Trading entities in Ireland are most commonly formed under one of the following business structures:

1. Companies

2. Partnerships

3. Branches

4. Investments funds

Before any person, company or organisation establishes a base of operations in Ireland, they should take all relevant company law and taxation advice relating to the specific details of the business in question. Please note that the Companies Bill 2012 is currently working its way through the enactment process of the Oireachtas (Parliament) and is expected to become law sometime in the year 2014. This Bill proposes a number of significant changes to company law. These will, when enacted, make significant amendments to Irish company law.

Companies

Types of companies

Companies registered in Ireland are governed by various Companies Acts (1963 – 2012) and statutory instruments. The following are key points on incorporated entities in Ireland.

a) A private company limited by shares is the most common type of company. This structure effectively limits the liability of a shareholder to the amount subscribed for as share capital. However, private companies restrict the rights of their members to transfer shares held and they are not permitted to invite the public to subscribe for shares. In private companies, it is possible to have one single member and up to a maximum of 99 members.

b) Public limited companies (PLCs) must have a minimum of seven members but there is no maximum number. There is a minimum share capital of €38,092 of which 25% must be paid on issue. A PLC may seek subscriptions from the public and can apply to have its shares quoted on any stock exchange.

Other company types include:

– Unlimited companies where the liabilities of the members is unlimited. There must be a minimum of two members in an unlimited company. These companies are typically used to minimise disclosure of financial information in the public domain.

– Public companies limited by guarantee without share capital. These are typically used for the management companies of commercial and residential developments, and for certain charities.

– A Societas Europaea (SE) is also possible under Irish company law. It is a public limited company created where there are two or more entities governed by the laws of different EU member states that wish to come together to form an SE.

Company obligations

a) Directors

Companies must have a minimum of two directors, one of whom must be resident in the European Economic Area (EEA). In the absence of having an EEA resident director, companies can put a bond in place to the value of €25,395 for filing with the Registrar of Companies. Companies that can demonstrate a real and continuous link with Ireland can apply to the Registrar of Companies for a certificate of exemption on the director residency/bond requirement. It is not permitted to have a corporate director on the board of an Irish-registered company.

b) Secretaries

Irish companies must have a company secretary. In Ireland, a corporate entity can act as secretary to a company.

c) Company constitution

Company constitution documents are known as the Memorandum and Articles of Association. Memoranda typically cover matters such as outlining the company’s primary objects while the Articles of Association specify the regulations regarding the affairs of the company.

d) Financial accounts and records

Companies are legally obliged under the Companies Acts to keep proper books and records that contain the information necessary to explain transactions and to give a ‘true and fair’ view of the company’s affairs. The financial accounts of Irish companies must be audited unless the company meets the criteria for availing of audit exemption and formally elects to do so. The financial accounts of an Irish limited company and some unlimited companies must be filed as public documents in the Companies Registration Office (CRO). However, there are disclosure exemptions available to withholding certain information dependent on the size of the company’s operations.

Partnerships

A partnership is an association of individuals that wish to carry on business together. General statutory provisions for partnerships are outlined in the Partnership Act, 1890. The liability of members within a partnership is unlimited. Where there is a limited partnership as permitted under The Limited Partnership Act, 1907, the liability of at least one partner must be unlimited. The maximum number of partners is 20, although exceptions exist for banking, solicitor and accountants’ partnerships.

Branches

An entity incorporated outside Ireland that establishes a business here must register with the Registrar of Companies and file annual financial statements.

Investment funds

Investment funds pool investor funds together and provide them with professional investment management services. The legal structure can take the form of:

– Capital investment companies (variable or fixed)

– Unit trusts

– Investment limited partnerships

– Common contractual funds

About the Author

Mary Flanagan is Business and Secretarial Director at Cooney Carey and has more than 20 years senior level experience, twelve of which were spent in business advisory services and eight in audit.    She specialises in corporate governance, company and group share re-organisations, due diligence and expert reporting. She also advises on employee retention schemes and senior level payroll services.

Mary has recently been awarded, with distinction, a Certificate in Directors Responsibilities & Duties from the Institute of Chartered Accountants in Ireland.