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Company Formation Ireland

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Ireland is a large island situated to the west of Great Britain, separated from it by the Irish Sea and is often regarded as being on the very perimeter of Europe. With a land mass of 84,079 square kilometres Ireland it is the 20th largest island in the world. Ireland is in fact two independent countries. The larger area forms “The Republic of Ireland” and the smaller area, in the north eastern corner, is part of the United Kingdom.


Population

The population of the whole of Ireland is approximately 5 million of which 3 million live in the Republic. Roughly one-third of the population lives in Dublin and its surrounding suburbs.

Political Structure

In 1949 Ireland became a Republic and left the British Commonwealth. Northern Ireland remains an integral part of the United Kingdom.

The Republic of Ireland is a parliamentary democracy with a written Constitution. The President is the Head of State elected to a seven year term and may serve no more than two terms. The Parliament is known as the Oireachtas and consists of two houses, a Lower House and the Senate. The lower house called Dáil Eireann has 166 members elected by proportional representation for a five year term. The members elect a Taoiseach (Prime Minister) who nominates 15 Government Ministers to the President.

The Senate, or upper house, is known as Seanad Eireann and functions in a similarly manner to the House of Lords in the United Kingdom. It comprises of 60 members. The Senate has powers of consultation and amendment only, and may not veto any proposals emanating from the Dáil . It does however have the power to delay legislative proposals and is allowed 90 days to consider and amend bills sent to it from the Dáil . The Senate serves for the same term as the Dáil.

The Republic of Ireland is a full member of the European Union. Accordingly, Irish citizens have the automatic right to live and work in any member state of the Union.

Infrastructure And Economy

Ireland is an open, modern, trade-dependent economy. GDP growth averaged 6% in 1995-2007, but economic activity dropped sharply in 2008 for the first time in more than a decade due to the onset of the world financial crisis which resulted in a sever slowdown in the property and construction markets. In 2008 the COWEN government moved to guarantee all bank deposits, recapitalize the banking system, and establish partly-public venture capital funds in response to the country's economic downturn. In 2009 the Irish Government announced the establishment of the National Asset Management Agency (NAMA), which will acquire property and development loans with a book value of more than $100 billion from Irish banks. In an attempt to bring the budget deficit down under the 3% EMU limit by 2014 the Irish Government introduced the first in a series of severe budgets in 2009. In addition to across-the-board cuts in spending, the 2009 budget included wage reductions for all public servants.

Language

The English language is the official business and commercial language. However, there are many areas referred to as "An Gaeltacht" such as the Aran Islands, Connemara, Galway and Cork where Irish Gaelic is spoken.

Currency

The Euro replaced the Irish Punt in 2002.

Exchange Control

None.

Type Of Law

Common Law based on English Common Law.

Principal Corporate Legislation

Companies Acts 1963 to 2009.

Ireland Company Information

Procedure To Incorporate An International Company

Submission of Memorandum and Articles of Association, which must state the intended business activity and the appropriate NACE code, together with a Form A1 detailing the first directors, secretary and situation of the Registered Office to be declared in the presence of a solicitor, notary or Commissioner of Oaths in the Republic of Ireland. It is important to note that the Registry will only incorporate new companies that prove they intend to undertake some form of activity in the Republic of Ireland. "Activity" means "any activity that a company may be lawfully formed to carry on and included the holding, acquisition or disposal of property of whatsoever kind".

Restrictions On Trading

Cannot solicit funds from or sell its shares to the public. Required to undertake some business within Ireland.

Powers Of Company

A Company incorporated in the Republic of Ireland has the same powers as a natural person.

Language Of Legislation And Corporate Documents

English.

Registered Office Required

Yes, must be maintained in the Republic of Ireland, this address should be displayed on all letterheads and stationery for the company together with the Incorporation Number and full name of the Directors and Secretary. Care should be taken to include the business address on stationery for the day to day business activities of the company.

Name Approval Required

No.

Shelf Companies Available

No.

Time Scale To Incorporate

10 working days.

Name Restrictions

A name that is phonetically and/or identical or similar to an existing name

A name that implies illegal activities or is offensive

A name that implies state patronage

If a name includes words which imply specific functions, e.g. "holding", "group", etc., further information may be required by the CRO to support the application.

