Lionheart Client Update: The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024

Lionheart Client Update:

The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024

On July 24, 2024, the Irish Government published the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024, accompanied by an Explanatory Memorandum. The Bill has already passed its first stage in Dáil Éireann, following the publication of its General Scheme in March 2024. The proposed legislation introduces several amendments to key statutes, including the Companies Act 2014, the Industrial and Provident Societies Act 1893, and the Registration of Business Names Act 1963.

Key Amendments to the Companies Act 2014

1. Common Seal

A new Section 43A will be introduced, reviving the temporary measure previously in effect during the “interim period.” This will allow for the execution of instruments under seal in separate counterparts. This is particularly relevant for companies requiring flexibility in document execution processes.

2. Virtual General Meetings

The Bill proposes a new Section 176A, modeled on Section 174A, which was introduced during the “interim period” and set to expire on December 31, 2024. This provision will give companies the option to hold fully virtual or hybrid general meetings, provided it is not expressly prohibited by the company’s constitution.

3. Shareholder Resolutions and Summary Approval Procedure (SAP) Declarations

Certain shareholder resolutions and SAP declarations will now need to be submitted to the Registrar in the prescribed form and manner, ensuring greater transparency and regulatory compliance.

4. Domestic Mergers

The Bill proposes amendments to facilitate mergers between two or more Designated Activity Companies (DACs). Additionally, if a group of subsidiaries is owned by the same parent company, a merger by absorption can be conducted in a single transaction, streamlining the merger process for group restructurings.

5. Involuntary Strike-Off

The Bill introduces three new grounds for the involuntary strike-off of a company by the Registrar, which include:

- Failure to deliver notice of a change of registered office.

- No company secretary recorded with the Companies Registration Office (CRO).

- Failure to file beneficial ownership information with the Register of Beneficial Ownership (RBO).

6. New Category 2 Offence

A new offence will be established under Category 2, applicable when an individual obstructs or interferes with an officer of the Corporate Enforcement Authority (CEA). This provision seeks to bolster the enforcement powers of the CEA.

7. Board Gender Diversity

Companies will now have the option to voluntarily submit information on the gender composition of their boards alongside their annual return. This data, while anonymised to prevent identification of individuals or companies, may be provided to the Minister for Enterprise, Trade and Employment and published to promote diversity.

8. Public Limited Companies (PLCs) – Record Date for Adjourned Meetings

Proposed amendments to Section 1087G specify that the record date for an adjourned meeting will be the same as that of the original meeting, provided the adjournment takes place within 14 days of the original meeting date.

Key Revisions from the General Scheme

Several proposed amendments initially included in the General Scheme have been omitted in the final Bill:

- Proxies: The proposal to exclude weekends and public holidays from the 48-hour notice period for appointing proxies has not been incorporated.

- Schemes of Arrangement for PLCs: The proposal to amend Section 1087D to provide alternative methods for achieving a special majority in schemes of arrangement has been dropped.

- Record Date for Adjourned Meetings of “Relevant Issuers”: The proposed exclusion of weekends and public holidays when calculating the record date has also been removed.

Enhanced Powers for Regulatory Authorities

The Bill further expands the powers of the Corporate Enforcement Authority (CEA), the CRO, and the Irish Auditing and Accounting Supervisory Authority (IAASA). It also introduces amendments to provisions related to corporate insolvency and the regulation of receivers, strengthening the overall regulatory framework for corporate governance and enforcement.

Looking Ahead

The Department of Enterprise, Trade and Employment anticipates that the Bill will be enacted before the end of 2024. Given the breadth of these changes, organisations should review their governance structures and compliance procedures to ensure alignment with the new requirements once the Bill is passed.

For any queries or further guidance on how the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 may impact your business, please contact our team at Lionheart. We are here to help you navigate these evolving regulatory developments effectively.