Why should I set up a Company?

Advantages of a Limited Company:

  • Limited liability status
  • Easier access to financial assistance via banks, shareholders etc.
  • Such financial assistance can facilitate quicker growth an expansion than if a sole trader
  • The fact that directors' remuneration may be maintained at desired levels regardless of profit fluctuations (subject to availability of cash)
  • The possible incentive of Business Expansion Scheme relief for a qualifying company
  • Corporation Tax in Ireland is one of the lowest in the world at 12.5%
  • Scope for tax planning.
  • Setting up a limited company gives the company a separate legal entity.
  • A limited company has the benefit of perceptual succession, meaning that the company will continue in existence even after its members have passed.
  • A limited company can issue more shares if the Articles permit

Disadvantages of a Limited Company:

  • The cost of administration of setting up a limited company and the day to day running of the company may be higher than a sole trader.
  • The requirement for an annual audit (if the Company does not qualify for the audit exemption) and the public filing of information with the Companies Office
  • The need to comply with Companies Acts and auditing and accounting standards
  • The fact that business losses may not be set against personal income
  • The possibility of further taxation on capital gains if appreciating assets are withdrawn from the business

What type of business would suit me best?

When you’re setting up your own business and deciding what form it should take there are a number of different options to choose from. The main types of business will take the form of sole trader, company, or partnership. Your decision will depend on a number of factors. The amount of control you desire over your company will be a deciding factor between staying as a sole trader where you have ultimate control to a private limited company where the amount of control you have may be limited. Also your financial position will also be a factor to consider, as a sole trader is less expensive to run than the setting up and run of a private limited company. The liability you have if things didn't work out for you business is another important issue to consider. With a private limited company your liability in such an event will be limited to the amount unpaid on your shares, whereas with a sole trader you may have to contribute from your personal assets in order to pay the debts of the business. When deciding what type of business suits you best careful consideration must be taken and professional advice sought.

What type of Company should I set up?

If you have decided to set up a company you will now be faced with the decision of what type of company you should choose. The main types of companies used in Ireland are private company limited by shares, public limited company, company limited by guarantee and an unlimited company.

Each company requires at least two directors, one secretary and a registered office address in the state. A private company limited by shares is the most popular vehicle used in Ireland. These companies can be used for small, medium or large operations. A private company limited by shares must have at least one member and can only have a maximum of fifty. In the event of the winding up of the company the liability of the members is limited to any amount unpaid in their shares. There is no minimum with regard to the share capital of the company.

A public limited company is usually for larger companies who may wish to offer shares in the company to the public. Many organisations such as golf clubs are set up as these kind of companies. This type of company must have at least seven members and there is no maximum. The authorised share capital of this company must be at least €38,092.14 of which 25% must be paid up.
A company limited by guarantee without a share capital is another type of company that can be used. These companies are usually used for non-profit making company's and property management company's. This company must also have a minimum of seven members and again there is no maximum. Because there is no share capital, when subscribing to the company, a member agrees to contribute any amount as stated in the Company's Memorandum & Articles of Association in the event of the company been wound up.

An private unlimited company is usually used for businesses where there very little risk. There must be at least two members and a maximum of fifty. This type of company is similar to a private company limited by shares, but differs in the case of the winding up of the company. In this event the members must contribute any amount as is required to pay the debts and liabilities of the company, therefore the do not benefit from the advantage of limited liability.

Business types information sheet

How long does it take to register a company?

Once you have completed our order form we will send you out all the signing documentation within 24 hours. (Formation Process) OmniPro operate a 24-hour turnaround policy. When we receive back all the necessary information and signing schedules we can lodge the application with the Companies Registration Office. This normally takes approx 5 working days provided all the documentation is in order. The Certificate of Incorporation will then be issued. This may take approx 2 days. The day the Certificate arrives in our office it will be sent together with the formation pack to you by courier.

How many directors do I need?

A private limited company must have at minimum of 2 Directors. There is no provision as yet in Ireland for a single director company. A director must not have more than 25 directorships. The company secretary can also be a director. However if the company secretary is not a director there must be two separate individuals to act as directors. The company must have at least one EEA Resident Director, and if this is not possible a Non Resident Bond should be put in place for the company. This is valid for two years. Alternatively an established company can apply to the Revenue Commissioners for a Real and Continuous Economic Link with the state.

How many shareholders?

A private limited company must have at least one shareholder and a maximum of fifty. Public limited companies and companies limited by guarantee must have a minimum of seven shareholders and there is no maximum. Unlimited companies must have a minimum of two shareholders and a maximum of fifty. A shareholder is a member of the company. The two terms are used interchangeably.

Who can be a director?

