Frequently Asked Questions
- What Is Company Legal Compliance?
- What Happens If I Don’t Comply With Company Law?
- Is Company Law Connected With Taxation?
- Does Company Law Compliance Apply To Small Family Companies?
- But I’ve Been OK So Far!
- But My Accountant Usually Does This Sort Of Work For Me!
- What Does Company Law Compliance Entail?
- Does Company Law Compliance Have Any Role To Play In The Context Of Director’s Disputes?
- What Role Has My Accountant?
- What Is Company Legal Compliance?
All companies, regardless of size, in the Republic of Ireland are regulated by the Companies Acts 1963 – 2006. Limited liability is a privilege and in order to obtain the benefit of that privilege one must run the affairs of a Company in accordance with the Companies Acts.
What Happens If I Don’t Comply With Company Law?
There are dozens of offences under the Companies Acts for even the most minor of oversights which result in significant fines and jail sentences. The Government has also created a special office called the Director of Corporate Enforcement to ensure that Company Laws are enforced rigorously.
Is Company Law Connected With Taxation?
Everybody likes to pay as little tax as possible. Very often certain tax efficient arrangements can be entered into by using Companies e.g. corporation tax rates are typically 12.5%. In respect of complex tax planning structures, the Revenue Commissioners may seek to undermine any particular arrangement if they examine the Tax Planning structure in question and find out that it does not comply with Company Law. Any benefit that it was hoped to have accrued under the tax arrangement will be lost if the Law has not been complied with.
Does Company Law Compliance Apply To Small Family Companies?
Yes, all companies are covered by the rigorous requirements of the Companies Acts 1963-2006. In certain circumstances, smaller companies are entitled to certain Accounting/Audit exemptions but otherwise companies regardless of their size are obliged to comply with Company Law.
But I Have Been OK So Far!
We are now living in a new era of compliance with Company Law. Since the Government created the Office of the Director of Corporate Enforcement, Company Laws that had previously been ignored are now being rigorously implemented and directors are being fined and made personally liable for the debts of the Company in many instances. There are now significant fines imposed by the Companies Registration Office in the event that Annual Returns with annexed accounts are not filed on time. There are even recorded instances of fines for failing to keep Statutory Registers written up to date.
But My Accountant Usually Does This Sort Of Work For Me!
Company Legal Compliance is now viewed as a separate service because of its complexity and due to the fact that it is quite time consuming. While many Accountants are quite happy to attend to routine matters such as filing annual returns, increasingly they are taking the view that Company Law Compliance issues should be left in the hands of experts, while they focus on their core areas: preparation of accounts, auditing and taxation work. Very few Accounting Firms actually offer a fully comprehensive Company Law Compliance service to their clients. Up to this the Accountancy Profession tended to prepare the accounts that would be annexed to the Annual Return to be submitted to the Companies Registration Office. Formerly, this by and large was enough to keep a Company on the Register of Companies and to avoid any significant problems for the directors. In this new era of compliance, we are happy to deal with our business clients and our colleagues in the accounting profession in dealing with more complex company compliance matters such as:
- Whitewash Procedures
- Share Allotments
- Increases in Authorised Share Capital
- Creation of new Share Classes
- Drafting of complex shareholders or directors resolutions
What Does Company Legal Compliance Entail?
Company Legal Compliance entails such issues as are listed in detail in the Services – What We Do section.
Does Company Legal Compliance Have Any Role To Play In The Context Of A Directors Dispute?
Unfortunately company directors do fall out from time to time. Often such disputes can lead to an extremely bitter break up of a company and of a business relationship. It is becoming increasingly common for a disaffected Director to report his fellow Directors to the Director of Corporate Enforcement and/or the Revenue Commissioners regarding any non-compliance with the Companies Acts or the Tax Acts. This could be very damaging to the other directors of the Company. In the context of any proceedings arising out of the dispute, the disaffected Director may be able to show the Court that the other directors are not fit people to be involved in the running of the Company because they did not comply with Company Law or Tax Law. Failure to keep the housekeeping in a company in order can lead to all sorts of untold problems in the future.
