Company & Commercial

An overview by Aidan Redmond Barrister-at-Law.

• Introduction
• Formation
• Memorandum of Association
• The Article of Association
• Powers & Duties of Company Directors
• Liability of Directors under The Competition Act 1991 - 1996

In Ireland the majority of companies are either private limited companies (usually identified by the word "Limited" or the abbreviated "Ltd"), and public limited companies (usually identified by the abbreviation "Plc").

Private limited companies are the most common form of corporate personality in this jurisdiction. Inter alia, the basic features are -

1. The number of members (founding shareholders) must not exceed 50;
2. The public may not buy shares in or hold debentures of the company, and
3. The private company must have at least two members.

FORMATION

To form a company under the Companies Acts, 1963 - 1990, certain documents must be prepared which will form the constitution of the company.

1. THE MEMORANDUM OF ASSOCIATION

This must contain -

(a) The name of the company.

In relation to choosing the name of the company a number of matters must be considered:

It should be noted that pursuant to Section 21 of the Companies Act, 1963, no company may be registered by a name which the relevant Minister of State regards as undesirable.

The name of the proposed company must in addition be different to names already on the Register.

The words "bank" or "insurance" must only be used where there is an appropriate licence or exemption.

In addition, pursuant to the registration of Business Names Act, 1963, a company may trade under a name other than its registered name. This trade name should be registered in the Register of Business Names.

(b) The Memorandum must also include a declaration as to liability,

e.g. "The liability of the members is limited".

(c) Perhaps the most important aspect of the Memorandum is what is generally referred to as the Objects Clause.

This clause will generally define the purpose for which the company was formed and what it shall in fact do in the way of its business. This statement will effectively determine what shall be the powers of the company because the objects stated will confer on the company all the necessary and incidental powers for carrying out those objects.

The objects clause also has a negative effect in that it will limit and restrict the powers of the company from doing things not authorised by the objects clause. Normally the objects clause will include, for instance a clause authorising the company to carry on a particular business which it is proposed to carry on and also to carry on various other businesses which it may probably or possibly desire to carry on.

For instance, if a company were formed with the intention of dealing in property, part of the objects clause might read as follows:

"to purchase, take on lease or in exchange, hire or otherwise acquire any real and personal property and any rights or privileges which the company may think necessary or convenient for the purpose of its business".

It is normal for the objects clause in addition to include a power generally to acquire property and rights which the company may think necessary or convenient.

It is normal in addition to include a clause empowering a company to acquire any other business similar to its own. Other normal clauses included in the objects clause would be:

1. Power to invest company money;
2. The power to receive money on deposit, to lend money and to guarantee the performance of contracts;
3. To draw, make, accept, endorse, discount and issue promissory notes, bills of exchange and other negotiable or transferable instruments;
4. To pay for property and renumerate persons by cash or otherwise;
5. To sell and dispose of property, assets or undertakings of the company for any consideration including shares, debentures or securities of any other company having objects altogether or in part similar to those of the existing company;
6. Power to act as or employ agents.

(This should not be taken in any way as exhausive of the possible objects/powers available to the company)

N.B. It should always be remembered that the objects clause may be altered by a special resolution of the company, i.e. 75% or more of the shareholders in a general meeting. It should be noted that such a special resolution must be registered with the Registrar of Companies within 36 days of being passed.

(d) A Capital Clause:

This will state the nominal capital of the company, i.e. the value in money of the shares which the company is authorised to issue and the number of shares into which it is divided together with the amount of each share, for example: "The nominal share capital of the company is £100,000 (one hundred thousand pounds) divided into 100,000 shares of £1 (one pound) each"

(e) The Association Clause

The founding members declare that they wish to be formed into a company and agree to take shares. The names and addresses of the founding members are listed in one column and a corresponding column will list the number of shares they each hold.

2. THE ARTICLES OF ASSOCIATION

These are the rules for the internal management of the company. There are standard form articles in Table A of the Companies Act, 1963 as amended and these can be used and altered as the need arises.

Incorporation requires an application to:

THE REGISTRAR OF COMPANIES
LOWER CASTLE YARD
DUBLIN CASTLE
DUBLIN 2
REPUBLIC OF IRELAND

Such an application requires the following documentation:-

This is effectively a statement which will contain the following information:-

1. The name of the company;
2. Its registered address;
3. The particulars in relation to the company secretary,
   i.e. (a) his name, (b) his adress, and (c) his consent to act as company secretary;
4. Each and all of the directors must be listed and the following information must be given in relation thereto:
   1. the names,
   2. the addresses,
   3. the occupations,
   4. the nationality if not Irish,
   5. the particulars of other directorships held in companies registered in the Republic of Ireland,
   6. a consent signed by each of the directors to act as directors.

This document must be signed by the founding members.

On registration the company must publish in Iris Oifigiuil the following information required by Statutory Instrument 163 of 1973, which was brought in for the purposes of compliance with Article 4 of the European Communities (Companies) Regulations, 1973. The information that is basically required is notice of delivery of:

Notification must also be given to the Registrar.

The purpose for such notification is that it will then entitle the company to rely on the relevant documentation in relation to its dealings with third parties.