The use of the word "standard" prohibited.

The use of the word "Credit Union" is prohibited under the Credit Union Act 1997.

Please note that if your chose name is too similar to the name of another company (phonetically and or visually), and it is accepted for registration by the CRO, through inadvertence or otherwise, and objection on grounds of similarity could be made in writing to the Registrar of Companies within six months following the incorporation of your company and you could be directed by the Registrar to change the name of the company.

Language Of Name

Can be in any language using the Latin alphabet. The Registrar may request an English translation if a foreign language name is used for a company name.

Names Requiring Consent Or License

The following names or their derivatives require consent or a license:

Names containing certain words cannot be used unless approved by relevant bodies. E.g. the words "bank", "banc", "banking", "banker" may only be used with the permission of the Central Bank of Ireland. This also applies to names such as "hollybank","sweetbank","canal bank", "bancorp", etc. and the surname "Banks", not withstanding the fact that the compny being incorporated may not intend to carry on banking business.

Words such as "insurance","re-insurance" and "assurance" cannot be used unless prior permission has been sought from and granted by the Irish Financial Services Regulatory Authority (IFSRA).

The word "Society", "co-op" or "co-operative" cannot be used unless permission has been sought from and granted by the Registrar of Friendly Societies.

The words "University" and "Institute of Technology" or "Regional Technical College" cannot be used unless permission has been sought from and granted by the Registrar of Friendly Societies.

In the case of the word "Charity", further information may be sought by the CRO to support the application.

Suffixes To Denote Limited Liability

Teoranta (Irish Gaelic for Limited), Limited or the abbreviation Ltd.

Disclosure Of Beneficial Ownership To Authorities

The identity of the beneficial owners of an Irish Company may remain confidential if corporate shareholders are engaged to act as the shareholder on behalf of the ultimate beneficial owners. This confidentiality is maintained as long as the company and its ultimate beneficial owners are not involved in any criminal activity.

Ireland Compliance

Authorised And Issued Share Capital

There is no capital duty payable on the authorised capital. There is a 1% capital duty payable on the issued share capital. There is no maximum authorised capital. The minimum issued capital is two shares of par value.

Classes Of Shares Permited

“Ordinary” and “Preference” shares. Preference shares provide a benefit over and above those available to the holder of ordinary shares. In most cases the preference will relate to voting rights and/or payment of company dividends depending on the provision of the Constitution.

Taxation

The corporate tax rate remains at currently 12.5% on trading income and 25% on non-trading income.

Tax Benefits For Start-Ups

Startup Refunds for Entrepreneurs (SURE) is a tax relief incentive scheme.

If you are interested in starting your own company, you may be entitled to an income tax refund of up to 41% of the capital that you invest under SURE. Depending on the size of your investment you may be entitled to a refund of income tax paid over the 6 years prior to year in which you invest.

The general conditions for SURE are that you must:

Establish a new company carrying on a qualifying trading activity;

Have mainly PAYE income in the previous 4 years. This would include a person currently in PAYE type employment, an unemployed person, a person recently made redundant or a retired person;

Take up full-time employment in the new company either as a Director or an Employee;

Invest cash into the new company by way of purchase of new shares.

The following sections of the leaflet will explain the requirements of the scheme and the refund available.

Double Taxation Agreements

Ireland has a very extensive network of double tax agreements in force with over 60 countries.

License Fee

None

Financial Statements Required

With effect from 1 January 2010, all companies which are required under the Companies Acts to produce audited accounts will be required to file all tax returns and make all tax payments electronically via the Revenue On-line Service (“ROS”). The Regulations concerning mandatory e-filing however will not apply to companies that satisfy the audit exemption conditions under the Companies Acts and such companies may continue to file certain “hard copy” returns. Every company, whether trading or not, must file and annual return each year at the CRO not later than 28 days from its statutory annual return date (ARD). Where returns are not filed on time, a substantial late filing penalty must be paid and further enforcement actions may be pursued by the CRO.

Audited accounts are filed with the annual return.

Atrium can assist you with all aspects of registering an Irish Company and has a company set up for you in the quickest possible timeframe.

New Companies Act 2014

The Companies Act 2014 is designed to make doing business in Ireland easier. At its core it is a consolidating piece of legislation as it takes 17 different acts created over the course of 50 years and consolidates them into one.

