Public Limited Companies:
Part 17 of the Companies Bill
Contents of Presentation
1. Part 17 – Public Limited Companies
2. Chapter 1 – preliminary and definitions
3. Chapter 2 – incorporation and consequential matters
4. Chapter 3 – share capital
5. Chapter 4 – interests in shares
6. Chapter 5 – acquisition of own shares etc
7. Chapter 6 – distribution by a PLC
8. Chapter 7 – uncertificated securities
9. Chapter 8 - corporate governance
10.Chapter 9 – duties of directors and other officers
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Contents of Presentation
11.Chapter
12.Chapter
13.Chapter
14.Chapter
15.Chapter
16.Chapter
17.Chapter
18.Chapter
19.Chapter
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11
12
13
14
15
16
17
18
– financial statements, annual return and audit
– debentures
– examinerships
– reorganisations
– strike off and restoration
– investigations
– mergers
- divisions
– public offers of securities etc
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Part 17 – Public Limited Companies
• 167 sections of law in 18 chapters
• The key difference between public limited companies
(PLCs) and private companies (whether LTDs, DACs or
CLGs) is that only PLCs will be permitted to list their
shares on a stock exchange and offer them to the public
• An existing PLC shall be deemed to be a PLC to which Part
17 applies
• The law applicable to PLCs will also be applicable to the
Societas Europaea (SE)
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Chapter 1 – preliminary and
definitions
• Sets out a number of definitions used throughout Part 17,
notably providing that the authorised minimum issued
share capital shall be €25,000 or such greater amount as
the Minister shall specify by order (s 1000)
• Part 17 shall not apply to investment companies (which
are covered in Part 24) (s 1001)
• The architecture of the law applicable to PLCs is that the
law applicable to LTDs (i.e. Parts 1 to 14) will apply to
PLCs, save to the extent disapplied, modified or
supplemented by any provision of Part 17 (s 1002)
• Part 17 shall be read as applying to an SE (s 1003)
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Chapter 2 – incorporation etc
• A PLC may be formed for any lawful purpose by a person
subscribing to a constitution and complying with the Act;
liability of members will be limited to any amount unpaid
on shares; can have as few as 1 members, and no
maximum (s 1004)
• A PLC must carry on some activity in the State (s 1005)
• Two-document constitution – memorandum and articles of
association – including an objects clause (but see s 1012
below), in the form set out in Schedule 9 (s 1006)
• Where the Act provides that a provision will apply save to
the extent the constitution provides otherwise, that
provision shall apply to a PLC unless excluded or modified
by its articles (s 1007)
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Chapter 2 – incorporation etc
• The name of a PLC must end with the words “public limited company”,
or the abbreviation “PLC” (whether capitalised or lower case, and with
or without punctuation marks – i.e. PLC, P.L.C., plc or p.l.c. are all
acceptable) or the Irish equivalent (s 1008)
• It is an offence to trade under a misleading name or imply one is a
body corporate other than a PLC (s 1009)
• A PLC shall not do business or exercise any borrowing powers unless
the Registrar has issued it a certificate under this section, which it
shall do if satisfied that the nominal value of issued share capital is at
least the authorised minimum (see s 1000) and a declaration from a
director or secretary to that effect, and setting out other matters, has
been submitted (s 1010)
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Chapter 2 – incorporation etc
• PLC to have capacity only to do things stated in objects (s 1011)
• However the validity of an act done by a PLC shall not be called
into question on the ground of lack of capacity by reason of
anything contained in the PLC’s objects (i.e. the Bill seeks to oust
the operation of the doctrine of ultra vires) (s 1012)
• A PLC may by special resolution (with notice) alter its objects
clause, but if holders of 15% or more of the company’s shares or
debentures object to the court, the alteration shall not have
effect (ss 1013, 1014 and 1016)
• A PLC may alter its articles by special resolution (s 1015)
• A PLC in existence before this section is commenced shall be
deemed to be a PLC to which Part 17 applies (s 1017)
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Chapter 3 – share capital
• PLC (unlike LTD, DAC or CLG) shall have the capacity to offer, allot
and issue any securities (including shares) to the public (s 1018)
• A PLC may not allot securities unless authorised to do so by
ordinary resolution or by the constitution of the PLC, and that
authority may not exceed 5 years (s 1019)
• S 1020 sets out pre-emption rights, whereby a PLC may not allot
any equity securities to a third party without first offering them on
the same or more favourable terms to existing shareholders.
