Company Incorporation and Company Compliance

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Company Incorporation and Company Compliance

• Local development Companies
• BRIAN OHARE
• COMPANIES REGISTRATION OFFICE

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CRO

• Statutory body, under D/Enterprise,Trade and
  Employment
• Registration of companies and business names,
  provision of company information to public
• Central repository of public statutory
  information on Irish companies

3
Company Type

• Several types of company, each has advantages and
  disadvantages
• LDC s tend to be limited companies, limited by
  guarantee, with or without a share capital

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Preliminaries

• Company requires an acceptable name
• If name unacceptable, registrar can direct it be
  changed
• Unacceptable
• --similarity (check with CRO)
• --offensive
• --State sponsorship
• --Bank, Insurance, Society/Co-op,
  University

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Preliminaries (Name)

• Name must be displayed outside companys
  premises, and on letterheads, invoices etc.
• Limited company may dispense with Ltd orTeo
  if
• --objects include science, art, commerce,
  education, religion or charity
• --memorandum/articles of association include
  not for profit clauses

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Preliminaries (Registered Office)

• Where CRO sends letters and notices
• Must be a physical location
• Docs left /sent by post to R.O. deemed by law
  delivered, even if R.O. changed
• Vital to keep CRO informed of changes

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Preliminaries (Activity in the State)

• Company must, post-incorporation, carry on an
  activity in the State
• Activityanything a company may be lawfully
  formed to undertake including the holding,
  acquisition or disposal of property
• Statutory declaration in form A1 setting out
  details to this effect, nature of activity etc.

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Preliminaries (Officers)

• Must be a secretary and at least 2 directors, one
  of whom can be the secretary
• One director at least must be resident in the
  State, unless
• --company holds a bond as prescribed to value
  25k, a sum enabling payment of fines/penalties
  arising under Companies Acts or Taxes
  Consolidation legislation,or
• --company applies for and receives a
  certificate from registrar that it has a real and
  continuous link with one or more economic
  activities in the State

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Preliminaries(Officers)

• A person may have no more than 25 directorships
  at any one time
• Certain types of company do not count for this
  calculation e.g. PLC
• A director appointee, disqualified in another
• jurisdiction from appointment/acting as
  director, must declare same pre-incorporation in
  Ireland
• If not (form B74), s/he is deemed disqualified as
  director in Ireland under section 160(1A) of
  Companies Act 1990.

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Incorporation

• Prepare
• Memorandum of Association, setting out conditions
  under which incorporation is granted e.g. name,
  objects and powers of company
• Articles of Association, setting out rules under
  which company regulates its affairs
• Model forms of both documents in relevant table
  of first schedule to CA 1963
• Form A1, giving details of company name,
  registered office, secretary/directors and their
  consent to acting thus, subscribers and share
  details

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Incorporation Schemes

• Preliminaries completed, submit documentation to
  CRO
• Ordinaryall documentation submitted on paper and
  scrutinised in detail15 days
• Streamlined Schemes (Presenters)
• Fe Phrainn Paper-based, draft memo and arts
  submitted for approval, printed by applicant,
  standard for future applications10 days
• CRODisk
• Electronic version of Fe phrainn, no paper
  filing, queueing or cash-handling5 days

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Certificate of Incorporation

• Document which proves existence of company
• Accompanied by various informational
  documentation including
• --CRO leaflet re company secretary
• --ODCE booklet re company directors
• --CRO leaflet re new companies
• --CRO leaflet re filing requirements

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Company ComplianceFiling Obligations

• Companies must file an annual return and accounts
  once at least in every year
• Return must be completed correctly, signed and
  filed on time (within 28 days of Annual Return
  Date)
• Return shows company position to public at a
  point in time
• Return must reflect all changes notified to CRO
  in director details, R.O. details share capital
  details
• If not satisfactory, return sent back for
  amendment

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Company ComplianceEnforcement Background

• By late 1990s, enforcement of company law was
  ineffective diminution in deterrent value of
  penalties, lack of consequences for directors of
  struck-off, indebted companies
• By 1997, proportion of companies filing on time
  was 13

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Company ComplianceLegislative Reform

• From 2001, new law (Company Law Enforcement Act)
  provided for
• Steep increase in late filing fee
• Specific filing date for every company (ARD)
• Office of Director of Corporate Enforcement
  (ODCE) to prosecute a range of company offences
• ODCE empowered to seek restriction/disqualificatio
  n of directors of struck-off companies

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Company ComplianceRenewed Enforcement

• New enforcement powersand activity led to a surge
  in filings over time
• Proportion of companies filing on time developed
  as follows
• 2000 39
• 2004 71
• 2007 88

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Company ComplianceCommunication with Companies

• Before we enforce, we write to companies (and
  directors where companies are poor filers)
• We send notices to companies before their ARD,
  and reminder notices where an ARD passes without
  a filing
• We send notices warning of strike-off or
  prosecution where applicable
• We issue twice-yearly bulletin Compliance
  Matters to all directors
• We undertake advertising campaigns at periods of
  peak filings

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Company Compliance Enforcement Actions

• Registrars enforcement powers relate to filing
  offences only
• DCE is prosecutor of other offences e.g. false
  declarations on a statutory document

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Company ComplianceEnforcement ActionLate Filers

• Late filing fee--100 on day one plus 3 per day
  to max of 1,200
• Restricted once-off waiver for
• --not for profit companies whose objects
• comprise chritable work/community
• welfare
• -- Genuine force majeure cases

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Company ComplianceNon-Filers Prosecutions

• CRO prosecutes (District Court) companies and
  directors for failure to file
• Selection based on a companys delinquency in
  filing
• Penalty can reach 1,900 for each offence
• Director with 3 convictions can be disqualified
  from directorship/involvement with any company,
  for a period

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Company ComplianceNon-Filers Strike-Off

• Failure to file in re any one year can cause
  strike-off
• Set, stepped procedure involved, various notices
• Struck-off companies lose privilege of limited
  liability and assets vest in Minister for Finance
• DCE empowered to seek disqualification/restriction
  of directors of struck-off companies
• Struck-off companies can be restored (admin or
  court)

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Company Compliance Non-Filers Court Injunction

• Registrar empowered to seek order from High Court
  directing company to file outstanding return/s
• This action follows failure of company to file in
  response to a specific Section 371 warning
  notice
• Registrar may seek costs to him of taking the
  action
• Have used sparingly but successfully