Corporate Reorganisation

The 2014 Act made new provision in relation to the reorganisation of a company’s capital and undertaking. A limited company may enter a transaction by which its assets, undertakings or liabilities are transferred to another company or body corporate, in return for shares or securities of that body corporate being issued to the shareholders of the company or its holding company.

A company may for any purpose (with the result that its company capital is thereby re-organised) transfer or dispose of one or more assets, an undertaking or part of an undertaking or a combination of assets and liabilities, to a body corporate, on the terms that the consideration (or part of the consideration) comprises shares or other securities of that body corporate paid (by their allotment of them) to the members of the relevant company or of its holding company rather than to the relevant company

Formerly, issues arose in relation to whether there might be sufficient distributable reserves to permit the allocation of new shares to the existing shareholders in a reorganisation. The 2014 Act effectively allows for the re-organisation (irrespective of the absence of distributable reserves) provided that the Summary Approval mechanism is followed or alternatively, where it approved by special resolution confirmed by the court.

Reorganisation Procedure

A corporate reorganisation of the types set out above may be undertaken if it is

  • approved by the relevant company by employing the Summary Approval Procedure; or
  • approved by a special resolution passed by the relevant company that is confirmed by the court as if that resolution provided for a reduction of the company’s company capital; the relevant provisions apply accordingly with the necessary modifications.

Where the reorganisation is approved or confirmed by order of the court, there shall be deducted from such of the relevant company’s reserves and company capital as the relevant company shall, by ordinary resolution, resolve an amount equivalent to the value (as stated in, or ascertainable from, the accounting records of the company immediately before the transfer or disposal) of the transferred or disposed asset or assets, undertaking or part of an undertaking.

The summary approval procedure declaration for the variation of company rights and the reduction of capital requires that the directors confirm, that having made inquiry, that the company is able to discharge its debts and liabilities in full and that they do not have actual or constructive notice that the company will incur any material, extraordinary or future liability within 12 months of the date of the declaration. See the section on the reduction of capital for the details of the procedures.

Any transaction in contravention of the requisite procedures is voidable at the instance of the relevant company against any person (whether a party to the transaction or not) who had notice of the facts which constitute such contravention.

Simple Capital Changes

The provisions for the variation of share capital, including its consolidation, division, increase, decrease and conversion were re-enacted, with changes in the 2014 Act. Save to the extent that its constitution otherwise provides, a company may by ordinary resolution, do any one or more of the following, from time to time—

  • consolidate and divide all or any of its shares into shares of a larger nominal value than its existing shares;
  • subdivide its shares, or any of them, into shares of a smaller nominal value, provided however that in the subdivision, the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;
  • increase the nominal value of any of its shares by the addition to them of any undenominated capital;
  • reduce the nominal value of any of its shares by the deduction from them of any part of that value, subject to crediting of the amount of the deduction to undenominated capital, other than the share premium account;
  • convert any undenominated capital into shares for allotment as bonus shares to holders of existing shares;
  • where a company has an authorised share capital, increase that authorised share capital.
  • in the case of a company whose constitution states an authorised share capital (in  addition to its power to do any of the foregoing things)—increase its share capital by new shares of such amount as it thinks expedient; or cancel shares  which have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

Registration of Capital Changes

Where the company has

  • consolidated or divided its capital,
  • converted its shares into stocks,
  • reconverted stocks into shares,
  • subdivided its shares,
  • redeemed any redeemable shares,
  • redeemed preference shares,
  • cancelled any shares,

it must give notice to the CRO. The return is in a prescribed form and must give particulars of the resolution varying the share capital. It must be made within 30 days. If a company does not do so, the company and any officer of it who is in default is guilty of a category 3 offence.

Where a company has an authorised share capital, it may by resolution increase that authorised share capital. It must file a notice of increase within 30 days with the Companies Registration Office. This must include particulars as may be prescribed with respect to the classes of shares affected and the conditions subject to which the new shares have been issued. A contravention by the company or by an officer in default is a category 3 offence.

Variation of Class Rights I

The rights attaching to a class of shares may not be varied without a special resolution of the class of shareholders concerned. In some circumstances, the consent of all shareholders is required.

Where the class rights are attached otherwise than by the constitution and the constitution does not contain provisions in relation to variation, they may be varied by a resolution of 75% in nominal value of the shareholders at a class meeting or by consent in writing of 75%, in nominal value and by compliance with any requirement (however it is imposed) in relation to the variation of those rights

Where the rights are attached by the constitution or otherwise and there is provision in the constitution for variation of the rights; then where the variation of the rights is connected with an authority in relation to issue of shares or the reduction of the company’s capital, then the rights shall not be varied unless the above provisions (75% class approval) are complied with, and the requirements of the constitution in relation to variation of rights is complied with, to the extent that it differs from the above default 75% requirement.

Variation of Class Rights II

Where the rights are attached to a class of shares in the company by the constitution or otherwise and

  • where they are so attached by the constitution and it contains provision with respect to their variation which had been included in the constitution at the time of the company’s original incorporation; or
  • where they are so attached otherwise, the constitution contains such provision (whenever first so included),

and in either case the variation is not connected with an authority in relation to the issue of shares or reduction of the company’s capital, then those rights may only be varied in accordance with that provision of the constitution.

Variation of Class Rights III

Where the rights attached to a class of shares by the constitution and it does not contain provisions with respect to the variation of the shares, then the rights may be varied only if all members of the company agree to the variation.

An amendment of a provision contained in the constitution of the company for the variation of the rights attached to a class of shares or the insertion of such provision is itself treated as a variation of those rights. A variation includes an abrogation of rights.

Save where the company’s constitution provides otherwise, the rights of holders of shares of a class issued by the company with preferred or other rights shall not unless expressly provided by the terms of issue, be deemed to be varied by the creation or issue of further shares ranking pari passu with them.

Variation Procedure

The quorum for class meetings for the approval of a variation of class rights is two persons holding or representing by proxy, at least one-third in nominal value of the shares of that class and at an adjourned meeting one person. The holder of shares present in person or by proxy may demand a poll.

Where class rights are varied by resolution, the holder of not less than 10% of the issued shares of that class, who did not consent to or vote in favour of the resolution, may apply to the court to have the variation cancelled. In this case, the variation shall not have effect unless and until it is confirmed by the court. The application must be made within 28 days or such longer period as the court allows, after the consent or resolution.

At the hearing, the applicant and such other persons who to the court appear to be interested in the matter may be heard. The court, if satisfied having regard to all the circumstances that the variation would unfairly prejudice the shareholders of the class represented by the applicant, may disallow the variation and not confirm it. The court order is to be filed with the CRO.

References and Sources

Primary References


Companies Act 2014 S.83 -S.93 (Irish Statute Book)

Companies Act 2014: An Annotation (2015) Conroy

Law of Companies 4th Ed.  (2016)  Ch.10   Courtney

Keane on Company Law 5th Ed. (2016) Ch.16 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

Shorter Guides

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

UK Sources

Companies Act 2006 (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

Palmer’s Company Law