What Role Has My Accountant?
Accountants are increasingly being put under pressures from both a Company Law and a Tax Law viewpoint. There are several pieces of legislation in existence now where Auditors are required to report their Client Companies to either the Revenue Commissioners and/or the Director of Corporate Enforcement regarding corporate misconduct. For instance, if a Director borrows money from his Company and the Loan transaction does not follow the proper Company Law procedure, then your Auditor must report this to the Director of Corporate Enforcement. This will then lead to the Director of Corporate Enforcement investigating your Company with the potential of fines and/or a jail sentence on the Directors. Accountants are being put in an impossible position. As we said earlier accountants understand the need for their clients to take proper professional advice. As such, your Accountant will understand the times you need to take legal advice and should notify you accordingly provided that you let him/her know what you are doing.
Services – What We Do
- Company Incorporation
- Maintenance Of Company Books (Statutory Registers)
- Alteration Of Memorandum and Articles of Association
- Allotment Of Shares (Cash / Non Cash)
- Change Of Company Name
- Registration Of Business Names
- Transfer of Shares In A Private Company
- Appointment / Removal of Directors / Secretary
- Removal And Restoration To The Companies Office Register
- Registered Office Service
- Company Law Drafting Service
- Directors Loans
- Companies Purchasing Their Own Shares
Morgan McManus Solicitors will attend to all formalities of incorporation. These formalities include the following:
- Ensuring that the proposed company’s name is suitable for registration.
- Identifying the type of company most suitable for our client’s requirements.
- Drafting the company’s Memorandum and Articles of Association to suit the particular circumstances and trading activities of the company.
- Supply an Information Booklet to the officers of the company regarding their responsibilities.
- Morgan McManus Solicitors are members of the CRO Fe Phrainn and CRO Disk Schemes which allow for fast track incorporations.
Maintenance Of Statutory Registers
It is a requirement of the Companies Acts that each Company maintain various Statutory Registers setting out details of Directors, Shareholders, AGM Minutes etc. These Registers must be updated every time there is a change. A company is obliged to notify the Companies Office where those records are kept so that they are available for inspection at any time. The Director of Corporate Enforcement is empowered to carry out spot checks on Companies and has taken several prosecutions against Directors for failing to keep these Registers properly. Regardless of whether your Company runs a corner shop or multinational business, Directors are under a Legal Obligation to maintain these Registers.
This is a very onerous obligation on company directors and the secretary which can result in significant fines and even jail sentences. Historically, Company Directors and Secretaries ignored these obligations but since the establishment of the Office of the Director of Corporate Enforcement no director or secretary can afford to ignore these responsibilities.
Maintaining the Statutory Registers requires specialist training. Morgan McManus Solicitors offer a full company Statutory Registers maintenance service using the latest computer software.
Alteration Of Memorandum Of Association
Companies often need to alter their Memorandum and Articles of Association. For instance, lenders to a company often insist that there are clear powers for borrowing and also clear powers to allow the Company to carry out the objective or purpose for which the money is being borrowed. For example, a company running a Builders Providers might want to go into the house construction business. In that situation the Company would need to change its Memorandum to allow for this new business activity. If a bank is lending money for this new enterprise then it will almost certainly insist on it.
Morgan McManus Solicitors can prepare the amended Memorandum of Association, various Minutes, Resolutions and Companies Office Forms to make the required changes.
Allotment Of Shares (Cash/Non-Cash)
A company may wish to increase its issued share capital, if for example the Company is admitting a new shareholder or if existing shareholders are contributing fresh capital to the company in exchange for new shares. Morgan McManus Solicitors can prepare the Directors Minutes, the Share Certificates, forms for submission to the Revenue Commissioners and Companies Registration Office and the updating of the Statutory Registers in order to implement the new allotment.
