Irish Company Formation Glossary
The Companies Act 2014 require directors of all companies to present the accounts at the Annual General Meeting (AGM). The degree of information given in the accounts varies with the size of the company.
Allotted Share Capital
Allotted share capital is the total value of the shares that the board of directors has issued over and above those initially issued by the company registration agent. They are referred to as allotted because they are being issued for the first time and therefore are not being transferred from one party to another.
Annual General Meetings
These are compulsory meetings with the main purpose of presenting the accounts to the shareholders, and to evaluate the performance of the board of directors. An Annual General Meeting must be held within eighteen months of incorporation, and every year thereafter provided that fifteen calendar months does not elapse between them.
An annual return is a document which gives details of authorised and issued share capital, members, directors, secretaries and principal addresses such as the registered office etc. (see note 5 on form B1.) It is required to be delivered by a company, whether trading or not, to the Companies Registration Office once at least in every calendar year.
Articles of Association / Constitution
The articles of association or the constitution literally lay down how a company is to be governed normally by choosing a standard set of articles provided within the Companies Act 2014 with appropriate amendments/alterations. These govern the internal management of a company and covers items such as the majority need to pass a special resolution and amount of notice required for meetings.
The constitution (commonly referred to as the memo & arts) although separate documents they are generally joined together for convenience.
The company that you wish to incorporate must have a name. This name has to be unique, and not too similar to any other companies registered in Ireland.
Irish companies require an individual (although corporate secretaries are allowed) over the age of 18 to act in the capacity of the company secretary.
A company secretary occupies a pivotal position in an Irish company and has direct legal responsibility to maintain company records, file annual returns and/or carry out any other functions that may be elucidated within the constitution.
Irish companies require at least one individual (corporate directors are not allowed) over the age of 18 to act in the capacity of director with at least one being a permanent resident of the EU.
The Companies Amendment Bill 2009 has been passed through all stages of the Oireachtas and took on 15th July 2009 when it was signed by the President.
Section 10 of the Act changes the requirement that at least one director be resident in the EU.
That means that a company all of whose directors are resident in, say, the France or Germany, will not require a bond or certificate of a real and continuous link with one or more activities in the State. Where there is no director of the company whom will be resident in the EU the alternative of a Non Resident Director Bond can be put in place.
The directors constitute the decision making body of a company commonly known as the board of directors and are liable at law for a company’s actions.
Extraordinary General Meetings
Extraordinary general meetings as the name suggests, can be called at any time of the year when there is a matter of sufficient gravity. It should be remembered that at all times the ultimate control will vest in the shareholders but unless they/it is/are the same as the directors day to day executive decisions remain the domain of the board of directors.
Private Limited Company
A limited company is a legal form of business organisation. A company is its own legal entity, separate and distinct from the people who run it. Should the company fail the company is limited to the amount of issued shares.
The constitution of a company states the name of a company and aims to set out the main and subsidiary objectives of the company (with a corresponding NACE Code). It also establishes the share structure of the company.
Nominal/Authorised Share Capital
The nominal/authorised share capital of a company is the potential amount of shares that a company has available for future distribution. In order to avoid having to increase the nominal/authorised share capital at a later stage it is usually set at a high figure such as €100,000.
Ordinary and Preference shares
In general there are two types of shares ‘ordinary’ and ‘preference’. Preference shares as the name suggests provide a benefit over and above those available to those holding ordinary shares. In most cases, the preference will relate to either voting rights and/or payment of company dividends depending on the provisions of the articles of association.
Registered Office Address
This is the address where a company is officially located in Ireland and where all process/official documents are served. It does not have to be the address where the business is actually carried out. Residential addresses are permitted. A copy of a company’s official books must always be kept at the registered address for the benefit of both shareholders and other interested parties.
The shareholders are the people (or other companies) which invest their money in a company in return for shares. These shares give the holders various rights, such as the right to vote at general meetings, the right to receive a dividend when the company makes a profit and the right to receive their money back, if funds are available, when the company is finally liquidated.
Corporate shareholders are allowed and shares may be held jointly by two or more people.
Special and Ordinary Resolutions
All companies are bound by their constitution. However, where it is deemed desirable changes can be made. Meetings called by the shareholder(s) provided the applicable majority exists. In the case, of ‘ordinary’ resolutions, which generally deal with day to day and/or matters of lesser importance, a simple majority is all that is normally required.
In the case of ‘special’ resolutions, which tend to deal with structural and matters of greater importance, majorities of either two thirds or three quarters are the norm depending on the particular constitution used.