Listed below are the different types of company which may be registered;
|LTD – New model private company||DAC – Designated Activity Company|
|PLC – Public Limited Company||CLG – Company Limited By Guarantee|
|PUC – Public Unlimited Company||PULC – Public Unlimited Company w/out share cap.|
|ULC – Private Unlimited Company||SE – Societas Europaea|
|External Companies||Unregistered Companies|
|Investment Companies||Joint Stock Companies|
However, the most commonly used company type by far is the Private Limited Company or ‘LTD’.
Companies which need to be incorporated for a very specific and stated purpose e.g. a joint venture, a film production attracting tax relief will tend to favour the Designated Activity Company (DAC).
A new company can be registered in one to five working days from date of application, subject to the name being acceptable. ‘Ready Made’ Companies were abolished in 1999. However, pre-formed companies occasionally become available and can be purchased, generally, at a higher cost than forming a new company.
The Registrar, will only refuse a name if it is identical, or almost identical to an existing name, implies State sponsorship or is generally thought to be offensive. Use of certain words such as “bank”, “insurance”, and “group” require special permission. Companies wishing to make an objection to a new company name have six months within which to do so. Names may be reserved for a 28-56 day period at a cost of €25 – €50.
A minimum of one Director is required for an ‘LTD’ company. However, a separate and ‘suitably qualified’ company secretary must be appointed in this case. All other company types require TWO Directors. Where there are two or more Directors, one may also act as Company Secretary. A corporate Secretary is permissible. The Directors can be any nationality and located anywhere.
One Director must be resident (i.e. at least 183 days per annum) in the European Economic Area (EEA). If a company has no EEA resident Directors, then it may enter into a Bond for €25,000. The Bond is arranged by obtaining an insurance policy. Alternatively, if the Company can prove that it has a “real and continuous link with one or more economic activities in the State” then it may be exempted from the requirement for an EEA Director. The Revenue decide if there is a “link”. Further guidance on this issue is available from our office.
Only one shareholder is required to form an LTD, a Public Limited Company and an Unlimited Company. A Company Limited By Guarantee may have a sole member. Designated Activity Company’s require a minimum of ONE shareholders. Bearer Shares are not permitted in Irish Private Companies. Shares may be held “In Trust”.
The “Authorised” share capital of a company is an arbitrary figure for the total number of shares that can be issued in a company. In order to avoid having to increase the authorised share capital at a later stage it is usually set at a very high figure such as €1,000,000.
The “issued” share capital is the shares, which have actually been allotted and paid for by the shareholders. Unlike the rest of mainland Europe, there is no large minimum share capital requirement for the formation of an Irish company. Accordingly the minimum issued share capital could be as little as € 0.01. LTD companies have the option not to state an authorised share capital.
The Registered Office of a company is the address for the company, which is recorded in the Companies Registration Office. It is the address to which most official correspondence is sent. The trading address of the Company maybe different from it’s registered office. It may not be a Post Office box.
There is a requirement to identify the places in the State where the Company will carry on business, together with an obligation to nominate an address, whether in the State or not, where the central administration will be carried on. For most new businesses, each of these addresses will be at the same location.
The internal and external activities of Irish companies were previously regulated by their Memorandum & Articles of Association. This has now been replaced with a ‘Constitution’. This simple document applies all of the regulations of the Companies Act 2014 to the subject company and sets out, by exception, the regulations which do not.
In the case of an ‘LTD’ there is no defining main objective of the company as LTD’s have the full legal capacity of a natural person i.e. the rule of Ultra Vires does not apply.
An Annual General Meeting must be held within eighteen months of incorporation, and every year thereafter provided that fifteen calendar months do not elapse between A.G.M.’s. The main purpose of the A.G.M. is to present the accounts to the members. If a Company’s Articles permit, the AGM can be held outside Ireland. LTD companies have the option to dispense with the holding of the A.G.M.
Accounts must be prepared and laid before the members. Accounts together with an auditors certificate have to be filed in the Companies Office, and are available for public inspection. The level of information given in filed accounts varies with the size of the company and are prepared as “Small”, “Medium”, or “Large”.
If a company meets certain conditions, such as having a turnover of less than €8.8m, a balance sheet total of €4.4m and employs less than 50 people and is not otherwise prohibited, it may be exempted from having its accounts audited. The company must still file it’s accounts with the CRO. Companies which are in a “group” may also claim audit exemption provided the group, as a whole, meets the same criteria.
Where a Company has appointed Auditors they must be Registered Irish Auditors under the 1990 Companies Act. Certain non-Irish auditors, such as member s of the Institute of Chartered Accountants in England and Wales qualify to act. The Auditors are usually re-appointed at the A.G.M. each year. Auditors are obliged to make a report to the Office of the Director of Corporate Enforcement where they find a breach of certain Indictable offences under the Companies Acts, while conducting an audit.
An Annual Return gives details of authorised (if stated) and issued share capital, members, directors and secretary and must be filed with the Companies Registration Office (C.R.O.) along with the company’s accounts.
The first annual return is made up to a date six months after the date of incorporation, and must be filed within twenty eight days of this date in order to avoid being “late”. If this deadline is missed the company incurs an automatic €100 penalty PLUS a further penalty of €3per day . Accounts do not have to be attached to this first annual return.
The next annual return is made up to a date twelve months after the date of the first annual return.- effectively eighteen months from the date of incorporation. The anniversary of this date becomes the company’s “Annual Return Date” (A.R.D.)
Tax on a company’s ‘trading’ profits is currently set at 12.5%. while non-trading income is taxed at 25%. The distinction between trading and non-trading is particularly important for overseas clients wishing to establish a presence here as without sufficient “substance” in Ireland here they could inadvertently become liable to the higher rate, and possibly liable to tax in their home jurisdiction. Further guidance on this issue is available from our office.
While Irish businesses are obliged to register for VAT once they reach sales of at least € 37,500 for services and € 75,000 for goods, these sales must be to Irish based customers. As such the Revenue exercise a certain amount of discretion when assessing applications to register for VAT from companies with an overseas involvement. A company can also be de-registered if these levels of sales are not maintained. The Revenue conduct VAT Audits on a random basis. However a company which is in a constant VAT refund situation is more likely to be selected. The current top rate of VAT for supply of goods and services is 23%