Setting up business to be made easier and cheaper
Wide-ranging reforms to simplify procedures and reduce costs for small enterprises
SETTING up a business is to become cheaper and easier after the Government published proposals to overhaul the law in what was described as "the most significant reform in Irish company law since 1963".
A host of measures aimed at simplifying the law for private companies has been introduced by the Department of Enterprise as part of Pillar A of the new Companies Bill.
The 1,406-page legislation consolidates the 15 existing Company Acts as well as a "significant" number of statutory instruments and judgments.
Pillar A is focused on private companies limited by shares (CLS) which make up nine out of 10 businesses here.
The changes proposed in the bill include:
- The minimum number of directors for a CLS will be reduced from two to one.
- The memorandum and articles of association will be replaced by a one-document "constitution".
- A CLS will have the same legal capacity as a "natural person", thus removing the need for a long company constitution and reducing legal disputes.
- Companies will be allowed to have their AGM by correspondence rather than having to meet in person. Directors' duties, which were previously only listed in case law, have been included as have all criminal offences under company law.
Legal experts welcomed the bill, but emphasised it did not deal with the conduct of company directors.
"The aim of the bill is not to make directors better people but to simplify the process. The conduct of people or companies was not on the agenda here," said one.
Enterprise Minister Richard Bruton said the bill was aimed at cutting costs for small and medium enterprises.
"This reform will have a significant impact on reducing business costs," he said.
"Small businesses will no longer have to go to the expense of holding a physical AGM while the burden of company legal documentation will be greatly reduced.
"Crucially, it will be easier for business owners to find out the nature of their legal rights and duties and will reduce the need consult with lawyers."
Mr Bruton added that he decided to publish Pillar A before the entire bill had been drafted in order to allow people and businesses who would be affected to prepare for the changes made by the legislation. The remainder of the bill is scheduled to be published next year.
Dr Tom Courtney chairs the Company Law Review Group, which helped draft the legislation. He described publication of Pillar A as a "landmark" in Irish company law.
"This is the product of years of very careful and painstaking work in remodelling Irish company legislation around the entity which uses it most -- the private company limited by shares -- and in making that legislation more accessible to those who need to be familiar with its provisions."
The bill was welcomed by ISME, who said it would allow businessmen to focus more on running their company and mean less time on compliance and administration.
"For too long the area of company law has been confusing, cumbersome and expensive for small business owners. Today's announcement should go some way to addressing these anomalies and, hopefully, will reduce the costs and burdens associated with running or setting up a company in these difficult times," said chief executive Mark Fielding.