COMPANIES BILL 2012: FOCUS ON THE MAIN NEW PROVISIONS CONTAINED IN PARTS 1-16 OF THE BILL

1. COMPANIES BILL 2012: FOCUS ON THE MAIN NEW PROVISIONS CONTAINED IN PARTS 1-16 OF THE BILL Colm Kearney Solicitor

2. INTRODUCTION • Most Significant Overhaul of Company Law in History of State • Consolidation of most Statutory Reforms since 1963 Act • Vision and Work – Dr. Thomas Courtney and CLRG • Current State of Companies Acts is Cumbersome • New Companies Bill – Simplify Legislation and Easy to Navigate • Enhance Competitiveness for Ireland on International Stage • Substantiating Ireland’s Position as Hub for Large Indigenous and Foreign Corporates with More Transparent and Understandable Company Law Structure • Largest Piece of Legislation to Come Before Houses of Oireachtas – Over 1100 Pages • Bill Passed by the Dail– Currently with Seanad • Primary Focus – Private Companies Limited by Share Capital – Approximately 85% of all Companies Registered in Ireland • Autumn 2014 – start of 2015 with a commencement order issuing somewhere between 3-6 months after enactment

3. STRUCTURE – Focus: Parts 1-16 Parts 1 – 25 of the Bill are laid out as follows:- Part 1 Preliminary and General Part 2 Incorporation and Registration Part 3 Share Capital, Shares and Certain Other Instruments Part 4 Corporate Governance Part 5 Duties of Directors and Other Officers Part 6 Financial Statements, Annual Return and Audit Part 7 Charges and Debentures Part 8 Receivers Part 9 Reorganisations, Acquisitions, Mergers and Divisions Part 10 Examinerships Part 11 Winding Up Part 12 Strike Off and Restoration Part 13 Investigations

4. STRUCTURE • Part 14 Compliance and Enforcement • Part 15 Functions of Registrar and of Regulatory and Advisory Bodies • Part 16 Designated Activity Companies (“DAC”) • Part 17 Public Limited Companies • Part 18 Guarantee Companies • Part 19 Unlimited Companies • Part 20 Re-registration • Part 21 External Companies • Part 22 Unregistered Companies and Joint Stock Companies • Part 23 Public Offers of Securities, Financial Reporting by Traded Companies, Prevention of Market Abuse, etc. • Part 24 Investment Companies • Part 25 Miscellaneous

5. PART 1 PRELIMINARY AND GENERAL Interpretation and Defined Terms Generally PART 2 - INCORPORATION AND REGISTRATION Transition Period: Allows for a Company to Achieve the Necessary Status of the Revised Format of Registration under the Bill Length of Transition Period: 18 Months from the Commencement of the Act (Minister Option to Extend to 30 Months) During Transition Period Only: Every Existing Private Company Limited by Shares assumes the status of a DAC until/if it opts to convert to a New CLS/LTD Three Options for Private Companies Limited by Shares Option 1 - Conversion to New Company Limited by Shares (New CLS/LTD) Option 2 - Conversion to Designated Activity Company (DAC) Option 3 – Take no Action

6. PART 2 - INCORPORATION AND REGISTRATION

7. PART 2 - INCORPORATION AND REGISTRATION • Option 1: Conversion to New CLS/LTD • New Constitution – Schedule 1 of the Bill – One Page Document • Details contained in New Constitution: • Company’s Name • Limited by Shares • Supplemental Regulations • (advice on what supplementary regulations to include with the re-registration insofar as they mimic the existing memorandum and articles of association but do not fall foul of the compulsory provisions in the Bill - left blank, a company’s internal regulations will default to the voluntary and compulsory provisions in the Bill (Table A Type Scenario ie Transfer of Shares) • Share Capital • Subscriber(s) Details and No. of Shares Subscribed For • Executed and Witnessed By Subscriber(s) • Statement with Constitutional Documents Detailing Directors, Secretary, Assistant Deputy Secretary, Registered Address, Trading Address • New LTD/CLS: Section 59 - 61 – During Transition Period - Members Adopt New Constitution – Special Resolution – Where Members do nothing, Directors Resolution to Convert and Deliver Constitution to Members and Documents to Registrar