• S 1021 provides that a PLC may waive those pre-emption rights.
• Where a company re-registers as a PLC, any previous authority of
the directors to allot shares will lapse at the end of its first AGM
held after its reregistration as a PLC (s 1022)
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Chapter 3 – share capital
• A PLC cannot accept the provision of work or services as payment
for shares (s 1023)
• A PLC may not allot a share (other than employees’ shares) unless
the whole of any premium and not less than ¼ of the nominal value
is paid up (s 1024)
• A PLC may not allot shares, other than for cash, where the
consideration includes an undertaking which is may be performed
more than 5 years after the date of allotment (s 1025)
• A PLC may not generally allot shares wholly or partly other than for
cash unless an expert’s report has been prepared valuing that
consideration, save in cases of securities-based consideration, or
where a recent valuation has been approved by members and
directors (ss 1026-1031)
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Chapter 3 – share capital
• A PLC may not, within 2 years of formation or re-registration as a
PLC, acquire non-cash assets from a member at the time of that
formation or re-registration, for a consideration of 10% or more of
its subscribed capital, unless the consideration is valued in an
expert’s report approved by the members (ss 1032–1033)
• A person who would be liable under ss 1023, 1025-1027 or 1032
may apply to the court for relief from their liability in relation to
payment for shares in the PLC (s 1034)
• A subscriber who undertakes in the constitution of a PLC to take up
shares must pay for those shares (including any premium) in cash
(s 1035)
• S 1036 makes provision for the acquisition and disposal of
securities by trustees and personal representatives.
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Chapter 3 – share capital
• Where an allottee contravenes ss 1023, 1025, 1026, 1027, 1032 or
1033 , any liability under the contract will be enforceable,
notwithstanding any additional statutory liability (s 1037)
• S 1038 provides for the acquisition by a PLC of its own shares.
• Ss 1039-1040 provide that in certain cases, where a PLC has
acquired its own shares, the PLC will be obliged to cancel or dispose
of those shares within a specified period.
• S 1041 provides that any mortgage, charge, lien or pledge of a PLC
on its own shares is void.
• S 1042 sets out the circumstances in which a PLC may give
financial assistance for the purchase of its own shares.
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Chapter 3 – share capital
• Where a PLC has classes of shares having different rights, the rights
of a class may be varied or modified, but only if approved by a
special resolution, or a 75% resolution, of the holders of that class
(s 1043)
• S 984 removes the discretion of directors to decline recognition of
transfer instruments, on certain conditions, where those shares are
governed by regulations made by the Minister under s 1085.
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Chapter 4 – interests in shares
• S 1045 sets out that this Chapter shall require the
disclosure to a PLC of certain interests in shares
• S 1046 sets out certain definitions
• A person shall be under a first duty to notify a PLC:
• where they acquire a notifiable interest in its shares
(being 3% or such rate as the Minister may specify);
• where they cease to hold such an interest; or
• where the percentage of their interest (rounded down
to nearest whole number) changes
(ss 1047-1048, 1050-1051)
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Chapter 4 – interests in shares
• A person shall be under a second duty to notify a PLC
where, in cases other than those in s 1047, a person
becomes aware of any facts, or change of circumstances,
such that they have a notifiable interest immediately after
the time of the change in circumstances or facts that they
did not have immediately before that time (s 1049)
• S 1052 sets out particulars to be stated in the notification.
• Where a person’s spouse, civil partner or child, or a body
corporate in which they have a specified interest, has an
interest in shares, the interest shall be attributed to the
person (s 1053)
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Chapter 4 – interests in shares
• Where persons are party to a share acquisition agreement
(as defined), each party is to be regarded as having the
interests of all others in the PLC’s shares (ss 1054-1055)
• Such persons have a duty to keep each other informed of
their interests in shares (s 1056)
• S 1057 provides that a reference to a person acquiring, or
ceasing to hold, an interest in shares shall include where
that occurs by virtue of another person’s interest.
• S 1058 provides that ss 258-261 (regarding disclosable
interests in the context of an LTD) will apply to a PLC.
• S 1059 sets out sanctions where the notification obligation
is not complied with.
