Incorporation under the Companies Act
Written by 01st April 2015on
Part 2 of the Companies Act 2014 deals with the incorporation and registration of companies.
The new Model Company will have a one document constitution in place of the current Memorandum & Articles of Association. The limit on the number of members a new Model Company may have has been increased to 149. Employees and former employees are not counted when determining the total number of members.
The constitution will state the name, that it is a private company limited by shares registered under Part 2; any supplemental regulations, the authorised share capital of the company and the number of shares taken by each subscriber. It must be signed by the subscriber(s) and will be in a form as set out in the First Schedule to Part 2. The new Model Company will have full and unlimited capacity the same as that of a natural person as it will not have an objects clause and so it will not be subject to the doctrine of ultra vires.
A prescribed form detailing the person who is or the persons who are to be the first director or directors of the company, the secretary, the registered office, the place where the central administration of the company will normally be carried on, details of the activity of the company being carried on in the State and the place in the State where it is being carried on must be prepared as part of the incorporation process. This form will be signed by the directors(s), secretary and the subscriber(s) and shall include an unsworn declaration which must be made by one of the directors or the secretary or a solicitor acting on behalf of the company, and is submitted with the constitution to register the company. Where there are no directors resident in the EEA, a bond must be provided with the prescribed form to incorporate the company. Where a director named on the prescribed form is disqualified, a separate statement in a prescribed form must be signed by that director specifying the jurisdiction in which and date they became disqualified together with the period of disqualification.
In addition to the one document constitution one of the fundamental changes proposed by the new legislation is to reduce the number of directors required by a company to just one. The Act preserves the requirement to have a secretary of a company who cannot also act in the role of sole director. This will do away with the need to have a passive nominee director and increase the level of accountability on the one director.
Upon registration of the constitution of the company, the Registrar will issue a Certificate of Incorporation. The Certificate of Incorporation is conclusive evidence that the company is registered.
The last word of the name of the company shall be ‘Limited’ or this can be abbreviated to ‘Ltd’. Trading under a misleading name shall subject any officer of the company who is in default to a category 3 offence.
The provisions applying to the reservation of a name when incorporating a company or changing a company name are preserved. Similarly the provisions applying to any change of name or alteration in the constitution will still require a special resolution.
Part 2 also deals with the authorisation of an electronic filing agent which facilitates the electronic signing of documents and the delivery of those documents to the Registrar by electronic means. A company may also revoke the authorisation of an electronic filing agent.
Finally the new legislation also provides that on request any member is entitled to receive a copy of the constitution from the company. Failure to provide a copy is a Category 4 offence.
In summary, the provisions relating to the incorporation of a company are broadly similar to those currently in existence. The main difference being the introduction of the new one document constitution and the provision that a limited company other than a designated activity company (DAC) may only have one director. The Companies Act 2014 is expected to come into force on 1 June 2015.