8. PART 2 – INCORPORATION AND REGISTRATION • Option 2 – Conversion to DAC – Part 16 of the Bill • DAC can be Limited by Shares or Guarantee - DAC: Section 57 – During Transition Period – Ordinary Resolution to Become DAC • DAC retains it’s Objects Clause and is Formed for a Specific Object ie a joint venture company or a trustee company, companies with charitable objects, insurance undertaking or credit institution, companies with negotiated different classes of shares (ie Tax driven companies) • Regardless of Presence of Objects Clause, Ultra Vires does not apply to DAC – Lack of Capacity cannot Negate DAC Actions • Section 976 – Potential Personal Liability for Directors of DAC where DAC acts outside Corporate Capacity • Compulsory for DAC to Re-Register before end of Transition Period • Conversion to the DAC will mean a change of name instead of such a company ending with limited the name now must end in Designated Activity Company, DAC, D.A.C.,dac, d.a.c. or the Irish equivalent • DAC – Section 986: Min. 2 Directors and AGM – Old Method – Formal Meeting - No Written Resolution Available

9. PART 2 - INCORPORATION AND REGISTRATION Option 3 – Take No Action LTD: Sections 56 and 62 – End of Transition Period – No Action Taken: No Objects Clause, Existing Memorandum and Articles Unless Provisions Specifically Repealed by the Bill Table A Not in Bill but Mostly Replicated in Bill save for Voluntary Provisions that do not Conflict with the Bill Voluntary Provisions in Bill can be Opted Out of but need to be Specifically Disapplied in Company’s Constitution or Articles Advices on Supplementary Regulations/Memorandum and Articles Should be sought Third Parties Assessing Constitution ie financial institutions and contracting parties need to be properly informed – potential to paint misleading picture Members can Apply to Court if Rights Prejudiced by Inaction of Directors (Section 212 equivalent of old Section 205 oppression on a minority) Presumption of Oppression on Members by Directors due to inaction and Directors will be obliged to rebut the presumption - Large Burden of Proof on Directors Directors need to be informed

10. PART 2 - INCORPORATION AND REGISTRATION • New: Sections 39 – 40 – Person Appointed by the Board to Bind the Company Generally and Details to be Notified to the Registrar of Companies (Such Persons have Unqualified Legal Authority ) • New: Section 17 – Increase of Number of Members from 99 to 149 • Section 33 – New - Documents to be Published in CRO Gazette are as follows: • Cert of Incorporation • Constitution • Amendment to Constitution • Change in Directors/Secretaries • Persons Authorise to Bind a Company • Annual Returns and Financial Statements • Change of Registered Office • Published within 10 Days of Document Delivery

11. PART 2 - INCORPORATION AND REGISTRATION New: Section 38 – Deletion of the Ultra Vires Doctrine Significant Change and Text of Section 38 as follows: “…notwithstanding anything contained in its Constitution a Company shall have, whether acting inside or outside of the State – a full and unlimited capacity to carry on or undertake any business or activity, do any act or enter into any transaction and (b) for the purpose of paragraph (a) full rights, powers and privileges.” Doctrine of ultra vires questioned the capacity of Companies to contract where they were acting outside of their principal objects Legislative provision finally obliterates a cumbersome common law uncertainty and allows all entities to trade with Companies without having to consider such an unfavourable outcome Companies now have Contractual Capacity of an Individual DAC will still have an Objects Clause as outlined above but cannot rely on doctrine of ultra vires

