The Companies Act, 2014 largely retained the pre-existing provisions relating to public limited companies. The most significant change was the decrease in the minimum required capital to €25,000 from €38,092 (£30,000).
A PLC may be incorporated with a single-member in the same way as a private single-member company. The facilitates group holdings. A PLC continues to require at least two directors.
A public limited company’s constitution continues to consist a memorandum and articles of association. It requires an objects clauses. However, the 2014 Act provides that the acts done by a PLC are not to be called into question on the grounds of lack of capacity due to anything contained in the objects clause. A member of the PLC may take proceedings to restrain acts which are outside the company’s powers unless they involve the performance of an existing contract.
The amount of the minimum share capital of €25,000 may be increased by Ministerial order. Where an order is made changing the required minimum capital, it may require that existing PLCs increase their authorised minimum capital. A failure to comply with the minimum capital requirement is an offence.
Investment companies are PLCs in nature, but different provisions apply to them. The provisions set out in Part 17 of Companies Act 2014 are applicable only to public companies in the traditional sense. The law in relation to investment companies is set out in another section.
Variations from LTDs
The vast majority of provisions applicable to private companies (LTDs) apply to public limited companies. Some options which are available to private companies are not available to public limited companies. In particular, the following provisions do not apply to public companies:
- the summary approval procedure, save insofar as it applies to members’ voluntary winding up;
- distribution of pre-acquisition profits;
- making of loans or quasi-loans to directors or persons connected with directors;
- the unlimited capacity of private companies;
- the use of summary approval for reduction of company capital;
- the use of summary approval procedure for certain capital reorganisations;
- the majority written resolutions;
- certain exemptions from the requirement for audit and financial statements based on size;
- audit exemptions;
- small to medium size accounts exemptions.
Formation of PLC
A public limited company may be formed under the 2014 Act for any lawful purpose. An existing company may be reregistered as a PLC, subject to compliance with conditions. Existing PLCs incorporated under earlier Companies Acts continue.
A PLC may not be formed unless it appears to the Registrar of Companies (CRO) that it will carry on an activity in the State. The activity must be set out in its memorandum.
The Companies Act prescribes the form of constitution of a public limited company. There must be an objects clause. It must set out the authorised share capital. The constitution is to be in accordance with Schedule 9 to the Act or as near to it as circumstances permit. It must be set out in its Memorandum and Articles of Association, be in legible form and be signed by the subscribers.
The constitution of a PLC may contain regulations in relation to its management and operation. Certain provisions of the Companies Act are mandatory, must be incorporated and cannot be overridden. Outside of this, regulations are optional within the bounds of general principles of law.
A public limited company must have the words, “public limited company” or “cuideachta phoiblí theoranta”, in its name. They may be abbreviated to “p.l.c or PLC”, upper case or lower case. Cuideachta phoiblí theoranta may be abbreviated to cpt or c.p.t.
A body that is not a PLC may not trade using any of the above words. To do so is an offence and officers in default are guilty of a category 3 offence.
A PLC may not use a name which may give the impression that it is any type of a company other than a PLC.
A PLC may have a seal for sealing securities issued by the company, and documents creating or evidencing securities. The official seal shall have the word “Securities” or “Urrúis” on its face.
A PLC formed under prior legislation continues in being as a PLC under the 2014 Act.
A PLC may not commence business until it receives a certificate of incorporation as a PLC from the CRO. The Registrar must be satisfied that the PLC has the requisite share capital. The nominal value of the allotted capital must be not less than the authorised minimum. Certain other matters in relation to paid up capital and preliminary expenses must be set out in a declaration to be made by the directors.
The share capital must be paid up, at least as to not less than 25%. Employees’ shares may be taken into account provided they are at least one-quarter paid up.
It is an offence for a PLC to trade without the requisite certificate. The certificate is conclusive evidence that the PLC is entitled to do business or exercise borrowing powers.
A PLC has the capacity to do anything stated in its objects clause set out in the memorandum. If an object is stated, the capacity of the PLC extends to doing any act that appears to be requisite, advantageous or incidental to, or to facilitate, the attainment of that object which is not inconsistent with law.
The validity of an act done by a PLC may not be questioned on account of lack of capacity by reason of anything contained in its objects clause. It is the duty of the directors to observe the limitations on powers arising from objects remains, notwithstanding the foregoing.A resolution ratifying such action does not affect any liability incurred by the directors unless the directors are specifically relieved by the relevant special resolution.
A member of a PLC may bring proceedings to restrain the doing of an act, in breach of its objects. These proceedings may not be taken in relation to an act done in fulfilment of a legal obligation arising from a previous contract by the PLC.
A party to a transaction with a PLC is not bound to enquire as to whether it is permitted by the PLC’s objectives.
A PLC may amend its objects by special resolution. An application may be made to the court to cancel the amendment and the alteration will have effect, only in so far as it is confirmed by the court. An application may be made by the holders of not less than 15% of the nominal share capital or debentures which entitle the holders to object to alterations.
