PRIVATE COMPANY STATUS

Under Irish Company Law, a company to be treated as a private company (in contrast to a public limited company) must include in its Articles of Association provisions:-

a. restricting the number of its members to 50;

b. restricting in some manner transfers of shares;

c. prohibiting any offer of shares or debentures to the public; and

d. prohibiting the issue of bearer shares.

NON-RESIDENT COMPANY STATUS AND CORPORATION TAX - CURRENT LAW

In Ireland, resident companies are charged with Corporation Tax on all their worldwide profits. Non-resident companies, on the other hand, pay tax only on profits derived from any trade carried on through a branch or agency of the Company in Ireland.

Corporation tax legislation does not indicate how the residence of a company is to the determined and therefore the rules relating to residence have evolved through case law. The principal determination that the Irish Revenue Commissioners concern themselves with is where the central management and control of the Company is carried on. This is a question of fact and not just of location and the Revenue will look to the actual meetings rather than the day to day management of the Company, that is, to the place where important business decisions are made. A non-resident company, therefore should have its' meetings outside Ireland and the Articles of Association of the Company should provide that all Directors' Meetings and meetings of shareholders must be held outside Ireland.

Other incidental factors are also taken into account by the Revenue, such as:

  • the country in which dividends are declared by the Company;
  • the residence of the Company Secretary;
  • the location of the Company's seal;
  • the place where the accounts of the Company are made up and audited.

Past experience indicates that the Revenue Commissioners are more concerned with the location of exercise of management control by the Directors rather than the incidental factors above.

LIKELY DEVELOPMENTS CONCERNING NON-RESIDENT COMPANIES

The situation with regard to non-resident companies is currently under scrutiny with the likelihood of the introduction of legislation in this area before the end of this year. At present it is unclear what exactly will be contained in such legislation but it is widely thought that one of the changes will mean that registration will determine residence (presumably in addition to the existing management and control test set out above). It is also thought that under the proposals, every company registered in Ireland will have to have at least one director who is normally habitually resident in the European Union.

The following are the methods by which such a company can be acquired:

ORDINARY FORMATIONS

A. Ordinary company formations take between three and four weeks at present.

URGENT FORMATIONS

B. This firm is a member of a scheme which has been agreed with the Companies Registration Office for urgent formations. A standard printed set of Memorandum and Articles of Association has been agreed and does not require to be checked by the Companies Registration Office. This procedure can be used only when the company is required for immediate trading purposes and a declaration to this effect must be submitted by one of the proposed first directors. Adopting this procedure, incorporation should take approximately ten days.

SHELF COMPANIES

C. Shelf Companies already formed by Company Formation Agents can be bought immediately on demand. The Agents generally have a variety of companies available from limited to unlimited, public and private etc. The objects contained in the Memorandum of Association of the company are generally in standard form and these companies will have an issued share capital of IR£2.00. Once purchased, the objects can be tailored to suit the business to be carried out by the company, the share capital can be increased and the existing directors and secretary will be replaced by those taking over the company.

GENERAL REQUIREMENTS

1. Under Irish company law, a company must have at least one shareholder, although it is more common to have two each owning at least one share each. Shares are issued by the company in registered form (details of the identity of the shareholder or his nominee must be registered with the company) and it is not possible for shares to be held in bearer form.

2. A company has a stated authorised share capital which is the aggregate par value of the shares that the Memorandum and Articles permits the company to issue. There is no limit to the authorised share capital a company may have and the share capital can be stated in any combination of currencies as well as Irish Pounds. The authorised share capital may be increased or reduced by a special resolution of the members of the company.

3. A company can issue shares up to the maximum authorised share capital level. The company must also have at least two Directors who must be individuals for the time being and a Secretary (who can, if required, be one of the Directors, or can itself be a corporation).