12. PART 3 – SHARE CAPITAL, SHARES AND CERTAIN OTHER INSTRUMENTS • Section 19 – New CLS/LTD not required to have an Authorised Share Capital • Section 70 – Re-enacts SS. 20-24 Companies Act, 1983 – Director Authority to Allot Shares and Pre-Emption – New: 5 Year Authorisation Renewal No Longer Applicable • Section 71 – Where Allotment of Shares is Other Than Cash – New: Copy Contract No Longer Required • New: Section 67 - a Company may allot shares in different nominal values, different currencies and/or with different amounts payable on them • New: Section 69 states that an allotment of shares by directors must be in the best interests of the Company and it’s members • New: A Company does not now have to maintain 10% of it’s issued share capital as non-redeemable

13. PART 3 – SHARE CAPITAL, SHARES AND CERTAIN OTHER INSTRUMENTS • Section 73 – New – Mergers and Group Reorganisations • Currently: Where company issues shares for cash or other consideration ie shares, the value of the consideration received over the nominal value must be accounted for in the share premium account • New: Exceptions to this rule to allow for distributions to shareholders instead of locking the funds in the share premium account: • 1) Mergers: Where Issuing Company has secured at least 90% of Equity in Another Company; • 2) Group Reconstructions: Where assets are transferred between two group companies and the consideration is the issuing of shares; • 3) Acquisition: Shares allotted by the target are acquired by the purchaser such that the target becomes a wholly owned subsidiary of the purchaser.

14. PART 3 – SHARE CAPITAL, SHARES AND CERTAIN OTHER INSTRUMENTS • Section 83 is the New “Section 60” – Financial Assistance for the Acquisition of Shares • S60.-(1) Subject to subsections (2), (12) and (13), it shall not be lawful for a company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company, or, where the company is a subsidiary company, in its holding company. • S83 “….it shall not be lawful for a company to give any financial assistance for the purpose of an acquisition made or to be made by any person of any shares in the company, or, where the company is a subsidiary company, in its holding company ….” • “acquisition” and “financial assistance” have been defined so are affectively the same meaning in the old section but the words “in connection with” have been removed • The assumption is that these words have been removed to tighten up the section so that it relates only to specific purpose of the acquisition and not any ancillary matter relating to the purpose

15. PART 3 – SHARE CAPITAL, SHARES AND CERTAIN OTHER INSTRUMENTS • Use of Summary Approval Procedure – No Major Change but formalises “Whitewash” • Special Resolution of the Members of the Company and a Declaration by the Directors • Contents of Section 83 Declaration are as follows: • the circumstances in which the transaction or arrangement is to be entered into; • the nature of the transaction or arrangement; • the person or persons to or for whom the transaction or arrangement is to be made; • the total amount of the company’s assets and liabilities as at the latest practicable date before the making of the declaration and in any event at a date not more than 3 months before the date of the making of the declaration; • the anticipated total amount of the company’s assets and liabilities immediately after the restricted activity having taken place; • that the declarants have made a full inquiry into the affairs of the company and that, having done so, they have formed the opinion that the company is able to pay its debts in full; and • that the declarants do not have actual or constructive notice that the company will incur any material, extraordinary, future liability within the period of 12 months after the date of the making of the declaration; • No Material Change from Existing Position

16. PART 3 – SHARE CAPITAL, SHARES AND CERTAIN OTHER INSTRUMENTS • New: Section 85 re-enacts Section 72 (Power of a Company to reduce it’s Share Capital) • Use of Summary Approval Procedure as alternative to Special Resolution and High Court Application Confirmation • New: Section 84 Variation of company capital • It recognizes that share capital, share premium account, capital redemption reserve fund and capital conversion reserve fund are all in similar distributable terms, of the same set, and moving amounts out of one subset into another should be treated unremarkably

17. PART 3 – SHARE CAPITAL, SHARES AND CERTAIN OTHER INSTRUMENTS • Sections 103 – 117 Acquisition of own Shares (Share Buy-Backs) • New: By cancellation pursuant to a reduction of company capital by either of the means referred to in Section 85 (as detailed above) • New: No longer a minimum 10% of issued share capital non-redeemable • New: Displaying of Share Buyback Contracts and Documents for 21 Days also Abolished – Speeds Up the Share Buyback Process

