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Practical Law Multi-Jurisdictional Guide 2012/13 Corporate Governance and Directors’ Duties

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Practical Law Multi-Jurisdictional Guide 2012/13 Corporate Governance and Directors’ Duties PRACTICAL LAW MULTI-JURISDICTIONAL GUIDE 2012/13 CORPORATE GOVERNANCE AND DIRECTORS’ DUTIES The law and leading lawyers worldwide Essential legal questions answered in 21 key jurisdictions Analysis of critical legal issues AVAILABLE ONLINE AT WWW.PRACTICALLAW.COM/CORPGOV-MJG MULTI-JURISDICTIONAL GUIDE 2012/13 CORPORATE GOVERNANCE AND DIRECTORS’ DUTIES Ireland Gina Conheady and Robert O’Shea www.practicallaw.com/9-502-2950 Matheson CORPORATE ENTITIES Generally applicable legal provisions. For example, tax, employment and criminal legislation (and so on), and the 1. What are the main forms of corporate entity used in your common law. jurisdiction? The Office of the Director of Corporate Enforcement (ODCE) guidance notes. The ODCE plays an important role in enforcing and encouraging compliance with Irish company The main form of corporate entity used in Ireland is the limited law. The ODCE has published a number of non-binding best liability company. There are two types of limited liability company: practice guidelines that seek to promote transparency and Private limited liability companies. These can be limited accountability. by shares or by guarantee. In private companies limited by Information leaflets and guidance notes. The Companies shares, the liability of shareholders is limited to the amount, Registration Office (CRO) is the statutory authority for if any, of unpaid share capital. This is the most common registering companies in Ireland. It also plays an important form of corporate entity in Ireland. Private limited liability role in relation to the enforcement of Irish companies’ filing companies cannot offer their shares to the public and the obligations and has issued a number of useful information right to transfer shares must be restricted by the company’s leaflets and guidance notes in that regard. articles of association (articles). The number of members of a private limited liability company must be limited to 99 or The following additional regulations apply to public companies fewer persons. listed on the main market of the Irish Stock Exchange (ISE) Public limited liability companies. These are companies that (which is a regulated market): can offer their shares to the public. Public limited liability The ISE Listing Rules (Listing Rules). The Listing Rules set companies must have at least seven shareholders and an out conditions for listing and the continuing obligations that Country Q&A issued share capital of at least EUR38,095, of which 25% apply to companies listed on the main market of the ISE. of the nominal value of each share and the entire share premium must be paid up. Public limited liability companies The UK Corporate Governance Code as supplemented by the can have their shares admitted to trading on stock markets Annex published by the ISE (Code). (in Ireland or elsewhere), but this is not a requirement. Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to LEGAL FRAMEWORK trading (Prospectus Directive), the Prospectus Regulations 2005 (Prospectus Regulations) and the Prospectus Rules. The Prospectus Regulations and the Prospectus Rules 2. What is the regulatory framework for corporate governance govern the preparation and publication of prospectuses. and directors’ duties? Irish Takeover Panel Act 1997 (1997 Act) and Irish Takeover Rules (Takeover Rules). The Irish Takeover Panel The following are the principal sources of regulation for Irish monitors and supervises takeovers to ensure compliance companies (both public and private): with the 1997 Act and the Takeover Rules. The Companies Acts 1963 to 2012 (Companies Acts). This Transparency Directive Regulations 2007 (Transparency is the core legislation applicable to companies in Ireland. Regulations) and the Transparency Rules. The Transparency This legislation will be consolidated and simplified under Regulations and the Transparency Rules seek to enhance the forthcoming Companies Consolidation and Reform Act the transparency of information provided by issuers on a (Consolidation Act), which is expected to be enacted into regulated market. Irish law by the end of 2013. Market Abuse Regulations 2005 (Market Abuse Constitutional documents. Each company must have a Regulations) and Market Abuse Rules. The Market Abuse memorandum of association (memorandum) and articles. The Regulations and the Market Abuse Rules impose significant memorandum sets out a company’s name, its objects and obligations on issuers and strengthen the rules in relation to powers and its authorised share capital. The articles set out insider trading and market manipulation. the company’s internal