The Companies (Corporate Enforcement Authority) Act 2021 (2021 Act) was signed into law on 22 December 2021. At the time of writing, it has not yet been brought into force.
The purpose of the 2021 Act is to replace the existing Office of the Director of Corporate Enforcement (ODCE) with a statutory and independent body to be known as the Corporate Enforcement Authority (CEA). It also introduces a number of welcome amendments to the Companies Act 2014 (2014 Act).
The amendments to the 2014 Act include:
- Clarification of the uses to which a company’s share premium account may be applied20.
- Clarification that a commonly used structure in group reorganisations, in which a company transfers its undertaking to another company in consideration for a share issue to the transferring company’s shareholders, is lawful, where the transferring company has distributable reserves that are at least equal to the value of the undertaking transferred.
- Where a private company limited by shares, acquires shares pursuant to section 106, they must be either cancelled or retained as treasury shares. The deﬁnition of treasury shares is amended to include shares acquired by a company pursuant to a merger or division.
- A reduction of capital effected in accordance with the 2021 Act is not to be a distribution under the 2014 Act and does not require the rules on distributions to be followed (in addition to the processes to effect the capital reduction).
- The directors of a PLC may decline a transfer of shares, subject to the constitution of a company, in certain circumstances, including to a person of whom they do not approve.
- More frequent reporting by liquidators to the CRO where so required by the Registrar.
- Removal of the Minister’s power to grant an exemption from showing the names of directors on business letters.
- Upon commencement of Section 35 of the 2021 Act, a director will be required to provide their PPSN or other identification verification to the CRO with certain filings which include an incorporation application, annual return, and notification of a change of director or secretary.
If you require assistance or advice in relation to any of the above matters, please contact our experienced Company Secretarial and Corporate Governance team.
Colm Hanley at firstname.lastname@example.org
Michelle Howe at email@example.com
Patricia Kelly at firstname.lastname@example.org
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