18. Section 95 – No change in the Transferring of Shares save for replicating Table A in Bill Suggestion here was to enforce registration of transfer of shares in the CRO Section 98 transmission of shares: in special circumstances (including cases of mergers) is new, empowering the minister to prescribe procedures to effect the transfer of shares: in the case of a death of the sole member of a single-member company where that member had been the only director of the company; and in other cases of difficulty. PART 3 – SHARE CAPITAL, SHARES AND CERTAIN OTHER INSTRUMENTS

19. PART 4 – CORPORATE GOVERNANCE • Significant Overhaul • New: Section 129: Minimum of One Director • Section 130: Companies must have a Secretary - In One Director Companies, Separate Secretary who may also be an Additional Director • Section 126: Directors to ensure Secretaries Suitably Qualified • Legal Commentators see Offering Secretarial Services as a Potential Revenue Source for Law Firms given Option of One Director Companies • Section 43 which states the seal must still be attested by two officers of the Company Made up of directors, secretary and authorised persons • No longer be a requirement that at least one director attests the affixing of the seal • New: Sections 159 – 166 - Internal Management Rules Notoriously in Table A (Regulation 80) Codified in Bill: • Business of the company is managed by the directors and that they have the ability to delegate to the office of Managing Director and manage the Company accordingly • Note: Sections 159-166 of the Bill are optional to the extent that the Company’s constitution/articles provides otherwise or the same are made illegal/compulsory by overriding provisions in the Bill

20. PART 4 – CORPORATE GOVERNANCE • New: Section 176 - Section 176 allows for Annual General Meetings to be Dispensed With and Matters Resolved by Written Resolution • Note: Not Applicable to all Company Types ie DAC and Criteria to be Adhered to • More practical solution for smaller Companies where the member base is small and where in such Companies, Directors and Shareholders are one and the same people • New: Section 194 – 195: Codifies the written resolution procedure and there is no stipulation that same has to be allowed for in the Company’s Articles of Association • New: The written resolution procedure is also further amended to allow for written resolutions to be passed on a majority basis as opposed to the unanimous vote ie only 50% to pass Ordinary Resolutions and only 75% to pass Special Resolutions • All Members entitled to vote must receive text of resolution and explanation of it’s effects

21. PART 4 – CORPORATE GOVERNANCE • Allows for these Resolutions to be effective 7 Days (Ordinary Resolutions) and 21 days (Special Resolutions) after the last member has signed • In it’s attempt to protect dissenting members, this part of the provision negates the potential benefit of majority written resolution voting by slowing the process down • Distinction between majority and unanimous voting by way of written resolutions is that unanimous resolutions, as before, become effective immediately • Resolutions can be signed on several different documents is codified in the Bill • Delivery of resolutions by way of fax or email is codified in the Bill • These procedures attempt take account of modern business life and the international element of Irish business

22. PART 4 – CORPORATE GOVERNANCE • New: Section 203 – Summary Approval Procedure (As outlined above) - an approval mechanism which formally validates legislatively an action otherwise considered a “Restricted Activity” • “Restricted Activity” is defined in Section 201 and includes the following: • Financial Assistance for the Acquisition of the Company’s Own Shares • Reduction in the Company’s Share Capital • Variation of Capital in a Re-Organisation • Loans to Directors and others and Intra-Group Company Loans • Mergers • Voluntary Winding up • Summary Approval Procedure allows for Companies to enter these types of transactions • Form: Approval by Shareholders’ Special Resolution, Director’s approval and Directors swear a Statutory Declaration of Solvency (Valid for 12 months before restricted activity) • Declaration at Meeting of Director’s 30 Days before Special Resolution Passed • Additional reports required of independent people in the case of certain other Restricted Activities • As before both civil and criminal sanctions where the swearing of a Declaration of Solvency was done on the basis to protect specific shareholders, creditors and/or to paint a false picture of the financial position of the Company

