Companies (Miscellaneous Provisions) (COVID-19) Bill 2020Thursday, 30 July 2020
In response to the COVID-19 pandemic, the Irish government recently published the Companies (Miscellaneous Provisions)(COVID-19) Bill 2020 (the “Bill“). The purpose of the Bill is to introduce temporary measures to address some of the practical and compliance challenges which are facing companies in light of the COVID-19 pandemic. If the Bill is enacted the temporary measures will remain effective until 31 December 2020 (the “Interim Period“). However, the Bill does provide for an extension of the temporary measures beyond 31 December 2020.
If the Bill is enacted what will the key changes be for companies?
Execution of documents
A company will have greater flexibility when executing documents under the company seal. It will not be necessary to have the signatures of the directors and/or company secretary and the affixation of the company seal all on the same page. This will allow documents to be executed under the company seal in situations where the directors, company secretary and company seal are in different locations.
Extension of AGM deadline
A company will be able to hold its annual general meeting on any date before 31 December 2020, regardless of the deadlines set out in the Companies Act 2014 or the company's constitution.
A company will be able to convene and hold general meetings (annual general meeting or extraordinary general meeting) by virtual means provided that all attendees have a reasonable opportunity to participate in the meeting. This means a company will be able to use audience participation software such as Zoom or Microsoft Teams to hold general meetings.
Prior to the day of a general meeting, the directors of a company will be able to:
- postpone general meetings,
- change the venue of general meetings,
- change the means of holding general meetings or
- cancel the general meeting provided such action is deemed necessary to comply with public health guidance or restrictions on movement or gatherings.
Cancellation or reduction of recommended dividends due to consequences of COVID-19
Where the directors of a company have recommended the payment of a dividend, the directors will be able to:
- withdraw the resolution to approve the dividend or
- propose an amendment to that resolution to provide for a dividend less than that originally recommended.
This will be permitted in situations where the directors form the opinion that due to the actual or perceived consequences of COVID-19 on the affairs of the company, the divided ought to be cancelled or reduced to a particular amount.
Increase of the debt threshold for a winding up
The Bill proposes to amend section 570 of the Companies Act 2014 which sets out the debt threshold for the commencement of a winding up in court.
Section 570 currently provides that a company shall be deemed to be unable to pay its debts if a creditor to whom the company is indebted in a sum exceeding the threshold of €10,000 (or €20,000 in the case of two or more creditors acting together), has served on the company a demand in writing requiring the company to pay the sum so due and the company has, for 21 days after the date of the service of that demand, neglected to pay the sum to the creditor. Under the Bill the €10,000 threshold will increase to €50,000 for the duration of the Interim Period. This will be of some assistance to companies who are facing cash-flow difficulties.
Electronic creditors' meetings
As with general meetings, creditors' meetings of a company may also be held by virtual means. The Bill also sets out requirements in relation to the form of notices of creditors' meetings and the conduct of voting at such creditors' meetings.
Extension of period for submission of examiners' report
The examiner of a company will have a longer period for the submission of the examiner’s report to court. An examiner currently has up to 70 days to submit the examiner's report with the possibility of a 30 day extension. The Bill provides for an additional extension of 50 days, which if granted, would allow 150 days for the submission of the examiner’s report to court. This will be of interest to companies who are or are intending to avail of court protection from creditors.
For more information or general advice on what the Bill might mean for you and your business, please contact Gillian O’Shaughnessy (Partner - Corporate) or John Fitzgerald (Head of Corporate Restructuring and Insolvency).