No formal qualifications are required to become a Director of a Company. The Companies Acts however do place some restriction on who can become a Director. The following may not act as Directors:

  • A body Corporate
  • An undischarged bankrupt
  • An auditor of the company or of the company's holding or subsidiary company.
  • A Director who has been restricted
  • Any Director who has been disqualified.

Although the Companies Acts do not restrict a individual under the age of 18 becoming a Director, it is recommended that this should be avoided if at all possible. As a minor any contracts entered into by the Director will be deemed null and void.

What is the difference between members and directors?

Members of a company are the people who subscribe for shares in the company. The first members of a company are the first subscribers to the Company's Memorandum and Articles of Association. A private limited company must have at least on member and a maximum of fifty members. A unlimited company must have a minimum of two members. A public limited company or a guarantee company must have a minimum of seven members with no maximum. In the winding up of a company which is limited by shares the members will agree to contribute any amount unpaid on the shares (limited liability). With an unlimited company the members must contribute any amount required for the winding up of the company (unlimited liability). Members of a company are essentially owners of the company.

Directors of the company are the officers of the company and the manage the day to day running of the company. The Board of Directors generally appoint the Directors. A Director has a number of different duties and responsibilities which he owes to the company.

A Director's duties can be broken into his fiduciary duties, duty of care and competence and statutory duties. A person may be a Director and a member of a company must should bear in mind that they are two very different roles.

Can a director be a member?

There is nothing to prohibit a Director also being a member of a Company. If this is the case the Director must be aware that the two roles are extremely separate. The Director should have adequate knowledge of his duties and responsibilities. If the Director involved is also a member he is obliged pursuant to Section 53 of Companies Acts 1990 to disclose to the company any interest in shares or debentures of the Company, any holding or subsidiary company or any other related company. It is very common for members and Directors to be the same individuals especially in many small private limited companies in Ireland.

Can one person or company own all the shares?

It is now possible for a private limited company to have just one member. The maximum number of fifty members remains the same. Unlimited Companies must have a minimum of two members and public limited companies a minimum of seven. Even though a company can have just one member it must still have at least 2 Directors and a Company Secretary.

What are shares?

Shares in a company are a member's interest in a company. The members will receive shares on entering the company in exchange for some form of consideration, usually cash. Rights will be attached to these shares and this will be outlined in the Company's Memorandum & Articles of Association. Rights attached to member's shares will usually be concerned with the right to attend and vote at meetings, payment of dividends and return of capital and any surplus on the winding up of the company.

Can a director be a Company Secretary?

A Director of a company may also be a Company Secretary. Section 175 of the Companies Acts 1963 state that each company shall have a Company Secretary who may be one of the Directors. The roles in relation to these positions are different and any person acting in both capacities should be made aware of this. The Companies Acts however do not define the exact role of the Company Secretary or establish their duties and responsibilities as they do with the Company Director. (Link to CRO information leaflet)

Do the directors of the company have to be Irish?

Each company registered in Ireland must have at least two Directors, at least one of which must be EEA Resident. If none of the Directors involved are resident in the state the company has two main options.

Firstly, the Company may apply for a Non-Resident Bond to be put in place for the company. The bond insures the company against a penalty of up to €25,394.76. The bond is valid for two years after which time it must be replaced, unless a resident Director has been appointed in the meantime.
Secondly, an established company may apply to the Revenue Commissioners for a Certificate of Real and Continuous Economic Link with the state. This can only be done after the Company has produced a set of financial statements and can prove that the Company has this link with the state.

What is the Authorised Share Capital of the Company and does it have to be €100,000?

The Authorised Share Capital is the maximum amount of share capital which can be issued in the Company. The share capital clause in the Memorandum of Association will state the authorised share capital of the company. In a company limited by guarantee without a share capital there will be no such clause. If a Company wishes to increase the Authorised Share Capital of the Company the members must resolve to do so and the amendments to the Memorandum and Articles of Association notified to the Companies Registration Office. There is no definition of what the Authorised Share Capital of the Company should be, that is a matter for the Company involved.

What is the difference between Authorised and Issued Share Capital?

The authorised share capital of the Company is the maximum number of shares the Company can issue. The issued share capital is the actual amount of shares that the company has issued to its members. The company may continue to issue shares up to the amount of the authorised share capital.

How many shares do I need to issue?

The amount of shares that the Company chooses to issue is entirely up to themselves, as long as the company has sufficient authorised share capital to do so. Generally shares in a company entitle to holders of those shares to a vote at general meeting, right to receive a dividend, an element of control of the company and the right to participate in the winding up of the company. The minimum number of shares in a private limited company is one, in a unlimited company the minimum number is two and in a public company the minimum is seven. In a company limited by guarantee without a share capital, there are no shares and therefore issued share capital is not an issue.