23. PART 5 – DUTIES OF DIRECTORS AND OTHER OFFICERS • New: Section 223 - encapsulates in legislation the concept of the “de facto director” stating that it is a person who occupies the role of director but who has not been formally appointed • A de facto director shall have the same legal obligations as a normal director • Section 226 – Directors’ Compliance Statements of Large Private Companies - €12.5M Balance Sheet or €25M Turnover – Compliance with Companies Acts, Serious Market Abuse or Prospectus Offence and Tax • Directors obliged to put in place the necessary internal systems to ensure compliance and conduct an annual review • Compliance Statement annexed to annual return with the Director’s Report and filed with the CRO • New: Codification of the Common Law Position on Directors’ Duties • Sections 228 – 229 – Directors’ Fiduciary Duties

24. PART 5 – DUTIES OF DIRECTORS AND OTHER OFFICERS • Directors’ Fiduciary Duties • Section 229 “(1) A director of a company shall— • (a) act in good faith in what the director considers to be the interests of the company; • (b) act honestly and responsibly in relation to the conduct of the affairs of the company; • (c) act in accordance with the company’s constitution and exercise his or her powers only for the purposes allowed by law; • (d) not use the company’s property, information or opportunities for his or her own or anyone else’s benefit unless – • (i) this is expressly permitted by the company’s constitution; or • (ii) the use has been approved by a resolution of the company in general meeting; • (e) not agree to restrict the director’s power to exercise an independent judgment unless • (i) this is expressly permitted by the company’s constitution; or • (ii) the case concerned falls within subsection (2); • (f) avoid any conflict between the director’s duties to the company and the director’s other (including personal) interests unless the director is released from his or her duty to the company in relation to the matter concerned by a resolution of it in general meeting;

25. PART 5 – DUTIES OF DIRECTORS AND OTHER OFFICERS • (g) exercise the care, skill and diligence which would be exercised in the same circumstances by a reasonable person having both – • (i) the knowledge and experience that may reasonably be expected of a person in the same position as the director; and (ii) the knowledge and experience which the director has; and  • (h) in addition to the general duty owed to employees under Section 225, have regard to the interests of its members; • (2) If a director of a company considers in good faith that it is in the interests of the company for a transaction or engagement to be entered into and carried into effect, a director may restrict the director’s power to exercise an independent judgment in the future by agreeing to act in a particular way to achieve this. • (3) Without prejudice to the director's duty under subsection (1)(a) to act in good faith in what the director considers to be the interests of the company, a director of a company may have regard to the interests of a particular member of the company in the following circumstances. • (4) Those circumstances are where the director has been appointed or nominated for appointment by that member, being a member who has an entitlement to so appoint or nominate under the company’s constitution or a shareholders’ agreement.”

26. PART 5 – DUTIES OF DIRECTORS AND OTHER OFFICERS • New: Section 232: Interests of the Director’s duties that might cause some form of a conflict, full disclosure of the interest of such a director are to be made to the Company and voted on in such a situation • New: Section 233: In the case of a breach of Section 229 (1) (d), using the Company’s information and property for his/her own gain without approval, a Director may be required to indemnify the Company for breach which increases the potential liability of becoming a director • New: Section 237 deals with loans by a Company to a Director. It is assumed that if such a loan has not been reflected in writing then it is repayable on demand and bears interest. The interest rate is referred to as the “appropriate rate” which is not clear • New: Section 238 is the converse position of Section 237, and states that where a director loans money to a Company and is not in writing together with ambiguity surrounding the claimed loan, such a loan bears no interest or security rights and is subordinated to all other indebtedness of the Company

27. PART 5 – DUTIES OF DIRECTORS AND OTHER OFFICERS • New Section 245: Director’s Expenses now allowed for - Directors are entitled to have funds which are provided to meet properly vouched expenditure in respect of the performance of their duties to the Company as Directors – Previously Optional Under Articles

