The Gazette 1974

14.1 The Society's Committee on Company Law was set up at a meeting presided over by Mr. Peter D. M. Prentice, President of the Society in January 1974. The Committee has held eight meetings to date and, in addition, there have been a number of meetings of its sub- committees. Initially it has been concerned mainly with the implications of the draft directives and conventions on Company Law of the European Economic Community. Liaison was established with the Department of Industry and Commerce. An Officer of that Department attended one of the earlier meetings of the Committee and outlined the procedures by which draft directives and conventions were processed through the Commission and Council of the Community. At the moment, one Draft Convention (that dealing with International Mergers) and four Draft Directives are going through this process. Individual members of the Committee have had the opportunity of meeting, in Ireland, members of the E.E.C. Commission dealing with company matters. These talks were most useful. 14.2 The Committee decided that the best way to achieve progress was to appoint sub- committees to consider the draft convention and each directive. These would then report back to it. Accordingly, sub-committees were set up to deal with the Second Draft Directive (dealing with maintenance of companies share capital), the Third Draft Directive (dealing with National Mergers) and the draft Convention on International Mergers. The Fourth Draft Directive (which deals with Company Accounts), and The Fifth Draft Directive (dealing with employees participation in management) have been left over for later consideration. 14.3 The Second Draft Directive contains some proposals which are new to Irish Company Law. These include the provision that the minimum initial share capital of a company should be 25,000 units of account (approximately £10,000). The Committee felt that this provision would be too onerous for many private companies in Ireland and was not really necessary for the protection of creditors of such companies. Accordingly, it has recommended that private companies would be excluded from the terms of the Directive. It is understood that this is a view which is also shared by the Law Society, London. The Committee understand that there is every likelihood that private companies will, in fact, be excluded from the Directive if it is finally adopted. Consideration is also being given to the provisions in the Draft Directive which will restrict the distribution of profits by reference to the capital of the company. This was a matter which had been considered by the British Jenkins Committee in their report of June 1962. The Committee took the view that there should not be any legal requirement to make good either realised or unrealised capital losses before distributing revenue profits. On the other hand the Jenkins Committee took the view that previous revenue losses should be made good before current profits are distributed. The sub-committee is still considering implications of these provisions of the Directive, intertwined as they are with the definitions of the word "profit". 14.4 The Third Draft Directive deals with regulations to protect members and others in the case of the merger of two companies. This type of merger is by "fusion" where all the assets and liabilities of one or more companies are transferred to another company in consideration of the issued shares in the "transferee" company to the members of the companies effecting the transfer. The draft Convention on International Mergers deals with mergers of this kind between companies in different countries in the E.E.C. In Ireland and Britain "mergers" are usually effected by way of the takeover of the transferee company of the shares in the transferor company. It is unlikely therefore, that merger by "fusion" will be availed of to any great extent unless this had some advantages where, say, an Irish company were acquiring a company situated in an E.E.C. country other than Britain. It is understood that a Draft Directive dealing with mergers by way of takeover of the shares in a company will shortly come up for con- sideration by the Commission. The Draft Convention on International Mergers is still being considered by the Commission. The Committee was asked by the Department of Industry and Commerce to send one of its members to attend on the official Irish delegation when the draft Convention was being considered. In response to this invitation, Mr. Michael G. Dickson (a member of the Committee's sub-committee dealing with the draft Convention on the Third Directive) went to Brussels on two occasions and was of great assistance to the officials. Under our Companies Act at the moment a merger by fusion can be effected by going to the High Court under Section 201. The Directive and the Convention propose a different way of achieving this purpose by protecting the interests of shareholders and creditors. It is also intended to insert in the Draft Convention, provisions designed to take into account the interests of employees of the merging companies but no firm proposals have yet been put forward. 14.5 The Committee were also asked to discuss with the Oireachtas Sub-Committee on European Legislation the operation in Ireland of the First Council Directive on Company Law of 9th March 1968. This is applied here by Statutory Instrument No. 63 of 1973. A sub- committee comprising Messrs. Brian J. O'Connor, M. G. Dickson and H. O. Fry considered the matter. It was suggested that the Registrar of Companies, rather than the company itself should have the duty of publishing notices of the issue of Certificates of Incorporation etc. This simply brings the law into line with the practice. Other drafting amendments were also suggested. Members of the Oireachtas Committee have publicly expressed their thanks to the Society's Committee for their assistance. 233

COMPANY LAW COMMITTEE

Brian O'Connor,

Chairman

Denis J. Bergin Anthony Collins Michael G. Dickson Joseph L. Dundon Houghton Fry Patrick C. Kilroy Peter D. M. Prentice

J. G. Ronan L. K. Shields

Brian O'Connor, Chairman