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Chapter 4 – interests in shares
• A PLC must create and maintain a register of notifications
under this Chapter (s 1060)
• A PLC has the power to investigate the ownership of its
shares by requiring that persons disclose whether they
held shares (and failure to comply shall be an offence) and
shall register information received (ss 1061-1062, 1065)
• A PLC shall be obliged to carry out such an investigation
on the requisition of members holding at least 10% of
shares, and shall prepare a report of information received
(ss 1063-1064)
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Chapter 4 – interests in shares
• A PLC may remove an entry which is more than 6 years
old if that entry either records that a person has ceased to
be interested in shares, or has been entirely superseded
by a later entry, but entries may not otherwise be
removed (s 1066-1067)
• Chapter 10 of Part 4, which provides for the inspection of
registers etc., shall apply to registers of interests and
investigation reports (s 1068)
• Certain PLCs shall be obliged to notify the market operator
of any matter notified to it by a director or secretary in
respect of their interests in shares or debentures (s 1069)
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Chapter 5 – acquisition of own
shares etc
• S 1070 contains provisions relating to the acquisition by a
PLC of its own shares (in addition to the requirements set
out in ss 106 and 107). The consideration for the purchase
must come solely from distributable profits, and the result
of a purchase must not be to reduce the nominal value of
non-redeemable issued share capital below 1/10 of the
nominal value of the total issued share capital.
• S 1071 defines the terms ‘off-market purchase’, ‘market
purchase’ and ‘overseas market purchase’
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Chapter 5 – acquisition of own
shares etc
• A ‘market purchase’ or an ‘overseas market purchase’
must be authorised by an ordinary resolution, and an ‘offmarket purchase’ by special resolution (ss 1072-1074)
• A PLC cannot assign the right to acquire shares to a third
party, but may release its rights under contract where so
authorised by ordinary or special resolution (s 1075)
• Provisions in Part 3 that refer to a contract authorised
under s 106 will also apply to an acquisition by a PLC
under ss 1070 to 1075, unless a contrary intention is
shown in any of those sections (s 1076).
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Chapter 5 – acquisition of own
shares etc
• S 1077 provides for the off-market re-allotment of
treasury shares by a PLC.
• S 1078 provides for the return to be made to the Registrar
in the case of an overseas market purchase of shares by a
PLC.
• S 1079 requires a PLC to publish particulars (eg on its
website) of an overseas market purchase, or of a purchase
of its shares by its subsidiary.
• S 1080 obliges a PLC to notify the relevant market
operator when it or its subsidiary purchases its own shares
on a regulated market.
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Chapter 6 – Distribution by a PLC
• A PLC may not make a distribution where this will result in
its net assets being less than the aggregate of its called-up
share capital and undistributable reserves (s 1081)
• S 122 (on relevant financial statements) will apply for the
purpose of determining whether a distribution may be
made without contravening s 1081 (s 1082)
• A PLC may not reduce its company capital below the
authorised minimum (see s 1000) (s 1083)
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Chapter 7 – Uncertificated securities
• S 1084 facilitates transfers of uncertificated securities
under s 12 of the Electronic Commerce Act 2000 or under
regulations made pursuant to s 1085
• The Minister may make regulations to enable or require
title to securities to be evidenced and transferred without a
written instrument (ss 1085-1086)
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Chapter 8 – corporate governance
• PLC (unlike LTD) must have at least 2 directors (s 1087)
• The directors of a PLC shall be required to retire by
rotation, unless the constitution states otherwise (s 1088)
• Where a change in directors is to be followed within 14
days by the issue of a prospectus in relation to a public or
local offer, the PLC shall notify the CRO of the change no
later than the time of issue of the prospectus (s 1089)
• Unless the constitution states otherwise, remuneration of
directors will be determined in general meeting (s 1090)
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Chapter 8 – corporate governance
• Where a PLC is a participating issuer in a system for the
uncertificated transfer of securities, it may require that a
person be entered on the register by a specified date/time
in order to be entitled:
i. to receive notice of meetings, and
ii. to vote and attend at the meeting (ss 1091-1093)
• Every PLC must establish an audit committee, or explain
why it has decided not to do so (s 1094)
• PLC must give at least 14 days’ notice of an EGM (s 1095)
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Chapter 8 – corporate governance
• Where a PLC has shares traded on a regulated market:
• It must ensure equal treatment for all members who
are in the same position as regards voting and
participating at meetings;
• Members holding 5% may demand an EGM be held;
• Certain meetings shall require 21 days’ notice;
• Additional provisions apply concerning notice;
• Members may put items on the agenda of a meeting;
• A person must be on the register 48 hours prior to a
meeting in order to exercise the right of a member to
participate and vote at that meeting.