FEES AND DISBURSEMENTS

The following are the applicable minimum charges for each of the above mentioned Formation procedures:

Ordinary Formations

3 - 4  week incorporation)

Companies Registration Office fees for registration 		IR£ 51.00
Commissioners fee								IR£  3.00
Share Register and Seal				  	        c.	IR£ 35.00

Minimum Total							      IR£  89.00
Plus professional fee

Urgent Formations

(10 - 12 day incorporation)

Companies Registration Office fees for registration		IR£ 51.00
Pre-printed Memorandum & Articles of Association			IR£  4.44
Commissioners fee								IR£  6.00
Share Register and Seal				     	   	c.    IR£ 35.00
Companies Registration Office fees to
transfer shares, change directors, secretary
registered office and Memorandum and Articles			IR£  22.00
Minimum Total								IR£118.44
Plus Professional Fee

Purchase of Shelf Companies

(Immediate)

Purchase fee							     	     c.IR£265.00

Minimum Total							       IR£265.00
Plus professional fee

The registration fee of IR£51.00 referred to above is based on initial issued share capital of IR£100.00 or less. Should the issued share capital increase above this amount then capital duty at the rate of 1% would be payable on the amount of such additional issued capital.

INFORMATION REQUIRED

The following is a list of information that is required prior to the formation of the company:

1. Type of Formation

a. Ordinary Formation

b. Urgent Formation.

c. Purchase of Shelf Company

2. Type of company required

a. Limited Trading

b. Limited Investment/Holding

c. Unlimited Investment/Holding


3. Directors and Secretary

a. Name - full first name and surname

b. Address of permanent residence

c. Occupation

d. Nationality

e. List of any other Directorships of any other companies wherever incorporated, held now or within the last ten years.

4. Subscriber Shareholders

a. Name

b. Address of permanent residence or principal place of business.

5. Suggested names for the Company with alternatives

6. Primary Objects

7. Share Capital

8. Situation of Registered Office

NOMINEE SERVICES

Two of our nominee companies, G.S.O'B. Nominees Limited and G.S.O'B. Trustees Limited can, if required, act as nominee shareholders for a non-resident Company. However, we do not provide nominee directors. Please note that as a matter of company policy we will not hold a share as nominee for a person unless we know the identity of the person and that person is recommended to us by a lawyer from his/her country.

FINANCIAL / ACCOUNTING DISCLOSURE REQUIREMENTS

Pursuant to a European Community Directive, domestic legislation was enacted in 1986 which requires public annual disclosure of certain accounting and financial information by all limited companies incorporated in the State. The level of detail required to be disclosed depends upon the size of the enterprise. In summary, small enterprises are required to file annually a formal Balance Sheet without an obligation to file a Profit and Loss account and Directors' Report. Medium size enterprises are required to file a Balance Sheet together with a Profit and Loss Account and Directors' Report. Small enterprises are those which do not exceed two of the following criteria:-

a. annual balance sheet total (total of fixed assets and current assets): IR£1,500,000.00

b. turnover annually: IR£3,000,000.00

c. number of employees not exceeding - 50

Medium sized enterprises are those which do not exceed two of the following criteria:-

a. annual balance sheet total - IR£6,000,000.00

b. annual turnover - IR£12,000,000.00

c. average number of employees in the year - 150

Large enterprises are required to file more detailed information.

REFERRAL TO REVENUE COMMISSIONERS

The Companies Office when examining documents lodged in order to form a company will refer each case to the Revenue Commissioners when the centre of management of the company is going to be outside the State.

The Revenue Commissioners will then contact those forming the company and will require certain information to be supplied. This involves a routine form being filled out. The information required includes:-

a. the address of the centre of management;

b. where the company board meetings will be held;

c. confirmation as to from where the company will effectively be managed; and

d. the residence of directors.

ANNUAL RETURNS

Under Irish law an Annual Return is required to be filed 14 days after the date of the Annual General Meeting or, if there has been no Annual General Meeting, the Annual Return is required to be filed by the 31st day of December each year. This Return must be filed together with the yearly financial information referred to above.

NOTIFICATIONS OF CHANGE OF DIRECTORS AND OTHER CHANGES

Information relating to any changes in Directors or Secretary, or Registered Office is required to be set out on a Companies Office Form B10 and this form must be filed in the Companies Office.

Any changes in the company's issued share capital must also be filed in the Companies Office and with the Revenue Commissioners.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.