The Companies (Miscellaneous Provisions) (Covid-19) Act 2020 (the ‘Act’) was signed into law on 1 August 2020. This legislation seeks to respond to practical challenges faced by companies and industrial and provident societies as a result of the Covid-19 pandemic. The Act will temporarily amend the Companies Act 2014 and the Industrial and Provident Societies Act 1893, in order to ensure that companies and societies can continue to comply with certain provisions of those acts notwithstanding the current difficulties faced by them as a result of the Covid-19 pandemic.
The provisions of the Act will apply for an interim period only, expiring on 31 December 2020 (the ‘Interim Period’). This period may then be extended if it is in the public interest to do so or should legal or practical restrictions in the State continue due to the prevalence or threat of Covid-19.
We set out a brief summary below of some of the main temporary changes arising on foot of the Act.
The Act seeks to ease some of the legal requirements around the execution of documents under seal during the Interim Period. Through the use of counterparts, companies will now be permitted to execute documents under seal separately and then treat them as constituting one and the same instrument. This would be particularly useful in the context of a transaction closing where the seal, the director(s) and secretary of the company are in different locations.
The Act also seeks to modify the existing law relating to general meetings through the introduction of the following provisions;
The Act also seeks to implement similar measures to those introduced in respect of AGMs and EGMs for creditors’ meetings during the Interim Period, allowing them to be conducted wholly or partly by electronic means.
Directors may, with the unanimous consent of the shareholders, withdraw a resolution to declare a dividend, or, may propose an amendment to a resolution declaring a dividend to reduce the amount that was originally proposed, where the directors believe the Covid-19 pandemic has had or is likely to have adverse consequences on the performance of the company.
The Act also provides that the debt threshold for creditor(s) to petition the court for a winding up of a company under section 570 of the Companies Act 2014 is to be increased to one threshold of €50,000, being an increase from the current levels of €10,000 in the case of a petition by a single creditor and €20,000 in the case of a petition by two or more creditors acting together.
The Act provides that where a company goes into examinership during the Interim Period, it will be entitled to seek an additional period of 50 days in which to submit the Examiner’s report to the court under the Companies Act 2014. This means that, subject to the discretion of the court where exceptional circumstances exist in respect of the particular company, a maximum period of 150 days would now be allowed for the submission of the Examiner’s report to the court.
While most of the new provisions contained in the Act, will only remain operative for the Interim Period they will come as a welcome change for many entities impacted by the Covid-19 pandemic.