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Chapter 8 – corporate governance
• Where a PLC has shares traded on a regulated market:
• The PLC may allow for participation in a general
meeting by electronic means;
• members have the right to ask questions relating to
items on the agenda of a general meeting and
usually to have the PLC answer such questions;
• A proxy may be notified by electronic means;
• PLC may permit advance voting by correspondence;
• Member may demand a full voting result.
(ss 1096-1107)
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Chapter 9 – duties of directors and
other officers
• Directors must convene an EGM when the net assets of a
PLC drop to/below ½ of its called-up share capital (s 1108)
• The directors of a PLC must ensure that the person
appointed as secretary has the necessary skills to
discharge the duties associated with that post, and that
that person meets prescribed conditions, including have 3
years’ experience and being a member of a recognised
body (s 1109)
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Chapter 10 – financial statements,
annual return and audit
• Part 6 of the Bill shall not apply to credit institutions or insurance
undertakings, being subject to specific requirements (s 1110)
• Requirement in Part 23 for a corporate governance statement
shall apply to a PLC with securities admitted to trading (s 1111)
• The financial statements of a PLC must be audited (s 1112-1113)
• A PLC may send a summary financial statement to shareholders in
place of the full annual accounts (s 1114)
• Disclosure obligations on a LTD that is the holding company of a
licensed bank apply to a PLC that is the holding company of, or is
itself, a licensed bank (s 1115)
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Chapter 11 – debentures
• S 1116 requires that a PLC keep a register of debenture
holders containing the names and addresses of debenture
holders and the amount of debentures currently held by
each of them, and provides for related matters.
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Chapter 12 - examinerships
• S 1117 provides that the provisions in s 511 in relation to
petitioning for a LTD to be put into examinership shall
apply with necessary modification to a PLC (save that
where the PLC is a bank or building society, only the
Central Bank may bring the petition).
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Chapter 13 - reorganisations
• S 1118 provides that where an offeror has become bound,
under Chapter 2 of Part 9 (acquisitions) or Part 5 of the
Takeover Regulations 2006, to acquire the shares or
securities of a dissenting shareholder or security holder,
the PLC must enter the offeror in its register of securities
as the holder of the uncertificated securities concerned.
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Chapter 14 – strike off and restoration
• In addition to the circumstances in which an LTD may be
struck off the register, s 1119 provides for an additional
case, whereby the Registrar may apply for the strike-off of
a PLC which has not been issued with a trading certificate
within one year of its registration as a PLC.
• A company which has been dissolved may not be restored
as a PLC unless it was a PLC immediately before its
dissolution (s 1120)
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Chapter 15 - investigations
• The minimum number of members who may apply for the
appointment of an inspector (under Part 13) in respect of a
PLC shall be 100 (as opposed to 10 for an LTD) (s 1121).
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Chapter 16 - mergers
• S 1122 is a definitions section, and notably defines
‘company’, in this Chapter, as including ‘body corporate’.
• This Chapter only applies if at least one of the merging
companies is a PLC (s 1123)
• The Chapter applies to mergers by acquisition, mergers by
absorption and mergers by formation of a new company,
which terms are defined (s 1124)
• For the avoidance of doubt, a merger (where one of the
companies is a PLC cannot be effected save in accordance
with this Chapter (s 1125)
34
Chapter 16 - mergers
• Where a merger is proposed, the directors of the merging
companies must draw up common draft terms of merger in
writing, which must contain specified items (s 1126).
• The directors of each merging company must (save in the
case of a merger by absorption, or where all shareholders
of both companies agree) also prepare an explanatory
report, which must contain specified items (s 1127)
• An expert shall (save in the cases identified in s 1127) be
appointed to examine, and make a report on, the common
draft terms of merger (s 1128)
35
Chapter 16 - mergers
• Where year-end of the latest statutory financial statements
of any merging company predates the common draft terms
of merger by more than 6 months, the company shall
prepare a merger financial statement (s 1129)
• Each merging company shall deliver a copy of the common
draft terms to the CRO, and cause notice of delivery of
same to be published in the CRO Gazette (s 1130)
• Each merging company shall make the merger documents
available for inspection by any member (s 1131)
• The common draft terms must be approved by a special
resolution of each merging company, and provision is
made for the relevant general meetings (s 1132-1133)
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Chapter 16 - mergers
• Where the share capital of any of the merging companies
is divided into shares of different classes, specific
provisions will apply with respect to the variation of the
rights attached to any of those classes. (s 1134)
• S 1135 deals with the purchase of minority shares.
