A company is a legal structure or entity through, which, or more correctly by which, a business or enterprise may be undertaken. It is controlled by its directors and owned by shareholders. They are typically the same persons in smaller enterprises. A UK registered company may be the sole or main shareholder of an Irish company which is thereby its subsidiary.
There are favourable tax arrangements for groups of companies comprising holding companies and subsidiaries under both Irish and UK tax legislation.
The key aspect of a limited liability company is that it is the entity liable for debts and liabilities, where it is the sole trading entity. It shareholders, who have a proprietary interest in its share capital, are legally separate from the company and are therefore not liable for its debts and obligations.
Companies may be limited or unlimited liability company companies. Unlimited liability companies are rarely encountered. The members of an unlimited liability company are obliged in the event of its winding up with a shortfall to contribute as required to make up the shortfall reflecting its net liabilities. Their main use is in the context of mechanisms to avoid publication of accounts. Some of the commonly used structures to avoid publication have been the subject of anti-avoidance legislation which makes them no longer effective.
Almost all companies are limited liability companies. The liability of shareholders is limited to the capital contribution which may be a nominal amount, commonly one Euro.
In almost all cases, it will be necessary to form an Irish company in order to avail of EU service providers’ rights. The key EU service providers rights to provide services from EU state throughout the EU, to form a branch and to form a subsidiary in another EU state are available to companies incorporated in Ireland with the requisite control and management within Ireland. See the separate section in relation to the precise requirements.
Irish company law is broadly similar to UK company law. Irish companies legislation was reformed in 2014. Many of the reforms are similar to those in the UK Companies Act 2006. Historically, Irish companies legislation grew out of common United Kingdom-wide legislation dating from 1908.
One objective of the legislation has been to make the private company the default type company in accordance with commercial realities. The earlier legislation largely assumed the public limited company to be the default, with modifications for a private company
The Companies Act 2014 spells out many of the mechanics of the operation of a private company. Potentially, the company’s constitution, effectively the memorandum and articles of association in accordance with UK practice, can be minimal relying on the default Companies Act provisions. Each provision in the Companies Act specifies whether it is mandatory. In most cases, the provision may be varied by the constitution, as desired by the parties.
Broadly, Irish companies legislation allows the same broad freedom to the parties to choose the exact terms of the structure, subject only to specific mandatory requirements on matters for which there is a public interest, most of which accord to the equivalent mandatory provisions in UK legislation.
Irish Companies legislation follows the broad scheme of UK legsilation. The legislation in Ireland has followed EU directives in certain key areas also applicable to UK companies legislation.The forms of company available under Irish law were reformed in 2014. However, despite some divergences in the names and the categories of company, the differences in substance to the UK are minimal.
Types of Company
There are public companies and private companies. Public companies have requirements in terms of minimum share capital. They may offer their shares to the public Their shares may be traded. In practice, quotation on a stock exchange is required to create an effective market in shares.
The vast majority of companies in Ireland are private companies. They may not offer their shares to the public nor may their shares be freely tradable. They may, be subsidiaries of public unquoted companies in Ireland, or elsewhere such as the United Kingdom
There are a number of different types of company under Irish law. The principal types of limited company in Ireland are
- a private company limited by shares (the most common type
- a designated activity company
- company limited by guarantee
- public limited company
- public limited company
- public unlimited company
- company limited by guarantee
- external company
Private Limited Companies
A private limited company is the structure most commonly used. It is sometimes referred to as an LTD. It is almost identical to a UK private company. It is unrestricted in what it can do, in contrast to a “Dedicated Activity Company (“DAC”) which has limited objectives and purposes.
A private limited company has unlimited capacity to do anything which a natural person could do.
A private limited company can have as few as one director and one shareholder. The liability of the shareholders is limited to the amount subscribed for the capital which can be as low as to euro or even less. There is no minimum amount of capital that is required.
A private limited company with more than one director will generally act through its directors by board meetings. Where there is more than one shareholder, its shareholders hold annual or special general meetings in much the same way as in the United Kingdom.
There is significant flexibility as to the terms of the constitution of the company. Within parameters, which are broadly similar to those in the United Kingdom, the terms of the constitution may be set in the way best suited to the needs of the shareholders.
Designated Activity Companies
A designated activity company can be either a private company limited by shares or a company limited by guarantee and having a share capital. A designated activity company is almost identical to a private limited company. The principal difference is that it must act for a particular purpose defined in the objects clauses in its constitution.
In contrast to the private limited company which is unrestricted in what it can do, the designated activity company resembles the traditional limited company which has an objective such as undertaking one or a number of kinds of business.
In some cases in the financial services sector and in a number of other instances, a designated activity company is mandatory under the relevant regulation. In these cases, the regulatory regime seeks to place some further limitation on the entity’s capacity to undertake activity outside of the area licensed.
A private unlimited company (a ULC) is rarely used as a trading company. It may have as few as one member. It must have at least two directors. Provided it is not a designated unlimited liability company, it enjoys certain exemptions from returning its financial statements with the annual return. Its members are liable in a winding up to contribute to a shortfall on the amounts required to cover its debts.
A public limited company is limited by shares. It must have a share capital of at least €25,000. It may offer its shares to the public. It shares may be tradable on a stock exchange or other market. They need not necessarily be so traded or quoted.
The public limited company may be an investment company with the objective of investing in collective investment funds.
A public limited company may have as few as one shareholder. There is no maximum number of shareholders. It must have at least two directors. It must have a company secretary with the requisite ability to undertake the statutory duties of the office.
It must have an annual general meeting and have its accounts audited. A traded / quoted company must include a corporate governance statement in its directors’ report.
Other Types of Company
A company limited by guarantee does not have a share capital. The members’ liability is limited to the amount undertaken to be contributed in the event of a winding up. It must have at least two directors and hold annual general meetings.
An external company is a company that establishes a branch in Ireland. It must register certain particulars with the Irish Companies Registration Office within 30 days in accordance with common EU regulations.