The Companies Act 2014, Company Directors Watch Out !

The Companies Act 2014, Company Directors Watch Out !

Company Directors not compliant with their new duties and obligations under the new Companies Act 2014  better watch out for the new “Penalty Points” regime being introduced here in 2015.

It’s Section 850 of the Companies Act 2014 and it’s brand-new and may prove to be a very potent weapon in the arsenal of the Director of Corporate Enforcement when the new Companies Act 2014 is commenced into law here.

These new provisions will effectively allow the ODCE to issue “penalty points” to a company directors who have allowed their companies be struck off the register for nonfiling of the statutory annual returns with the companies registration office. Whilst not officially call a penalty points notice the ODCE will send a 21 day letter to directors of a typical dissolved unliquidated company that has been involuntarily struck off the register by the CRO and affording the director an opportunity of accepting a disqualification and or restriction undertaking, in order to avoid a court appearance where that person concerned agrees to sign an undertaking not to act in any way as a manager or director of the company as if they were subject to a disqualification or restriction order being given by a court.

This is a brand-new process introduced in accordance with the recommendation of the Company Law Review Group in its 2007 report following consideration of similar UK law provisions for company directors.

The ODCE will have locus standi to issue these disqualification or restriction undertaking letters where they have reasonable grounds for believing, for instance, that a company director may be guilty of an offence pursuant to section 160 of the Companies Act 1990 and the ODCE may deliver a notice to that person of that fact and inviting them to notify the ODCE of his or her willingness to give a disqualification undertaking for the proposed period. That period in all likelihood, maybe one or two years, as otherwise, that person may be faced with a higher sanction of a five-year disqualification ban if the matter goes before the courts.

That person then has 21 days within which to accept that invitation and the ODCE must not make an application to the court and the ODCE may even extend that 21 day deadline, which in all likelihood will be required to enable a typical director take appropriate advice on the consequences of facing a disqualification or restriction order.

In the event that the company director is willing to give the disqualification undertaking, the ODCE shall, file the appropriate companies registration office form with the Registrar of Companies setting out the prescribed particulars of the disqualification undertaking and the CRO will enter those particulars on the register of disqualified persons with the registry at Parnell Square in Dublin 1. The company director who has given the disqualification undertaking must not act as a director manager or other officer or be concerned or take part in the promotion, formation or management of any company for the period of that ban.

Company directors in 2015  better watch out that they ensure they don’t fall into this category of directors who will be targeted for this sanction under the new Companies Act 2014.

THE COMPANIES ACT 2014

THE COMPANIES ACT 2014

The Companies Bill 2012 finally finally becomes an Act after it was signed into law by the President on Tuesday 23rd  December.

What happens next is a little bit of an anticlimax in that the Minister appears to have indicated that he intends to sign a commencement order for all of the provisions effective 1st June 2015.

The Companies Registration Office  will need to finalise and introduce over 159 new CRO forms and start educating over 500,000 company directors and members of the different types of companies of the forthcoming changes and exactly what everybody will have to do when the new legislation becomes effective here mid 2015.

Also, the Rules Committee of the District and High Court will need to consider the new statutory provisions which will permit new applications in the District and High Court under the new provisions of the soon-to-be Companies Act 2014.

A little bit of a disappointment for the 15,000 or so companies limited by guarantee that may wish to avail of audit exemption, they will have to wait until June 2015 to avail of the new provisions.

Also disappointed will be thousands of accountants who may have of wished to avail of the new Section 343 District Court Application to restore a lost audit exemption.

Also on hold is the new single director concept which will not become available here until  June 2015.

Unfortunately, the official title of the New Company Law, the Companies Act 2014 will probably be quite short lived in that a new Companies Amendment Act is at an advanced stage with regard to the introduction of new provisions providing for an increase in thresholds for a medium-size companies, introducing the concept of the new small company, “The Micro”, with reduced CRO filing requirements, the Companies Act 2014 will in future be referred to as the Companies Acts 2014 to 2015, and shortly thereafter as the Companies Acts 2014 to 2016 and no doubt there are other EU directives and regulations coming down the line, which will require further changes to company law, so lots of activity for the next five years…..

Examinership Lite, Finally becomes available on Monday, 14th July 2014!

Examinership Lite, Finally becomes available on Monday, 14th July 2014!