How Will It Affect Limited Companies

With the Companies Act 2014 into effect on the 1st of June 2015 we would like to make you aware of the main features of the act that will affect your limited company, due to the great deal of focus on private limited companies as they account for 90% of company types in Ireland.

Requirement To Convert To New Company Type

All companies currently incorporated as a “Private Limited by Shares” company type, must choose to convert to one of these two new company types:

Private Company Limited By Shares (LTD)

Creation of a new Model Company – Private Company Limited by Shares (LTD) – this is intended to replace the existing private limited company with a more simplified format allowing for a simple constitution, no requirement for an AGM and only one director required. No name change required.

Designated Activity Company (DAC)

Creation of a new Designated Activity Company (DAC) – certain companies will be required to register as a DAC, e.g. regulated financial institutions. Others will need to choose if a DAC vehicle will suit their current or desired structure. These companies will have a two document constitution and must have two directors. A name change will be required.

Existing private limited companies will have to make a decision on which of the new entity types they wish to become. They can opt in and become a new private company limited by shares, opt out and become a designated activity company or do nothing and be deemed a designated activity company for the transition and a private company limited by shares thereafter.

Some of the main differences between the new model private company limited by shares (LTD) and the existing private company limited by shares (EPC’s) are set out below:

EPC (existing private company

limited by shares)

LTD (new model private company

limited by shares)

Minimum of two directors

Minimum of one director

No requisite skills requirement for

secretary

Company secretary must have the requisite skills or access thereto.

Two document Memorandum & Articles

Single document constitution

Capacity limited by powers in

Memorandum – ultra vires

Ultra vires does not apply

No requirement to register

Option to register those entitled to bind

the company

Only single member companies may

dispense with AGM

May dispense with the AGM

Written resolutions must be passed by all members

May pass written resolutions by the

relevant majority

Other Types Of Entity

Key Features

Unlimited Companies (UCs)

An unlimited company will continue to have a Memorandum and Articles of Association

It will still have an objects clause

It may opt to have just one member (currently must have at least two)

Name changes to include words “Unlimited Company” or “UC” at the end of its name

It must have two directors

Public Limited Companies (PLCs)

The only company type permitted to have shares listed on the stock exchange

It will continue to have a Memorandum and Articles of Association

It will continue to have a main object clause

It may opt to have just one member (currently must have at least seven)

No name change

It must have two directors

Guarantee Companies (CLGs)

This will be the most common form of entity used by charities, sports and social clubs and management companies

It will continue to have a Memorandum and Articles of Association with a main objects clause

It may opt to have just one member (currently must have at least seven)

It will be able to avail of the audit exemption (not currently available)

Name changes to include words “Company Limited by Guarantee” or “CLG” at the end of its name

It must have two directors

The Constitution (M&AA)

The Memorandum and Articles of Association to be replaced by a Single Document ‘Constitution’.

Under the Companies Act 2014, a Constitution will replace the Memorandum and Articles of Association for a standard Private Limited Company. Companies will no longer have to state their objectives, meaning that the company will be permitted to trade in any legal business they desire. This means the abolishment of the doctrine of ‘ultra vires’ for the standard Private Limited Company.

Private Limited Companies will be given a transition period of 18 months to adopt a new Constitution. At the end of this period, a standard constitution will be provided to all Private Limited Companies by default, however we strongly recommend that the company adopts its own Constitution to adopt additional regulations to cover situations like director’s powers, meetings, etc. Atrium can of course assist with this.

Other Changes In The Companies Act 2014

Other activities have been simplified by the Companies Act 2014. For example, it is no longer necessary to get High Court approval for things like capital reductions or solvent windings up. Instead this can be done through a directors’ declaration and a shareholders’ resolution. It is also now possible for private companies to merge or split up without getting approval from the courts.

Large LTD companies and PLCs will have to produce a Directors’ Compliance Statement, while there is a clear encouragement in the act that loans to directors should be clearly documented on company accounts. Also there is a codification of directors’ duties in the act which sets out eight fiduciary duties. This clarifies the responsibilities of company directors.

In general, the purpose of these changes is to reduce the cost and complexity of running a company, although there may be some initial costs for some businesses – to amend a company’s constitution for example.

Content supplied by TBA & Associates

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