• Application to the court for confirmation of the merger
must be made jointly by all merging companies (s 1136),
and any creditor may object to the application (s 1137)
• Holders of securities (other than shares) in a company
being acquired shall have equivalent rights in successor
company, unless they have approved the alteration in their
rights or have re-purchase rights (s 1138)
37
Chapter 16 - mergers
• The court on being satisfied may make an order confirming
the merger (s 1139)
• That order may include provisions permitting the giving of
financial assistance or a reduction in capital (s 1140)
• A copy of the order shall be sent to the CRO, and notice of
delivery published in the CRO Gazette (s 1141)
• Directors and experts involved in a merger shall have a
civil liability to make good any loss or damage suffered by
a shareholder by reason of misconduct by those directors
or experts, and shall be criminally liable for untrue
statements in documents issued by them (ss 1142-1143)
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Chapter 17 - divisions
• S 1144 is a definitions section, and as is the case for many
sections in this Chapter, mirrors the provisions found in
the corresponding section in Chapter 16 on mergers.
• This Chapter only applies if at least one of the companies
involved in the division is a PLC (s 1145)
• The Chapter applies to divisions by acquisition and
divisions by formation of a new company, which terms are
defined (s 1146)
• For the avoidance of doubt, a division (where one of the
companies is a PLC cannot be effected save in accordance
with this Chapter (s 1147)
39
Chapter 17 - divisions
• Where division is proposed, the directors of the companies
involved must draw up common draft terms of division in
writing, which must contain specified items (s 1148)
• The directors of each company must (save where all
shareholders of each company agree) also prepare an
explanatory report, which must contain specified items (s
1149)
• An expert shall (save in the cases identified in s 1149) be
appointed to examine, and make a report on, the common
draft terms of division (s 1150)
40
Chapter 17 - divisions
• Where year-end of the latest statutory financial statements
of any company predates the common draft terms of
division by more than 6 months, the company shall
prepare a division financial statement (s 1151)
• Each company shall deliver a copy of the common draft
terms to the CRO, and cause notice of delivery of same to
be published in the CRO Gazette (s 1152)
• Each company shall make the documents of the division
available for inspection by any member (s 1153)
• The common draft terms must be approved by a special
resolution of each company involved, and provision is
made for the relevant general meetings (s 1154-1155)
41
Chapter 17 - divisions
• Where the share capital of any of the companies is divided
into shares of different classes, specific provisions will
apply with respect to the variation of the rights attached to
any of those classes. (s 1156)
• S 1157 deals with the purchase of minority shares.
• Application to the court for confirmation of the division
must be made jointly by all companies involved (s 1158),
and any creditor may object to the application (s 1159)
• Holders of securities (other than shares) in a company
being acquired shall have equivalent rights in a successor
company, unless they have approved the alteration in their
rights or have re-purchase rights (s 1160)
42
Chapter 17 - divisions
• The court on being satisfied may make an order confirming
the division (s 1161)
• That order may include provisions permitting the giving of
financial assistance or a reduction in capital (s 1162)
• A copy of the order shall be sent to the CRO, and notice of
delivery published in the CRO Gazette (s 1163)
• Directors and experts involved in a division shall have a
civil liability to make good any loss or damage suffered by
a shareholder by reason of misconduct by those directors
or experts, and shall be criminally liable for untrue
statements in documents issued by them (ss 1164-1165)
43
Chapter 18 – public offers of
securities etc
• S 1166 provides that the provisions of Chapters 1, 2 and 4 of Part
23 of the Bill (which relate to prospectus law, market abuse law,
and transparency law) shall apply to PLCs.
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For Further Information Contact
Dr Tom Courtney, Partner
[email protected]
Direct line – 01 618 0584
Dáibhí O’Leary, Associate
[email protected]
Direct line – 01 618 1120
or your usual Arthur Cox contact
This document contains a general summary of developments
and is neither a complete nor definitive statement of the law.
Specific legal advice should be obtained before taking action.
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