The application may not be made by any person who has voted in favour of the alteration. The application must be made within 21 days of the resolution.
The court on hearing the application may confirm or cancel the alteration on such terms as it sees fit. It may adjourn the proceedings to allow for the purchase of the interests of dissenting members and may give directions. An order may be made for the purchase of the shares by the PLC itself with a consequent reduction in capital.
The PLC may by special resolution alter its constitution so that the company is no longer a PLC. It may make such other alterations in the constitution as are requisite in the circumstances. Where the resultant company type is a private company limited by shares, the alteration shall include the replacement of the memorandum and articles of the reregistering company by a private company constitution.
Constitution of PLC I
A public limited company (PLC) is to have a memorandum of association and articles of association. They are together, to comprise a constitution.
The memorandum of association must set out
- the name
- that it is a PLC registered under the legislation,
- its objects
- that the liability of its members is limited and
- its authorised share capital which is to be not less than the authorised amount.
The memorandum of association of a PLC takes precedence over its articles of association. In accordance with general principles, alterations to articles may be challenged on the basis that they are not made in good faith for the benefit of the company or constitute oppression.
Provisions may be entrenched in the memorandum of association. Provisions contained in the memorandum which could have been inserted in the articles may be altered by a special resolution.
The right to alter does not apply, where the memorandum in itself prohibits the alteration of the relevant provisions. An alteration may not authorise any variation or abrogation of special rights of any class of members.
Constitution of PLC II
The constitution must be in printed form. The memorandum and articles are to be contained in one document, subscribed by each subscriber in the presence of one witness and authenticated in the manner set out in the Act.
There must be an authorised share capital. The constitution is to state the number of shares taken by each subscriber. Amendments to the memorandum of association regarding share capital must be reflected in the memorandum.
The articles of association may contain regulations regarding governance, other than those prohibited by law. Optional provisions in the 2014 Act are to apply, except to the extent modified by the constitution.
There is no table A in the legislation. Instead, the statutory defaults (as modified, if applicable) apply.
PLC Trading I
A plc comes into existence on the issue of its Certificate of Incorporation. The certificate is conclusive evidence that the requirements of the Acts have been complied with and that the association is a company duly registered.
A public limited company may not commence business or borrow until it obtains a certificate from the CRO confirming
- that an application has been made in the prescribed form,
- that the relevant nominal capital is at least the authorised minimum amount and
- that a statutory declaration of compliance has been furnished.
The declaration of compliance must set out certain matters relating to the formation of the company, capital allotment and allocation and the benefits given or intended to be given to promoters. The certificate is conclusive evidence.
PLC Trading II
The commencement of business or borrowing without completing the above requirements is an offence. Officers and others in default may be convicted as principals. If the company enters obligations in breach, the obligations remain, but the directors are liable to indemnify the other party for any loss incurred.
A PLC may be struck off the Register of Companies, where it has not received the trading certificate from the Registrar within one year of incorporation. Procedures apply to the strike off process. An initial notice must be served setting out prescribed particulars to the registered office and to each director. This sets out a 28 day period during which they may procure the issue of a trading certificate.
If a trading certificate is not procured, the registrar may publish a notice in the gazette with the intention to strike out. A further opportunity of at least 28 days is given to rectify the position. Thereafter, the CRO may strike out the PLC.
References and Sources
Companies Act 2014 (Irish Statute Book)
Companies Act 2014: An Annotation (2015) Conroy
Law of Companies 4th Ed. (2016) Ch.31 Courtney
Keane on Company Law 5th Ed. (2016) Hutchinson
Other Irish Sources
Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury
Introduction to Irish Company Law 4th Ed. (2015) Callanan
Bloomsbury’s Guide to the Companies Act 2015 Courtney & Ors
Company Law in Ireland 2nd Ed. (2015) Thuillier
Pre-2014 Legislation Editions
Modern Irish Company Law 2nd Ed. (2001) Ellis
Cases & Materials Company Law 2nd Ed. (1998) Forde
Company Law 4th Ed. (2008) Forde & Kennedy
Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy
Companies Acts 1963-2012 (2012) MacCann & Courtney
Constitutional Rights of Companies (2007) O’Neill
Court Applications Under the Companies Act (2013) Samad
Company Law – Nutshell 3rd Ed. (2013) McConville
Questions & Answers on Company Law (2008) McGrath, N & Murphy
Make That Grade Irish Company Law 5th Ed. (2015) Murphy
Company Law BELR Series (2015) O’Mahony
Companies Act 2006 (UK) (Legilsation.gov.uk)
Statute books Blackstone’s statutes on company law (OUP)
Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington
Company Law in Context 2nd Ed. (2012) D Kershaw
Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam
Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington
UK Practitioners Services
Tolley’s Company Law Handbook
Gore Browne on Companies
Palmer’s Company Law