At Long Last, the Minister for Jobs, Enterprise and Innovation, Richard Bruton has now signed into law the new statutory instrument, SI No. 285 of 2014 and he has appointed Monday, 14 July 2014 as the day on which Section 2 of the Companies (Miscellaneous Provisions) Act 2013 shall come into operation.

The 2013 Act was very diligently signed into law on Christmas Eve by the President but the Minister had to hold off commencing the relevant section until new circuit court rules were introduced setting out the mechanism whereby companies can apply locally in the circuit court for examinership provided generally their turnover is below €8.8 million.

The Minister for Justice has also signed into law a new statutory instrument, SI No. 284 of 2014 which also comes into operation on 14th July 2014 and introduces a new Order 53 to the circuit court rules 2001 to 2014.

These new rules comprise some 20 pages of practice and procedure for solicitors, barristers and judges as to how this new application will be treated in the local circuit court, what court documents are required and the new rules also set out helpful precedents documents that comply with the new rules.

 

Interesting to see who will be first?

New Company Law coming here sooner than expected!

New Company Law coming here sooner than expected!

The Work, Role, Duties and Responsibilities of the Company Secretary is about to dramatically increase here in the Republic of Ireland!. The Companies Bill 2012 completed Report and Final  Stage in absolute record time on Wednesday 2nd April and an October 2014 enactment date is now very likely!

This is the largest Bill in the history of the State and will extend to over 1432 sections of new law that will be very relevant to 500,000 company directors.

The New Companies Act 2014, assuming it is enacted into legislation by Octobr 2014 will effectively abolish the memorandum and articles of association for all private companies and introduce the new concept of the constitution for such companies. This will be a challenging time for company secretaries briefing their boards on the transitional arrangements and to set out clearly exactly what is required going forward for the model private company.

But yet another new Companies Bill 2013 was also enacted on 24th December 2013 which will facilitate a more efficient electronic filing of accounts with the companies registration office and simplify the e-filing process of the statutory annual return, this will be Companies Act No. 17 before the big Consolidation Act.

However, the companies registration office will cease to issue PINs and IDs for those companies already electronically filing their statutory returns and accounts with the companies registration office and will phase out the PINs and IDs system by July 2014. Company secretaries need to watch this space and plan ahead as to how they will deal with the effective filing of statutory documentation with the Irish CRO in the future.

It will also introduce Examinership Lite in the Circuit Court probably with effect from 14th July 2014.

Who ever said Company Law is boring!

Brian Walker BL is a practising barrister in the Law Library in Dublin and a Company Secretary, having previously worked in the company secretarial department of PricewaterhouseCoopers and KPMG.

 

New CRO Electronic Filing Coming Soon!

New CRO Electronic Filing Coming Soon!

As a young trainee company secretary working with PricewaterhouseCoopers in the late 1970s I have vivid memories of converting over our old manual share registers on to the mainframe computers in the then high-tech air conditioned room in the offices of the cigarette manufacturers, PJ Carroll and Company who were one of the first companies in Dublin at that time using computers to handle their accounts administration and they allowed various firms an allocation of time on their computers to run share reports and dividend calculations as opposed to doing all this by hand.

Around this time, the first amendment to the 1963 Principal Companies Act was made in the form of the Companies Amendment Act 1977 and in particular Section 4 which facilitated forward thinking companies who wished to convert their share registers on to a computer based system using specialised software. This was all cutting edge stuff and we all assumed that the paper would be relegated to the dustbin within or five years.

Not so, and whilst the numbers using electronic filing to facilitate the swift submission of the statutory annual return and accounts to the companies registration office, many company secretaries are still addicted to paper and have still not changed over.

The recently published, Companies (Miscellaneous Provisions) Bill 2013 and in particular Section 3 will facilitate the electronic filing of the accompanying accounts to the statutory annual return without the need for original signatures. This facility is currently available if you use the CRO CORE system but in 2014 this will be possible using company secretarial software like Blueprint to upload the accounts for submission to the companies registration office.

In order to encourage as many practitioners as possible to e-file their accounts they will most likely reduce the 28 day filing window to just 14 days for those who manually submit a set of accounts to the CRO.

However, practitioners need to review this area in detail as the companies registration office are poised to cease issuing PIN’ and ID numbers for electronic filing from December of this year and it is expected that they will cease accepting pins and IDs from in or around June 2014.