What is a registered office?

A company's Registered Office Address is the office where all the statutory or legal documents can be sent. The Companies Acts also require this address to be printed on all company letterheads and stationery. This address must be located within Ireland and the Registered Office Address can be a separate address from the business address of the company. The address chosen can not be a P.O Box number.

Can the registered office be my home address?

The registered office address of the Company can be whatever the Directors decide so long as it is located within the state. Directors commonly use their residential address for the purposes of providing the Company with a registered office address.

How do I register for taxes?

A Company may register for Corporation Tax, PAYE/PRSI and VAT by completing and filing the relevant application with the Revenue Commissioners. This process may take up to four weeks depending on the activities of the Company and information provided to the Revenue Commissioners. An individual, partnership or trust may also register for taxes.

What is the annual return?

The Annual Return is a document that must be filed with the CRO once every calendar year. It provides details of the Company including the Directors, Secretary, Share Capital, Members, and any transfers or allotments during the year. The date that the first annual return must be filed with the Companies Registration Office is six months after its incorporation. That date then becomes the Annual Return Date for the company and every year thereafter, the company must file an Annual Return and Financial Statements on that date.

How do I check the Company Name?

You can check to see if your proposed company name is available by contacting OmniPro via e-mail or phone. We will immediately check to see if that name or a similar name already exists and get back to you with the results of the name search straight away. We would advise that you have at least three options when checking a company name to avoid disappointment.

Can I reserve a Company Name?

The Companies Registration Office operate a very strict policy on company names and due to the volume of incorporation they cannot allow a name to be reserved under any circumstances. Once your name has been primarily approved by us, it is essential that you get the formation application lodged with the Companies Registration Office immediately will the name is still available. Even if the name has been primarily approved we can never guarantee that the Companies Registration Office will accept the name until they have incorporated the company.

Do we still have to file accounts even if we haven't traded?

A company must file financial statements together with the Annual Return each year. The only exemption to this is the company's first six month Annual Return, which does not require any financial statements to be annexed to it. Even if these are dormant accounts they must still be filed. Public limited companies and companies limited by guarantee are required to file a set of full financial statements with the CRO, while usually abridged financial statements are sufficient for a private company limited by shares, depending on its size. A large private limited company will be required to file a full set of financial statements.

What is the difference between registering a company and registering a business name?

When registering a company, the name which the company is registered under becomes that compa ny's legal identity. This is the name that distinguishes the company from other companies. A registered company name provides protection to the extent that no other company can be registered with the same or similar name if it is likely to cause confusion to customers. This is the name that will appear on all the company's letterheads and stationery and should be displayed clearly outside every office or place of business.

A company can register a business name under which it may trade. If a company is trading under a name which is different from its registered company name then it is obliged to register a business name. There is very little restriction on the use of business names, and while this may be useful it also means there is very little protection against other companies trading under the same or similar names. Individuals or partnerships can also register business names.

Is there any protection of a business name?

Business name registrations cannot give protection against duplication of the name by others. The CRO do not do searches when registering a business name to see if there are any other company or business names which are the same or similar. It is up to the company or individuals involved to find out whether others trading under same or similar names have certain rights or restrictions in place for the use of that name.

Are there any restrictions to the name I choose for the company?

When registering a company name it should be noted that the name will not be registered if it is the same name as one which is already registered. This restriction includes names of companies that are dissolved for up to twenty years. If the proposed new company name is similar to one that is already registered and the new company has similar activities to that of the existing company, the name will also be refused. Other names which will not be registered is:

  • A name which is offensive
  • A name which would suggest State sponsorship
  • A name which includes "bank" or cognate words the Central Bank has not issued a license
  • A name which includes "insurance" or cognate words unless necessary license has been granted by the Minister
  • A name which includes the words "society", "co-op", or "co-operative"
  • A name which includes word "university" unless permission has been granted by the Department of Education

What are board meetings?

A board meeting is a meeting of the Board of Directors. In order for Directors to exercise their powers they must do so collectively. The formal procedure for this it to convene a board meeting at which they will resolve and agree to exercise these powers for a particular purpose. For a board meeting to be valid a quorum must be meet, this usually means that at least two directors must be present unless the Company's articles specify otherwise. Minutes of all board meeting are required to be written up and entered into the statutory register.

What are general meetings?

A general meeting is a meeting for all the members of the company, provided they have the right to attend and vote. There are two types of general meetings; Annual General Meetings (AGM) and Extraordinary General Meetings (EGM). An AGM must be held once every calendar year and no more than 15 months but lapse between one year and the next. Ordinary business of the company is usually conducted at AGMs including the approving of financial statements, retiring and electing of directors, approving auditor's remuneration and voting on any other business that the members have been informed of in the notice of the meeting.

