WEEK 1 - INTRODUCTION

A Company: Group of people coming together with common objective (usually of making a profit)

Separate legal entity – which provides:

·       Perpetual succession/continuity

·       Limited Liability *Unlimited liability companies are the exception

·       Stability

How many people needed? – Only one member (nearly all)

Sources of Company Law

1.    Companies Act 2014

2.    Case Law

3.    EU Law (not main focus of this course, but be aware of)

Companies Act 2014

Became law on 1 June 2015

Repealed all prior Companies Acts (don’t reference any of these in the exam)!!!

Case Law

Judges interpret provisions of Act in the cases before them

Used to explain how provisions of companies act will apply in various circumstances.

Chartered corporation (not that important)

Not set up under Companies Act

Were set up by means of a royal charter

E.g. Trinity

Statutory Corporations

Companies incorporated by legislation other than the Companies Acts *which is their principle feature

Set up under own unique legislation eg an post act

E.g. An Post, RTE

Registered Company

Most common method of incorporation

Register with CRO (Companies Registration Office) under the Companies Act 2014

Main types:

·       Private company limited by shares (LTD)

·       Designated activity companies (DAC)

·       Public limited companies (PLC)

New types of Companies under Companies Act 2014

Reformed LTD’s primarily, introduced new type of ltd. = which was a DAC (has an objects clause)

Private Company Limited by Shares

·       Limited liability – to the amount unpaid on their shares

·       A simple constitution (no memo or arts)

·       AGM not required

·       No more objects clause

·       Min 1 member- max 149

·       Only one director required (but then also requires a secretary)

·       No name change required

Nice table summary of this in Lecture Week 1 – slide 18

Designated Activity Company (DAC)

Basically a pre-2014 LTD.

Objects clause!!!

Insurance companies

Structure suits some businesses eg MNC’s who already have objects clause in other countries

·       Two document constitution (memo and arts)

·       Objects clause

·       1-149 members

·       Where only one member, AGM not required (not case if 2 or more members)

·       Must state DAC or CGA (Gaeilge) in name

·       Min. 2 directors

Public Limited Companies (PLC’s)

·       Only corporate form allowed list shares on stock exchange

·       Has memo and arts

·       Has objects clause

·       May have 1 member, no max

·       Must have min €25,000 share capital (at least 25% paid up front)

·       No name change

·       Must have 2 directors

Companies Limited by Guarantee (CLG)

E.G. charities, sports clubs

·       Cant pay anything up front on share *you act as guarantor, if needed then you pay up money

·       Members liable for amount set out in memo in event company is wound up

·       Minimum €1

·       Public company

·       Cant have share capital

·       Has memo and arts and objects clause

·       May have 1 member, no max

·       Must have 2 directors

·       Must have CLG at end of name

·       Can avail of audit exemption in certain cases

Unlimited Companies (UC’s)

·       Unusual, very few in Ireland

·       Companies and members debts liability is unlimited

·       Greater privacy no obligation to disclose eg. Salaries, financial information

·       Has memo and articles

·       Objects clause

·       May just have one member

·       At least 2 directors

Other forms of business association (not companies)

1.    Sole Trader

2.    Partnership

Sole Trader Advantages

·       Few legal formalities

·       Decisions made by owner

·       Deduction of expenses

·       Profits retained by owner

·       No requirement to file annual return

·       Accounts kept confidentiality

Note – sole traders can have employees

Disadvantages

·       Unlimited Liability *primary disadvantage

·       Difficulty disposing of business (no shares to sell like in a company)

·       Difficulty raising finance (harder to get loans, cant get floating charges for example)

·       Higher taxation

Obligations:

-       Sole trader is legally obliged under Registration of Business Names Act 1963 to register their business name if that name is not under their own name. One month to do so after adoption of business name

-       Legally required to register as a ST for tax purposes with Revenue

-       Maintain proper books and accounts records

-       Register for VAT where annual sales >37,500 for services and >75,000 for goods

-       If employees are hired, operate payroll and comply with empl. Law

-       Carry out business with full personal liability and responsibility for all debts, charges and litigations of the business

Partnership Law

Accountants, solicitors, doctors and dentists not allowed to incorporate and must operate by means of a partnership

Why? – ensure personal accountability for any negligence/wrongdoings on behalf of the professional. EG. If your doctor was negligent they are personally liable for their actions, whereas if LTD. they could limit their liability.

The Partnership Act

-       Two or more people carrying on a business venture without forming a company

-       Unlimited liability and each individual partner is liable jointly and severally for each others actions and debts which accrue

-       Governing legislation = The Partnership Act 1890 *********** Note for exam potentially

If you are working with someone else with a view to making a profit but you haven’t set up a company, you are automatically in a partnership regardless of whether or not there was a partnership in place

Advantages:

-       Fewer formalities (no registration required)

-       Governed by contract law (can tailor to specific needs/contexts of partners, if you don’t have one then act applies)

-       Confidentiality

-       Equal participation by each partner (can be adv/disadv eg. In week 2 p1)

Disadvantages:

-       Unlimited liability

-       Lack of continuity (under act if one partner dies, the entire partnership is dissolved)

-       Taxation

-       Limitation on numbers (20, but can be 50)