The alternative will require company secretaries to be au fait with the new filing arrangements being proposed by the companies registration office utilising the ROS certificate

The way things are going today it won’t be long before its June 2014!

 

Brian Walker, Barrister and Company Secretary

The 10 New Court Applications for Insolvent Clients,What Happens when Things Go Wrong?

The new Applications under the Personal Insolvency Law

 

1. Presenting a Bankruptcy Petition before the High Court.

Many insolvent debtors will not get past the first assessment when they meet their new personal insolvency practitioner as they quite simply will not have ticked all the boxes and it’s the job of the PIP to advise them that they are not eligible to qualify for any of the debt relief schemes and may well be at a vulnerable stage that a concerned creditor is just about to present a petition in the High Court to have them declared bankrupt.

The Office of the Official Assignee in Bankruptcy is in the process of being integrated with the new Insolvency Service of Ireland and they are gearing up for record numbers of applications over the next 12 months and have recently gone to tender on a new case management system to beef up their IT infrastructure to handle the increased caseload.

 

2 Objecting to a DRN in the Circuit Court.

Its inevitable that creditors will be most unhappy that they have received a Debt Relief Notice in the post from the Insolvency Service of Ireland on behalf of  a specified debt from a debtor who has just succeeded in writing off €20,000 of debt.

Most of the applications objecting to the various reliefs under the provisions of the Personal Insolvency Act 2012 allow a limited period of just 14 days to make an application to object but this application can be made during the supervision period of up to 3 years.

A lot can happen in a three-year period that might give creditors grounds of objection and these applications might be frequent!

 

3 Filing objection to a protective certificate for a DSA or PIA

Section 63 provides that were a creditor is aggrieved by the issue of a protective certificate that the creditor may within 14 days of the giving of notice of the issue of the protective certificate to the creditor to apply to the appropriate court, the Circuit or High Court for an order directing that the protective certificate shall not apply to that creditor.

 

4 Objecting to a DSA or PIA, the “unfair prejudice test”

New rules of the Circuit and High Court have just been introduced setting out the precedent notice of objection that is required pursuant to Section 75 and Section 112 of the Personal Insolvency Act 2012 concerning a proposed debt settlement arrangement or personal insolvency arrangement. The application can be made in either the Circuit or the High Court depending on the value of the liabilities.

The relevant statutory instrument is SI number 317 of 2003, Circuit Court Rules Personal Insolvency 2013 which inserts immediately following order 72B, the new order 73 followed by forms 51B

 

5. Objecting to a variation of a DSA or PIA

The practice and procedure is almost identical to that as set out above objecting to a DSA or PIA.

 

6. Bringing proceedings against a debtor for selling property at an undervalue

Certain debtors will have planned their applications for debt relief under the Personal Insolvency Act and will have offloaded various properties before making contact with the new personal insolvency practitioner. The Personal Insolvency Act 2012 now makes provision for a look back of up to 3 years.

 

7. Bringing proceedings against a debtor for giving fraudulent preference.

Personal insolvency practitioners will require independent legal advice when they might discover that a client debtor has transferred relevant properties to connected persons and is concerned that it might be fraudulent preference under the new personal insolvency laws. This provision has also been extended to provide for a three-year look back.

 

8. Self adjudication of bankruptcy.

Thousands of insolvent debtors are awaiting the full commencement into law and operation of the provisions of the Personal Insolvency Act 2012 but many will not qualify and will be rejected by PIPs as they will not qualify under the new legislation.

Many debtors will be left with the choice of seeking self adjudication in bankruptcy, it’s a tricky enough process and really requires a legal practitioner to guide them through the regulations and the aftermath and in particular preparation for a meeting the Bankruptcy Inspector.

 

9. Application to appoint a bankruptcy trustee

It’s provided for under the Bankruptcy Act 1988 and the rules of the superior courts. The court appoints the debtor’s nominee as a bankruptcy trustee subject to the consent of the creditors and the bankruptcy trustee steps into the shoes of the Official Assignee in Bankruptcy.

 

10. Application for a bankruptcy payment order

The Personal Insolvency Act 2012 amends many provisions of the Bankruptcy Act 1988 to 2012 and when fully commenced into law in or around October 2013 it will provide for an application to be made for a Bankruptcy Payment Order against the Debtor for up to 5 years.