Ireland is an obvious choice as it will be the only English speaking country in the EU. We have the same language, the same legal system and a pro-business eco system.
US companies, too, looking to establish a foothold in the EU, or considering a move from the UK, may too look to Ireland, for much the same reasons.
In Ireland, businesses are governed by the Companies Act 2014 (the Act). External companies setting up in Ireland may look to incorporate a company or establish a branch.
Types of company
Whilst there are many different types of company in Ireland, the most common is the private limited company. There are two types of private company limited by shares in Ireland - an LTD, which is a simplified form of company and a designated activity company (DAC) (which can also be limited by guarantee). The LTD is the form of company used by the vast majority of incorporators. The DAC is designed to be used for companies incorporated for a specific purpose, such as joint ventures.
Name of company
There are restrictions on the choice of company name. A name may be refused if it is identical to or too similar to a name already appearing on the register of companies, is offensive or would suggest state sponsorship. It is possible to search the Companies Registration Office (CRO) register to see if the name is available. If it is, it can be reserved for 28 days. A LTD must end its name with "Limited" or the Irish language equivalent, "Teoranta". A DAC must end its name with either "Designated Activity Company" or "Cuideachta Ghníomhaíochta Ainmnithe" unless exempted. After incorporation, abbreviations such as Ltd or DAC can be used.
Irish incorporated companies must register a business name, if they intend to operate under a name that is different from their registered name.
Directors
A DAC must have at least two directors whereas LTD’s may have a sole director. All directors must be over the age of 18 years. Where a company has only one director, that person may not also hold the office of secretary of the company. A person cannot be a director of more than 25 companies at a particular time. Directors must be individuals and unless the Company holds a surety bond to the value of €25,394.76 at least one director must be resident in the EEA. After incorporation it is possible to apply to the CRO for an exemption from the requirement to have an EEA resident director, provided the Revenue Commissioners have certified that the company has a real and continuous link with one or more economic activities in Ireland.
Company secretary
Companies are required to have a company secretary who also must be over the age of 18. However the position of company secretary can be held by a company. A statutory duty has been imposed on directors to ensure that the company secretary has the requisite skills and resources to discharge his/her/its duties.
Registered office
The company must have a registered office which must be a physical location (not, for example a post office box) and can be located anywhere in the state. It is also possible to use the address of a registered agent as the company’s registered office.
Carry on activity
A company cannot be incorporated in Ireland unless it carries on activity in Ireland. An LTD may not carry on the activity of credit institutions or insurance companies (which must incorporate as another form of company) In addition an LTD cannot list debt securities. An anomaly in the Act (which is expected to be amended in due course) provides a very wide definition of “credit institution” which includes companies giving loans on their own account, accordingly companies that do this (such as group treasury companies) should incorporate as a DAC.
Share capital and shareholders
A DAC is required to have an authorised share capital stated in its constitution. An LTD is not required to have an authorised share capital, but it may. A private company must be incorporated with at least one issued share. Shares in a limited company must have a minimum nominal value and the shares cannot be issued at a value less than this amount (but can be issued at a value greater than their nominal value).. There is no minimum capital requirement for a private company other than the nominal value of 1 share e.g. €1.00.
A private company may have a single shareholder, which can be a natural person or a company. Both LTD and DAC may have up to 149 shareholders.
Constitution
The LTD has a one document constitution and does not have an objects clause (therefore the LTD has the capacity of a natural person). The DAC has a two document constitution which includes a memorandum of association with an objects clause setting out the objects for which the DAC was formed. The Act contains many governance provisions applicable to both LTDs and DACs some of which may modified in the constitution.
Form A1
Registration of an LTD or DAC requires the completion of a Form A1, setting out details of the company name, its registered office, secretary and directors (including confirmation that at least one director is resident in the EEA), their consent to acting as such, the subscribers and details of their shares. This is filed in the CRO with the company’s constitution. A certificate of incorporation is issued by the CRO, usually within 5 days from filing.
Registering a branch
Instead of incorporating an Irish company, UK or US companies may operate through a branch in Ireland. There is no requirement to register the branch unless the branch is relatively substantial. For example having an employee based in Ireland – say a salesperson – would not on its own give rise to a requirement (or a right) to register a branch. To satisfy the requirements for a branch the foreign company should have an on-going connection with the particular premises from which business is conducted and some degree of interest in the property e.g. by lease. There should also be locally based management which can negotiate business and contracts directly with third parties.
Once a branch is established, it must be registered by filing a Form F12 together with authenticated copy constitutional and accounting documents of the parent company. Note also that the requirement to register a branch only applies to foreign limited companies – foreign unlimited companies cannot register a branch in Ireland.
