On 21 August 2020, the Companies (Miscellaneous Provisions) (COVID-19) Act 2020 (the “Act”) was commenced by order of the Minister into law. This legislation addresses specific company law issues arising because of the ongoing and unprecedented Coronavirus crisis. To ease the unprecedented uncertainty and disruption suffered by Irish companies as a result of the Coronavirus pandemic, the Act will temporarily amend certain areas of the Companies Act 2014 (the “Companies Act”) to deal with certain specific company law issues arising as a result of the pandemic.
The measures in the Act will remain in place until 31 December 2020 (the “Interim Period”). However, the Act allows for an extension of the temporary measures beyond the Interim Period if deemed necessary.
The key changes introduced by the Act are:
Document Execution: – Section 5 of the Act amends section 43 of the Companies Act to enable the use of multiple counterparts of a transaction document to be used for signing and sealing during the Interim Period. Under the Act, these counterparts will be considered as one single document.
This amendment will assist companies to complete transactions or restructurings in situations where it is not possible for the company seal, director and secretary to be in the same location.
Annual General Meetings: – Section 6 of the Act amends Part 4 of the Companies Act by allowing for AGMs to be held at any date prior to 31 December 2020, regardless of any deadline set in the Companies Act or the Constitution of the company.
Electronic Meetings: – Under section 6 of the Act, General Meetings, AGM’s, and EGM’s do not need to be held in a physical venue and can be conducted, wholly or partially, by electronic means, provided all attendees have a reasonable opportunity to hear and participate.
The Act also includes specific requirements in relation to the form of notice for electronic meetings (including class meetings) and the conduct of voting at such meetings. The Act also provides for remote and secure members voting. All members who attend electronically will also be counted in the quorum of the meeting.
Rearranging Meetings: – Section 6 of the Act also gives directors the power to:
At any time prior to the day of the scheduled meeting where they deem it necessary to do so to comply with public health advice.
Dividends: – If a dividend has been recommended, section 10 of the Act allows directors to: (i) withdraw the resolution to declare a dividend; or (ii) reduce the amount proposed, where they deem it necessary due to the actual or perceived impact of COVID-19 on the company’s business.
Examinership: – A new subsection is proposed to be inserted into the Companies Act by section 13 of the Act extending the court protection for companies in examinership from creditors from 100 to 150 days during the Interim Period. The Court may also allow an Examiner an additional 50 days to lodge his or her report to the Court where, due to exceptional circumstances, he or she has been unable to so within the initial 70 days, or 30 additional days afforded under the Companies Act.
Winding Up Applications: – The Act proposes that the debt threshold for the commencement of a winding up application be increased from €10,000 (single creditor) or €20,000 (multiple creditors), to €50,000. This will assist companies facing cash flow issues during the pandemic.
Creditors Meetings: – A new section to be added to the Companies Act under section 19 of the Act allowing for certain creditors meetings (i.e. on the context of a liquidation or examinership) to be conducted wholly or partially by electronic means provided all those entitled to attend have a reasonable opportunity to hear and participate, and there is a mechanism for casting votes either before or during the meeting.
In summary, the Act aims to provide assistance to companies in these difficult times by easing execution requirements and allowing the use of technology to cope with the unique restrictions that Irish companies are currently facing. Additionally, the increased protections afforded to companies under the threat of insolvency will ease during the Interim Period.