The Companies (Amendment) Act 2009 was passed by the Oireachtas and Seanad and signed into law effective of 12th July 2009. The new Act seeks to improve the transparency of loans made by companies that are banks to their directors and to persons connected with them; support the Director of Corporate Enforcement (“The Director”) in his efforts to enforce compliance with company law whether the company being investigated is a bank or not, and amend some existing provisions relating to Irish registered non-resident companies to meet EU Commission concerns
The Main Changes in the Act
- The citation of the Companies Acts should now refer to the “Companies Acts 1963 to 2009” All references to the Companies Acts should now be changed to reflect the new citation. All audit reports and financial statements signed on or after 12th July 2009 should refer to the “Companies Act 1963 to 2009.”
- The Act amended Sec 43 of Companies (Amendment) No. 2 Act, 1999 regarding the requirement to have an Irish Resident Director. The Act now requires all companies to have a Director who is resident in a “Member State of the European Economic Area”. The EEA includes all of the EU plus Iceland, Norway and Liechtenstein. Any company who was due to renew a Non-Resident Bond is not required to do so once one of the Directors are resident in the EEA. The residency rules are the same as the residency rules for Revenue, 183 days in the previous calendar year.
- All Directors need to be aware of the changes regarding loans to Directors. Regardless of the actions or knowledge, if the Company is in breach of Section 31 of Companies Act 1990 regarding loans to Directors and connected persons, all the Directors of the company maybe prosecuted. Directors should review the financial position to ensure that firstly the Company is not in breach of Sec 31 and if it is, they take the necessary steps to rectify the situation. The Director or Corporate Enforcement are particularly active in reviewing the financial statements of companies to ensure that companies are not in breach. If there is a breach the ODCE is writing to the Directors requesting proof that the Directors have rectified the situation.
- The Act also removed the requirement for the ODCE to prove that Directors were ”knowingly and willfully in breach of Sec 31”. Previously the ODCE wrote to Directors on receipt of a report or based on their own investigations to advise them their company is in breach of Sec 31 and that the Directors rectify the situation or face prosecution. With the removal of “knowingly & willfully” the ODCE is open to take a prosecution immediately after receiving a report from an Auditor or based on their own investigations that the company is in breach of Sec 31 of Companies Act 1990.
- Increased powers of investigation for the Director of Corporate Enforcement regarding the power of search & seizure, power to require the production of books & records from a third party and right to access information.
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