The Companies Act 2014


What Is The Companies Act 2014?

The Companies Act 2014 is a comprehensive legislation that governs the establishment and operation of companies in Ireland. It came into effect on June 1, 2015, replacing the previous Companies Acts dating back to 1963. The Act aims to simplify company law, enhance corporate governance, and promote business efficiency and transparency. The Companies Act 2014 sets out a comprehensive set of rules and regulations that govern the establishment, operation, and management of companies in Ireland. These regulations aim to enhance corporate governance, ensure transparency, and protect the interests of shareholders and stakeholders. If you have set up a company in Ireland, it is important to understand the Companies Act and have a grasp of Irish Company Law when incorporating a company.

Why Is It Important?

One important aspect of the Act is the introduction of directors’ duties and responsibilities. Directors are required to act honestly and responsibly in the best interests of the company, exercising care, skill, and diligence. They must avoid conflicts of interest and declare any potential conflicts that may arise in the course of their duties. Directors are also responsible for ensuring accurate financial reporting, maintaining proper accounting records, and preparing annual financial statements in accordance with the relevant accounting standards. These can be legal obligations such as filing tax returns, registering beneficial owners, and general legal compliance from an operational perspective.

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The Act imposes requirements regarding the composition of the board of directors. Companies must have at least two directors, with at least one director being a resident in the European Economic Area (EEA). If not, then the company will have to have a section 137 bond in place in order for them to legally comply. The Act also mandates that certain categories of companies, such as public limited companies, have at least two non-executive directors. These provisions promote diversity, independence, and accountability in corporate decision-making.

Financial Reports

Financial reporting and auditing are subject to stricter regulations under the Companies Act 2014. After you set up a company in Ireland, you are required to prepare annual financial statements, which must be audited in certain cases. The Act sets out detailed rules on the format and content of financial statements, ensuring consistency and comparability. It also establishes the Irish Auditing and Accounting Supervisory Authority (IAASA), which oversees the auditing and accounting professions, promoting quality and integrity in financial reporting. Irish Formations can provide a free referral to an Accountancy firm to help you with this.

The Act introduces measures to protect shareholders’ rights and ensure their active participation in company affairs. Shareholders have the right to attend and vote at general meetings, where important decisions are made. The Act also enhances shareholders’ access to information by requiring companies to provide financial statements, resolutions, and other relevant documents to shareholders. It establishes safeguards against abusive related party transactions, requiring such transactions to be disclosed and approved by shareholders.

Strike Offs

In addition, the Act addresses insolvency and corporate restructuring procedures. It introduces new mechanisms for voluntary liquidation, and creditors’ voluntary winding-up. Irish Formations can help with this service. It is important that when creating a company in Ireland you are familiar with these regulations.