000 and/or a term of imprisonment of 5 years.
Category 3 (Summary only)
- on summary conviction, a class A fine (i.e., a fine not exceeding €5,000) and/or a term of imprisonment of up to 6 months.
Category 4 (Summary only)
- on summary conviction, a class A fine (i.e., a fine not exceeding €5,000).
What are the most serious offences under company law?
There are two Category 1 offences. They are:
i. fraudulent trading (section 722 of the Companies Act 2014); and
ii. failure to keep adequate accounting records that contributes to a company being unable to pay its debts/uncertainty as to the company’s assets and liabilities/substantially impedes the winding up of a company (section 286 of the Companies Act 2014).
The underlying seriousness of this wrongdoing is reflected in the fact that they are both classified as Category 1 offences.
There are numerous Category 2 offences under company law. By way of illustrative example, they include:
- acting as a company director or secretary while an undischarged bankrupt (section 132 of the Companies Act 2014);
- prohibited loans to company directors and connected persons (section 248 of the Companies Act 2014);
- failure to keep adequate accounting records (section 286 of the Companies Act 2014);
- making a false or misleading statement to an auditor (section 389 of the Companies Act 2014);
- answering a question, providing an explanation, making a statement, completing/signing/producing/lodging/delivering a return/report/certificate/balance sheet/other document that is false in material fact in purported compliance with a provision of the Companies Act 2014 (section 876 of the Companies Act 2014);
- destroying, mutilating, falsifying any book or document affecting, or relating to, the property or affairs of a company (section 877 of the Companies Act 2014);
- (an officer of the company) fraudulently parts with, or alters, or makes an omission in any book or document affecting, or relating to, the property or affairs of a company (section 878 of the Companies Act 2014).
There are also a number of Category 2 offences that relate directly to the CEA. These include:
- failure to produce books or documents or related explanations to the CEA (section 785 of the Companies Act 2014);
- obstruction of the CEA’s right of entry or search/obstruction of the CEA’s right to seize and retain material under warrant/failure to provide a CEA warrant holder with name, address, occupation or material information that is in a person’s custody or possession/failure to facilitate access to information held on a computer (section 789 of the Companies Act 2014);
- falsification, concealment or destruction of a document or record in circumstances where a person knows or suspects that an investigation is being conducted by the CEA and the document or record would be relevant to the investigation (section 793 of the Companies Act 2014).
Can a court order that a breach of company law that constitutes a criminal offence be remedied?
Yes. Under section 872 of the Companies Act 2014, a court in which a conviction is recorded can order that the convicted person remedy the breach for which the person was convicted.
What’s the situation if, having been a convicted of a criminal offence, a person or company continues to contravene company law?
Section 870 of the Companies Act 2014 provides that, if a contravention (i.e., breach) in respect of which a person (which includes company) has been convicted is continued after the conviction, the person shall be guilty of a further offence on every day on which the contravention continues.
Are criminal offences regularly prosecuted under company law?
Yes. Details of company law prosecutions are set out in the CEA’s annual reports, which can be accessed on this website.
What is an “officer in default”?
Certain sections of the Companies Act 2014 provide that an officer of a company who is “in default” shall be guilty of an offence. In that context, section 270 of the Companies Act 2014 provides that an officer who is in default is one who authorises or who, in breach of his or her duty as such officer, permits the default mentioned in the relevant provision.
Section 271 of the Companies Act 2014 provides that, in relevant offence proceedings, where it is proved that the officer was aware of the basic facts concerning the default in question, it is presumed that the officer permitted the default unless the officer shows that s/he took all reasonable steps to prevent the default or that, for reasons beyond the officers’ control, s/he was unable to do so.