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An overview by Aidan Redmond Barrister-at-Law.
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:
| (i) |
Power to invest company money; |
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| (ii) |
The power to receive money on deposit, to lend money and
to guarantee the performance of contracts; |
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| (iii) |
To draw, make, accept, endorse, discount and issue promissory
notes, bills of exchange and other negotiable or transferable
instruments; |
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| (iv) |
To pay for property and renumerate persons by cash or otherwise;
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| (v) |
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; |
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| (vi) |
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:-
| (1) |
The Memorandum of Association. |
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| (2) |
A statutory declaration by a Solicitor
seeking registration of the company, or a director or company
secretary named in the Articles of Association of compliance
with the relevant companies legislation re registration. This
is a standard form known as Form A2 and is to be found in
a schedule to the Companies (Forms) Order, 1987 (Statutory
Instrument 147 of 1987). |
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| (3) |
The third document which must accompany
the registration is again a standard form document and is
known as Form A1 and is to be found in a schedule to the Companies
(Forms) Order, 1987 (S.I. 147 of 1987). |
This is effectively a statement which will contain
the following information:-
| (i) |
The name of the company; |
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| (ii) |
Its registered address; |
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| (iii) |
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; |
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| (iv) |
Each and all of the directors must be listed and the following
information must be given in relation thereto: |
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| (a) |
the names, |
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| (b) |
the addresses, |
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| (c) |
the occupations, |
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| (d) |
the nationality if not Irish, |
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| (e) |
the particulars of other directorships held in companies
registered in the Republic of Ireland, |
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| (f) |
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:
| (1) |
A Certificate of Incorporation |
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| (2) |
A Memorandum of Association |
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| (3) |
The Articles of Association |
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| (4) |
The registered address of the new company |
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.
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