Company Law Flashcards
Sources of Irish Company Law
- Case Law
- EU Law
- Legislation (Companies Act 2014)
What is a Sole Trader?
A sole trader is a natural person who is engaged in a trade, profession, business on his/her own account.
The simplest and most common form of business structure.
Sole Trader: Advantages
- Simplicity
- No supervisory office
- Full control and profit entitlement
- Privacy/no filing annual returns
Sole Trader: Disadvantages
- Unlimited liability
- Limited growth potential (less attractive for raising significant investment compared to limited companies).
- Tax limits (income is taxed as personal income, which may result in higher tax rates compared to corporate tax rates).
What is a Partnership?
A partnership is the relation which subsists between persons carrying on business in common with a view to profit.
Features of a Partnership
Formed through a verbal or written agreement, ideally one which clearly states each partner’s role, responsibilities and outlines profit-sharing.
Between 2 and 20 partnerships generally, but solicitors, accountants, etc may have more.
Partners share control of the business, contributing their skills, capital or other resources.
What is a Company?
A company is a distinct legal entity formed to conduct business, distinct from its owners, with the ability to own assets, incur liabilities and operate independently.
What is Corporate Governance?
The relationship between the directors and the stakeholders.
The responsibility and accountability to stakeholders.
What is Incorporation?
Incorporation is the process by which a company is set up and becomes a legal person.
Types of Companies
- Public Limited Company (PLC)
- Unlimited Company (UC)
- Private Company Limited by Shares (LTD)
- Designated Activities Company (DAC)
- Company Limited by Guarantee (CLG)
Public Limited Company (PLC)
The only type of company that can have shares listed on a stock exchange.
Subject to increased administrative obligations.
Minimum level of share capital level (€25,000), or which at least a quarter must be paid up.
Any number of members (even just one).
Unlimited Company (UC)
Private or public.
Members are liable for all debts of the company, even if this results in the debts having to be paid from their own private assets.
Accounts for 2% of all Irish companies.
Private Company Limited by Shares (LTD)
Most popular form of company.
The liability of its shareholders is limited to the amount, if any, unpaid on their shares.
Has full and unlimited capacity, unlike any other type of company, in that it does not have an objects clause (meaning it does not have to have just one specific purpose).
Only one director is required, and a different secretary.
Private Company Limited by Shares (LTD) cont.
Must have between 1 and 149 shareholders.
A simple single document constitution.
Cannot act as a credit institution or insurance undertaking, and cannot have/apply to have shares or debt securities publicly listed or traded.
No minimum capital requirements and can be incorporated with a share of 1c, and even that share need not be fully paid up.
Designated Activities Company (DAC)
A private company limited by shares.
The key distinction between DAC and LTD is the existence of an objects clause.
Must have a minimum of two directors.
May have debt securities, but not shares, listed.
Has no minimum capital requirements.
Must hold an Annual General Meeting.
Company Limited by Guarantee (CLG)
Members to not subscribe for share, but instead undertake to guarantee the liabilities of the company up to a specified amount.
Since the members do not hold shares in the company, and since there is no limit on the number of members, this is the preferred form of company used by sports clubs, social clubs and charities.
Names of Companies
A company’s name must be acceptable to the Registrar of Companies. They will not accept it if it is too similar to a name already on the register, or if it is undesirable.
Undesirable Company Names
- Offensive
- Suggests State sponsorship
- Contains “bank” or “insurance” unless permission from the Central Bank
- Contains “co-operative”, “society” unless permission from the Registrar of Friendly Societies
- Contains “university” unless permission from the Department of Education
- Contains “charity” unless justified
- Contains “standard”, “credit union”, “building society”
Implications of a Separate Legal Personality
- Corporate Property
- Can sue and be sued
- Constitutional Rights
What is a Director?
A director is any person occupying the position of director, by whatever name called.
No qualifications required, unless set out by the company’s constitution.
Types of Directors: Shadow Directors
A person in accordance with whose directions or instructions the directors of a company are accustomed to act shall be treated for the purposes of this part as a director of the company unless the directors are accustomed so to act by reason only that they do so on advice given by him/her in a professional capacity.
Types of Directors: Alternate Directors
Any director of a company may from time to time appoint any other director of it or, with the approval of a majority of its directors, any other person to be an alternate director as respects him/her.
Appointing & revocation must be in writing and given by the appointing directory to the company.
Types of Directors: Managing Directors
The directors of a company may from time to time appoint one or more of themselves to the office of mangling director for such period and on such terms as to remuneration and otherwise as they see fit, and subject to the terms of any agreement entered into any particular case, may revoke such appointment.
Types of Directors: De Facto Directors
A person who occupies the position of director of a company but who has not been formally appointment as such.