Where the company is issuing the shares for a non-cash consideration, e.g. a Bonus Issue, Morgan McManus Solicitors can prepare all necessary documentation and liaise with the Revenue Commissioners for the purpose of assessing Companies Capital Duty, if any.
Change Of Company Name
Companies may wish to change their name for a variety of reasons, for example a change in the principle activities of the company, prior to the company going into liquidation or for marketing reasons.
Morgan McManus Solicitors can advise on the availability of a proposed company name. Once the name has been checked we can then prepare the various Minutes, Resolutions, and Companies Office Forms for signature by the Officers and Shareholders of the company.
Registration Of Business Names
Where a sole trader, partnership, company, or foreign company trades in the Republic of Ireland under a name different from their own or registered name they are obliged to register that trading name within 30 days with the Registrar of Business Names. Failure to do can result in a fine. Morgan McManus will attend to this registration for you.
Transfer Of Shares In A Private Company
Unfortunately the procedure for transferring shares is not as straight-forward as one might think. It involves a lot more than simply signing a Stock Transfer Form. The following are examples of issues that may be overlooked:
- the Company’s Memorandum & Articles must be checked to see if there are any restrictions on the transfer of shares,
- Stock Transfer Form must be prepared and stamped in the Revenue Commissioners,
- the Directors must “resolve” that the transfer be registered,
- entries must be made by the Company Secretary in the Company’s Register of Transfers and Register of Members,
- finally the old share Certificate must be cancelled and a new Share Certificate is then issued.
Failure to follow any of these steps will undermine the validity of the transfer.
Morgan McManus will ensure that everything is done correctly.
Appointment / Removal Of Directors / Secretary
Morgan McManus Solicitors will again prepare the various Minutes, Resolutions and Companies Office Forms to make these changes. We are also in a position to make these changes electronically over the internet.
Removal And Restoration To The Companies Office Register
Morgan McManus Solicitors will attend to Voluntary Strike Off applications on behalf of clients. If required, we will arrange:
a) the filing of all outstanding Annual Returns and relevant fees received;
b) a letter of consent from the Revenue Commissioners and
c) the necessary newspaper advertisements for such an application
In the event that your Company is struck off for failure to file Annual Returns then Morgan McManus Solicitors will arrange the restoration of a company to the Register. This will be done in the prescribed Companies Office manner where the application is made within 12 Months from the date of strike off. Where the Company is struck off for more than 12 months then we will attend to the High Court Application required to reinstate the Company.
Registered Office Service
For an annual fee, the offices of Morgan McManus Solicitors can be used as the registered office of a Company. This means that all companies registration office notices would be sent to this office and indeed any other official documents. This would ensure that all important notices and letters delivered to the registered office address will not go unchecked or overlooked.
Company Law Drafting Service
We will draft every manner of shareholder’s and directors resolution’s and other Company Law documents that are required in the course of the life of a company. It is important to understand that many tax planning strategies involve the use of Companies. It is very easy to infringe Company Law requirements and if that happens then the entire tax planning strategy will fail. You should always consult an expert and Morgan McManus are happy to offer this service.
There are severe restrictions under Company Law on Directors taking loans from their Companies. These restrictions can even affect very small loans. If a Director takes an unauthorised loan, then the Company Auditor is obliged to report him/her to the Director of Corporate Enforcement. Your Auditor has no choice in the matter despite that fact that it will mean that the Company will be investigated and that the Directors may end up getting fined or jailed. You should always consult your Legal Advisor before you take a Directors Loan. Morgan McManus Solicitors offer advice in this area.
Companies Purchasing Their Own Shares
Circumstances can arise where a Company needs to purchase its own shares e.g. to buy out a disgruntled shareholder. There are very complicated Company Law restrictions on a Company’s ability to purchase its own shares. A special “whitewash” procedure must be implemented in order to legalise a Company purchasing its own shares. At Morgan McManus Solicitors we will attend to this for you.
For further information on any of the above please do not hesitate to contact our office to make an appointment with one of our Solicitors.