28. PART 6 – FINANCIAL STATEMENTS, ANNUAL RETURN AND AUDIT • This section is predominately for the use of accountancy and audit practitioners • What this section serves to do is to consolidate the legislative amendments in this area

29. PART 7 – CHARGES AND DEBENTURES • New Section 409: Definition of Charge • “means a mortgage or a charge, in an agreement (written or oral), that is created over an interest in any property, assets or undertaking of the company (and …….includes a judgment mortgage) but does not include a mortgage or a charge, in an agreement (written or oral), that is created over an interest in – • (a) cash; • (b) money credited to an account of a financial institution, or any other deposits, shares, bonds or debt instruments; • (c) units in collective investment undertakings or money market instruments; or • (d) claims and rights (such as dividends or interest) in respect of anything referred to in any of the foregoing paragraphs.” • New Definition Clarifies that a charge over a bank account, cash or shares do not require registration • All Charges require registration bar these 4 exceptions

30. PART 7 – CHARGES AND DEBENTURES • New: Section 413 - Priority of Charges • Date of receipt of the particulars regarding the charge by the Registrar of Companies will determine the priority in respect of charges not the date that the charge is created which is currently the case • New Section 410 – Registration of Charges • “One-Stage Procedure” and “Two-Stage Procedure” in relation to the registration of Charges • One-Stage Procedure identical to the current mechanism in place for entering a charge whereby within 21 days of its creation • New Two-Stage Procedure - notice can be sent to the Registrar stating the Company’s intention to create a charge followed by a further notification within 21 days of the creation (even before the creation of the charge) • The ability to gain enhanced priority only apply where the creditor knows sufficient detail about the assets to be charged • The time and date of receipt by the CRO will determine priority (unless determined by some other legislative provision)

31. PART 7 – CHARGES AND DEBENTURES • The two – stage procedure will probably be used by most advisors • Stage 1 allows the advisor to notify the CRO that a charge is intended to be created on a certain date • Stage 2 is the actual filing of the prescribed form within 21 days after its creation, as per the current C1 return • Using the two stage approach, the charge takes effect in terms of priority on the date of the first preliminary filing, or where there is no preliminary filing, the date the C1 is filed • A third party interested in the charge may now deliver the charge to the CRO not just the company or its representative • Negative pledge provisions or the amount charged will no longer be included on the prescribed form • The above procedure is subject to other registries ie Property Registration Authority etc.

32. PART 8 – RECEIVERS • New: Section 438 – Powers of Receivers - Codifies in Bill the Common Law Position • Bill specifies that the Powers of a Receiver under the Bill are Subject to a Court Order or Debenture appointing a Receiver • Powers of a Receiver • “to enter into possession and take control of property of the company in accordance with the terms of the order or instrument ; • to lease, let on hire or dispose of property of the company; • to grant options over property of the company on such conditions as the receiver thinks fit; • to borrow money on the security of property of the company; • to insure property of the company; • to repair, renew or enlarge property of the company; • to convert property of the company into money; • to carry on any business of the company; • to take on lease or on hire, or to acquire, any property necessary or convenient in connection with the carrying on of a business of the company; • to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the company; • to draw, accept, make and endorse a bill of exchange or promissory note; • to use a seal of the company; • to engage or discharge employees on behalf of the company; • to appoint a solicitor, accountant or other professionally qualified person to assist the receiver; • to appoint an agent to do any business that the receiver is unable to do, or that it is unreasonable to expect the receiver to do, in person; • where a debt or liability is owed to the company, to prove the debt or liability in a bankruptcy, insolvency or winding up and, in connection therewith, to receive dividends and to assent to a proposal for a composition or a scheme of arrangement; • if the receiver was appointed under an instrument that created a charge on uncalled share capital of the company- • to make a call in the name of the company for the payment of money unpaid on the company’s shares; or • on giving a proper indemnity to a liquidator of the company, to make a call in the liquidator’s name for the payment of money unpaid on the company’s shares; • to enforce payment of any call that is due and unpaid, whether the calls were made by the receiver or otherwise; • to make or defend an application for the winding up of the company; • to refer to arbitration or mediation, any question affecting the company.”

