The Companies (Miscellaneous Provisions) (Covid-19) Act 2020 (the “Act”) was signed into law on 01 August 2020.
The Act amends the Companies Act 2014 and the Industrial and Provident Societies Acts 1893 (as amended) on a temporary basis to address certain compliance and procedural issues facing companies and societies as a result of the Covid-19 pandemic.
The Act remains to be commenced by ministerial order.
Temporary Nature of Amendments
The amendments set out in the Act will only apply for an initial temporary period to 31 December 2020 (referred to in the Act as the “interim period”) but are capable of being extended for further periods by ministerial order. However any extension of the initial temporary period must be based on the public interest and the continuing effects of Covid-19 on public health.
What the Act Provides
(a) Execution of Documents
Section 5 of the Act (introducing a new Section 43A of the Companies Act 2014) provides that documents to be executed under seal can be executed in different counterparts with all counterparts then regarded as the one instrument.
This overcomes the difficulty of the seal and authorised signatories being in different locations.
(b) General Meetings
Sections 6 to 11 of the Act seek to introduce provisions seeking to ease the legal requirements for the holding of general meetings to address social distancing requirements brought about by the Covid-19 pandemic and the related regulations and guidance issued by health authorities.
Briefly:
(i) companies due to hold an AGM in the period from the commencement date of the Act to 31 December 2020 can postpone the AGM to 31 December 2020;
(ii) companies can conduct general meetings wholly or partly by electronic means provided all attendees have a reasonable opportunity to participate in the meeting;
(iii) where meetings take place using electronic means provided by a company then the technology used should ensure that attendees can hear what is being discussed, and to the extent entitled under the company’s constitution to speak and to submit questions and comments orally to the chairperson;
(iv) technology used must provide a mechanism for casting votes (either before or during the meeting);
(v) any electronic communication used by attendees at meetings must be secure and minimize the risk of data corruption and/or unauthorized access; and
(vi) member participation in a meeting by electronic means is to be counted in the quorum for such meeting.
Notices convening general meetings where electronic means are being employed must specify the electronic platform that is being used for the meeting and the procedure to be adopted for voting on resolutions proposed to be passed at the meeting.
Directors also have the ability to cancel meetings; change the method of holding meetings and change the venue of a meeting where it is deemed necessary to do so to comply with public health guidance.
(c) Dividends
Where the directors have previously recommended a dividend to be adopted by resolution at a general meeting, Section 10 of the Act (introducing a new Section186A of the Companies Act 2014) allows the directors to withdraw that resolution for consideration or to amend it by reducing the amount of the dividend recommended due to the actual or perceived consequences of Covid-19 on the affairs of the company.
(d) Winding-Up
Section 14 of the Act (introducing a new Section 570A of the Companies Act 2014) increases the threshold for deemed insolvency from €10,000 to €50,000.
Where a company is insolvent (i.e. unable to pay its debts as they fall due) during the interim period a creditor will only be able to bring an application for an order for the winding-up of that company where the debt owed amounts to €50,000 or more.
A creditor’s meeting may be held wholly or partly by the use of electronic communications technology during the interim period with similar rules to those for participation in general meetings in relation to the use of electronic meeting means.
(e) Examinership
Under Section 13 of the Act (amending Section 534 of the Companies Act 20914) an examiner can now in exceptional circumstances seek an extended period of 50 days in which to make his report to the Court under the Companies Act 2014.
This extends the reporting period from 70 days (current) to 120 days and the maximum period of an examinership to 150 days.
Exceptional circumstances can include but are not limited to the adverse effects of Covid-19.
Industrial and Provident Societies
The Act also makes changes to the Industrial and Provident Societies Acts 1893 (as amended) to provide flexibility for holding general meetings in similar for to that for companies outlined above.
The Act does not contain any provisions amending the current law on the risk of restriction or imposition of personal liability on directors for reckless trading during the Covid-19 pandemic.
Professional advice should always be taken before acting on any of the matters discussed. Please contact a member of our team should you wish to discuss this topic further.