Any meeting, which is not, an Annual General Meeting will be known as a Extraordinary General Meeting. An EGM is called when there is special business of the company to be dealt with and needs to be put before the members. For example if a company's net assets have fallen to half or less of the company's called up share capital the Directors of a company are obliged to call an EGM. The Directors usually call an EGM when the business to be considered will not wait to the next AGM of the company.

What is the CRO number

The Company Registration Office Number is the number that is assigned to the company once it has been registered. It is the company's identification number. This number will appear on the Certificate of Incorporation and must appear on all documents lodged with the Companies Registration Office. The Company Registration Office Number will never change; even if the company changes its name the Company Registration Office Number will always remain the same.

What is the Memorandum and Articles of the company?

Each company must have a Memorandum and Articles of Association. These documents must be lodged in the Companies Registration Office when the company is being formed. The Memorandum of Association deals with the external activities of the Company. Its states what the Company's main objects are, together with the powers which the Company have when carrying out these objects.
The Articles of Association deal with the internal activities of the Company. The Articles of the company contain the rules and regulations by which the company should be run. A company can adopt the standard Articles that are found in Table A of the Companies Act, 1990. Alternatively the Company may adopt their own Articles, or amend Table A to suit their own requirements.

What are the responsibilities/duties of a company director?

Company Director duties are broke into three sections. These include their fiduciary duties, duties of care and competence and also their statutory duties.

As part of Directors fiduciary duties to the Company they must exercise their powers for proper purpose, not fetter their discretion when deciding how to act on behalf of the company and they must act in the best interest of the company and not themselves and by doing so avoid a conflict of interest.

In fulfilling their duty of care and competence Directors must exercise skill, diligence and delegation in performing their duties on behalf of the Company.

Finally, there are also statutory duties which are imposed on Directors. These include such matters as duty to keep proper books of account, duty to lay financial statements before annual general meeting, prohibition from the use of sensitive information in relation to value of the Company's shares, and a duty to co-operate with the Director of Corporate Enforcement.

ODCE information

I don't need the company anymore, what should I do?

If a company has never traded or has ceased to trade, the Directors of the Company are obliged to arrange for the dissolution of the company in a proper manner. This can be done by voluntary strike off or voluntary liquidation.

To ensure the Company is eligible for voluntary strike off process certain requirements must be met. The Company must be up to date with all its filings with the Companies Registration Office and the Revenue Commissioners. The Company must also have no assets or liabilities. Only when the Company is in this position can it begin the application for voluntary strike off.

Voluntary liquidation can take place when the company is solvent. Unlike voluntary strike off the company does not have to be up to date with its filings in the Companies Registration Office. This process can be a costly one. It is generally used when the company has ceased to trade but still has a large amount of capital. Voluntary liquidation can be seen as a tax efficient way of winding up the company and distributing the assets.

Who is the Chairman of the Company?

Each board meeting of a company requires a Chairperson. The Directors of the Company may elect a chairperson for that meeting and decide how long they shall remain as chairperson. The chairperson of a board meeting is usually one of the Directors present who has been elected by fellow Directors. The Chairperson of the Board of Directors will also act as the Chairperson of General Meetings.

What is limited liability?

A member of a private limited company or a public company limited by shares have the advantage of limited liability. This means that the members liability in the winding up of the company is limited to the amount, if any, unpaid on their shares. In the winding up of a company limited by guarantee without a share capital the members are limited to contribute any amount which is outlined in the Memorandum and Articles of Association. This figure is usually €1. In an unlimited company, the members must contribute any amount as is necessary in the winding up of the company. There is more risk involved for the members of this type of company.

Can I change the Memorandum and Articles of the Company?

A company can change its Memorandum and Articles of Association if the members resolve to do so. A company may change its Memorandum of Association if they wish to change or expand its objects or powers, or change the share capital of the company.

The Articles of Association can be changed if the company wanted to alter or add to the internal rules of the company. Once the necessary resolution to change either the Memorandum or Articles of Association, or both, the resolution together with a copy of the amended Memorandum and Articles of Association must be lodged with the Companies Registration Office.

Why do I have to continue to file returns when the company is dormant?

Each Company is obliged under Company Law to file an Annual Return together with a set of financial statements each calendar year regardless of whether they are trading or dormant. Failure to file the annual return on time results in an automatic late filing penalty of €100 which increases by €3 per day thereafter until the return is filed. Late filing may also result in prosecution of both the Company and/or the Directors.