regulations. Many Irish companies adopt the standard form model articles contained in the Companies Acts, known as “Table A” (Table A Model Articles). © This article was first published in the Corporate Governance and Directors’ Duties multi-jurisdictional guide 2012/13 and is reproduced with the permission of the publisher, Practical Law Company. MULTI-JURISDICTIONAL GUIDE 2011/12 CORPORATE GOVERNANCE AND DIRECTORS’ DUTIES The following regulations apply to companies listed on the Management Enterprise Securities Market (ESM) (which is an unregulated Day-to-day management of the company is typically delegated market): to the board in the articles with certain fundamental decisions ESM rules, which are published by the ISE (ESM Rules). relating to the company being reserved for the shareholders (for example, changes to the company’s memorandum and articles). Directive 2004/39/EC on markets in financial instruments (MiFID). Board members The Prospectus Regulations and the Prospectus Rules. The directors of a company together constitute the board. ESM-listed companies are encouraged to comply with the Irish company law restricts certain persons from being appointed Code or with certain key aspects of the Code. as directors, such as bodies corporate, undischarged bankrupts and persons subject to a disqualification order. There are a number of Irish public listed companies listed on markets outside of Ireland such as the NASDAQ, NYSE and Employees’ representation the London Stock Exchange (main and AIM markets) and these There is no general provision for employee representation on companies are subject to additional rules applicable to those the boards of Irish companies (other than certain state bodies). markets. However, a company’s articles or an agreement with a third party (such as a trade union) can provide for employee participation. 3. Has your jurisdiction adopted a corporate governance code? Number of directors or members All companies must have at least two directors. This will be Public companies listed on the main market of the ISE (but not reduced to one director in the case of private limited companies the ESM) must comply, on a comply-or-explain basis, with the under the forthcoming Consolidation Act. corporate governance standards set out in the Code. There is no upper limit on the number of directors that can be The Code sets out principles of good corporate governance under appointed, unless provided for in a company’s articles. the following headings: Leadership 5. Are there any general restrictions or requirements on the Effectiveness. identity of directors? Accountability, including internal control, audit committees and external auditors. Age Remuneration. There are currently no specific age restrictions for directors of Irish companies under Irish company law. However, given that the legal age Relations with shareholders. of capacity is 18 and a director’s appointment is not effective without consent, there is a strong argument that directors must be over 18. In the event of non-compliance with the Code, the company must This will be clarified under the forthcoming Consolidation Act, the provide a clear rationale for its deviation in its annual report. current draft of which (Consolidation Bill) specifies that no person can Country Q&A There are no prescribed governance requirements for ESM be appointed as a director (or secretary) unless he has attained the companies, however, many companies adopt at least some age of 18 years. There is no maximum age limit for directors. elements of the Code. Some ESM companies also look to the Nationality corporate governance guidelines for smaller quoted companies (QCA Code). The QCA Code applies key elements of the Code and Every Irish company must have at least one director who is other relevant guidelines where, because of the cost or complexity, resident in the European Economic Area (EEA), unless either: full compliance with the Code may not be appropriate. The QCA The company has filed a non-resident bond to the value of Code is voluntary rather than mandatory. EUR25,395 with the CRO. The company holds a certificate from the CRO confirming BOARD COMPOSITION AND REMUNERATION OF that the company has a real and continuous link with one or DIRECTORS more economic activities in Ireland. 4. What is the management/board structure of a company? The articles of a company may specify additional nationality requirements to satisfy tax residency requirements. Structure Gender Irish companies are managed by a single tier board of directors At present, Irish company law does not provide for gender quotas (board). on boards or any related disclosure requirements. For listed companies, the Code recommends that appointments to the board should be made with due regard for the benefits of diversity, including gender. FOR MORE about this publication,
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