33. PART 9 - REORGANISATION, ACQUISITIONS, MERGERS AND DIVISIONS • New: Based on the EC (Cross-Border Mergers) Regulations 2008 and allows for two Irish companies to merge so that the assets and liabilities of the Transferor can be transferred to the Transferee before the Transferor is dissolved • A merger is defined as – • a merger by acquisition; • a merger by absorption; or • a merger by formation of a new company • New Section 465: Summary Approval Procedure or where agreement cannot be reached under Summary Approval Procedure then alternatively applications to Court can be utilised • Terms of Merger and Explanatory Note Required by Directors, experts’ reports on draft terms and explanation to shareholders, merger financial statements of the merging entities (may be required), filings in the CRO, notice in the CRO Gazette, Advertisement in daily newspaper, merger documentation available for inspection for 30 days • Divisions are the converse of the merger procedure and require Court Approval, Summary Approval Procedure does not suffice

34. PART 10 - EXAMINERSHIPS • Consolidates any amendments in this area since then into this one section of the Bill • Encompasses the amendments made in the Companies (Miscellaneous Provision), Act, 2013 regarding small and medium sized enterprises applying to the Circuit Court for protection under the Examinershipprocess

35. PART 11 - WINDING UP • More Structured Layout as follows: • Chapter One – Preliminary Interpretation • Chapter Two – Winding Up by Court • Chapter Three – Members’ Voluntary Winding Up • Chapter Four – Creditors’ Voluntary Winding Up • Chapter Five – Conduct of Winding Up • Chapter Six – Realisation of Assets and Related Matters • Chapter Seven – Distribution • Chapter Eight – Liquidations • Chapter Nine – Contributories • Chapter Ten – Committees of Inspection • Chapter Eleven – Court’s Powers • Chapter Twelve – Provisions Supplemental to Conduct of Winding Up • Chapter Thirteen – General Rules as to Meetings of Members, Contributories and Creditors • Chapter Fourteen – Completion of Winding Up • Chapter Fifteen – Provisions Relating to Insolvency Regulations • Chapter Sixteen – Offences by Officers of Companies in Liquidation etc.

36. PART 11 - WINDING UP • New: Section 559(1)(g) if the Court is satisfied, on a petition by the Director of Corporate Enforcement, that it is in the public interest that the Company should be wound up, a company can be wound up • New: Section 571 - a Creditor must be indebted to the Company in excess of €10,000 for over 21 days in order for it to be considered unable to pay its debts as they fall due • New: Section 634 proposes that for the first time all Liquidators must hold a recognisedqualification • Broad categories being defined as Member of Prescribed Accountancy Body, Practicing Solicitor or a member of other supervisory body or professional body recognised by the Supervisory Authority and also another category of persons with practical experience in winding ups and knowledge of relevant law • Final category of persons must also be approved by the Supervisory Authority prior to his/her appointment • Supervisory Authority being defined as the Irish Auditing and Accounting Supervisory Authority as per Section 901 of the Bill • New: Section 614 (3) states that the duties of Provisional Liquidator in a Court Winding Up shall be provided and limited to the order appointing him or her, or any subsequent order of such Court

37. PART 12 - STRIKE OFF AND RESTORATION • New: Section 726 – 736 outline a distinction between voluntary and involuntary striking off the register of companies • Clear Now from a Search on CRO file why a company struck off

38. PART 13- INVESTIGATIONS • The area of investigations of the Company’s affairs by Court appointed inspectors is not very different under the Bill and just serves to repeat the position as outlined in the Companies Act, 1990

