Based on some of the recommendations of the Company Law Review Group the Government has approved priority drafting of the Companies and Industrial and Provident Societies (COVID-19) (Amendment) Bill 2020 with a view to early enactment.
Please find the General Scheme of the Bill attached here.
The Corporate Governance Committee of the CLRG (of which KPMG’s Salvador Nash is Chair) proposed amendments (which are adopted in the Bill) to specifically provide that companies can have virtual general meetings to include cancellation and rescheduling of meetings, provide for a variation or withdrawal of dividend resolutions, an extension of time for the holding of the 2020 Annual General Meeting (with the exception of regulated entities) and permitting the execution of documents under seal by the use of counterparts. Similar general meeting provisions are also provided for in the Bill in respect to Industrial and Provident Societies.
There were also recommendations from the Corporate Insolvency Committee and some amendments worth highlighting include the following: -
- increasing the amount in which a creditor can issue a statutory demand to place a company into liquidation to €50,000;
- providing for creditors meetings to be held by technological means;
- amending the legislation to provide that the Court can have power to extend the protection of examinership because of COVID-19; and
- putting, on a statutory footing, a director's duty to have regard to the interests of a company's creditors and to preserve the company's property (this was a previous recommendation of the CLRG).
It is important to highlight the foregoing amendments (with the exception of a director's duty to creditors) would only remain operative until 31 December 2020, subject to extension to 30 June 2021.
Additionally, no amendments are being proposed to: -
- provide protection to directors from personal liability for a company’s debts (because a Court determines they carried out business in a reckless manner) because they continued to trade, in good faith, during COVID-19; or
- limit applications for restriction orders against directors of insolvent companies (who traded during Covid-19).
The foregoing is most likely because of the Director of Corporate Enforcement’s statement on COVID-19 and the insolvency functions of that office. It is of the view that it would generally not consider directors to have acted dishonestly or irresponsibly in circumstances where a company has become insolvent as a consequence of events outside the director’s control.
The Office of the Parliamentary Counsel will now be requested to draft the Bill before it is presented to the Dáil and the Seanad.
