Farm Ireland

Friday 23 February 2018

Company secretary carries a heavy load

Every company is required by law to have a company secretary who is responsible, together with the directors, for ensuring that the company's obligations under company law are met.

A farming company is generally set up in such a way that the husband and wife are appointed as directors and either of them is also appointed company secretary. By agreeing to act as a company secretary, there are a number of administrative duties to be attended to after the company has been formed.

Farmers often do not like other people knowing that they are farming through a company. Especially when one considers that the Department of Agriculture is obliged to publish details of a company's single farm payment (SFP) on the Department website, whereas it is not allowed to publish individual farmer's single farm payment details.

To distance themselves from the company, a farmer will often trade through a business name.

For example, a farmer Joe Bloggs forms a company called Agriculture Limited, but he may choose to trade as Joe Bloggs. In that way, business can be transacted in the name of Joe Bloggs rather than Agriculture Limited.

The company will be required to register the business name Joe Bloggs because the company is using a business name that differs from its full corporate name.

To register a business name, the company is required to submit a Form RBN1B, along with the registration fee (€40 for paper filing or €20 for electronic filing), to the Companies Registration Office (CRO) within one month of adopting the business name.

Company law requires that a nameplate must be affixed outside every office or place in which the company carries on business. The plates must be affixed in a conspicuous position and the company name must be shown in letters that are easily legible.

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The secretary should also order notepaper as soon as possible so as to ensure that the company complies with company law as regards letterheads. Every company is required to have the following particulars on its letters and order forms:

• The place of and number of registration of the company;

• The address of its registered office;

• The full name of the company;

• The names and any former names of the directors and nationality, if not Irish.

These particulars must also be disclosed on company websites and emails in the name of the company.

The day-to-day business of a company is conducted by the directors of that company. In larger companies, it is occasionally necessary for the shareholders to be consulted by the directors regarding the business of the company.

However, in farming companies in Ireland more often than not, the people who own the company, the shareholders, are also the persons acting as directors and secretary -- for example, husband and wife, or parent and child.

Decisions in relation to the company are generally taken in the form of resolutions. There are two types of resolution that may be passed at meetings.

An ordinary resolution is the most common method by which a company conducts its business and is passed by the shareholders of a company by a simple or bare majority (for example, more than 50pc of the vote) either at a convened meeting of the shareholders or by circulating a resolution for signature.

A special resolution by comparison requires a greater vote threshold, generally at least a three-quarters majority. A special resolution is necessary in any case where company legislation or the articles of association so specify, such as to change the name of the company or to alter the memorandum or articles of association.

After the meeting, printed copies of special and certain ordinary resolutions passed at a meeting or written resolutions that have effect as special or ordinary resolutions must be sent within 15 days for filing to the Registrar of Companies. Minutes of the proceedings of general meetings and meetings of directors must be entered into books kept for that purpose.

A single member private limited company, such as a farmer who holds all the shares in the company is different. His or her decision, once put in writing and notified to the company, is all that is required for any resolution or decision in a general meeting.

In every other case, companies are required to hold an AGM of their shareholders at least once a year, apart from the company's first year of existence. Twenty-one days notice of the AGM must be given unless all entitled to attend vote agree to accept shorter notice.

The only business that must be dealt with at the AGM is the presentation of the balance sheet, profit and loss account, auditors' report and directors' report on the state of the company's affairs for consideration by the shareholders.

Any meeting of the shareholders other than an AGM is an Extraordinary General Meeting (EGM).

Every company is also obliged to maintain certain registers. These include a register of members, directors and secretaries and debenture holders.

However, that is not where the documentation required by law ends. Minute books, director's service contracts, and instruments creating charges over the company's property under the Companies Acts.

It is clear from all of the above that onerous obligations exist in respect of company compliance.

For this reason, company secretaries should keep themselves informed of their duties and obligations under the law or appoint a professional such as an accountant or solicitor who will take responsibility for this area.

It is worth mentioning that company law in Ireland is in the process of being updated with the consolidation of the Companies Acts 1963-2009 into a single act, the overall drafting of which is expected to be completed later this year.

Aisling Meehan is a solicitor and tax consultant and Nuffield Scholar. The author does not accept responsibility for errors or omissions.

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