39. PART 14 – COMPLIANCE AND ENFORCEMENT • Chapter 1 • This deals with Compliance and protective orders • Chapter 2 • This deals with Court ordered disclosures whereby the Court has the ability to make disclosures of information to persons interested in the Company but would not necessarily be entitled to information i.e. shareholders • Chapter 3 • This deals with the area of restriction on Directors of insolvent companies • Chapter 4 • This deals with disqualification generally • Chapter 5 • This deals with the disqualifications and restrictions undertakings • Chapter 6 • This deals with enforcement in relation to disqualification and restriction • Chapter 7 • This deals with the provisions relating to offences generally under the Companies Acts • Chapter 8 • This goes through general additional offences like improper use of the word Limited, providing false information in Company returns, reports, balance sheets, destruction and falsification or mutilation of Company books to mention but a few • New: Section 820 states that the defence of acting honestly and responsibly is no longer sufficient on its own for a director not to be subject to restriction • Furthermore, Such directors must also be able to demonstrate that they complied with the liquidator and conducted themselves in a cooperative way during the winding up of the Company

40. PART 14 – COMPLAINCE AND ENFORCEMENT • New Section 872 - Compliance and enforcement has now been codified into one area which allows for the various offences referred to above to be graded in terms of seriousness • Welcome reprieve from the current position whereby the offences for various different breaches of the Companies Acts are attached to various different provisions and it is hard to keep track of how they move from one offence to the other • “(1) A person guilty of an offence under this Act that is stated to be a category 1 offence shall be liable – • (a) on summary conviction, to a class A fine or imprisonment for a term not exceeding 12 months or both; or • (b) on conviction on indictment, to a fine not exceeding €500,000 or imprisonment for a term not exceeding 10 years or both. • (2) A person guilty of an offence under this Act that is stated to be a category 2 offence shall be liable – • (a) on summary conviction, to a class A fine or imprisonment for a term not exceeding 12 months or both; or • (b) on conviction on indictment, to a fine not exceeding €50,000 or imprisonment for a term not exceeding 5 years or both. • (3) A person guilty of an offence under this Act that is stated to be a category 3 offence shall be liable, on summary conviction, to a class A fine or imprisonment for a term not exceeding 6 months or both. • (4) A person guilty of an offence under this Act that is stated to be a category 4 offence shall be liable, on summary conviction, to a class A fine.” • As you can see there is a scale from 1 to 4 depending on the seriousness of the breach and the category of breach is detailed in each part of the Bill • The categories refer to a class A fine which under the Fines Act, 2010 is defined currently as an amount not exceeding €5,000

41. PART 15 – FUNCTIONS OF REGISTRAR AND OF REGULATORY AND ADVISORY BODIES • Provisions relating to the Companies Registration Office, the Registrar, the CRO, Gazette, the Irish Auditing and Accounting Supervisory Authority, the Role of the Director of Corporate Enforcement and the role of the Company Law Review Group are all dealt with in this section • Chapter 1 – Registrar of Companies • This chapter goes through all such items as performance of the duties of the Registrar, fees to the Registrar is entitled to, that the registrar must produce an annual report, that the Registrar inspect documents produced, among others • Chapter 2 – The Irish Auditing and Supervisory Authority • This deals with the Irish Auditing and Supervisory Authority’s role in the administration and its role regarding the policing of the Companies Acts • Chapter 3 – Director of Corporate Enforcement • Chapter 4 – Company Law Review Group • This chapter deals with the Company Law Review Group and its role in relation to the Companies Acts and also its functions, duties and membership

42. CONCLUSION • As you can see from this analysis of Parts 1-16 of the Bill, this a far more easy to navigate proposed Act than its former counterparts spread over so many amendments and Acts. Commentators believe that an Act like this can only further allow for doing business in Ireland to be a more attractive proposition to foreign companies especially given its increased transparency and clarity • Inform ourselves, inform our clients, identify advisory opportunities • Questions from the Floor