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The interim period of two measures of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 has been further extended to 31 December 2023 following government approval this week. The Act makes temporary amendments to the Companies Act 2014 and the Industrial and Provident Societies Act 1893 to address issues arising as a result of COVID-19.
The Act makes temporary provision in respect of increasing the threshold at which a company is deemed unable to pay its debts to €50,000. The Act also allows 240,000 companies and 950 industrial and provident societies in Ireland to hold their annual general meetings (AGMs) and general meetings by electronic means. The continuation of these important amendments will provide additional breathing space and continuity for businesses to the end of 2023.
The Minister for Trade Promotion, Company Regulation and Digital, Dara Calleary, said:
"I am pleased to confirm the further extension of two important temporary measures of the Companies (Miscellaneous Provisions) (Covid-19) Act in respect of the Companies Act 2014 and Industrial and Provident Societies Act 1893, to the 31 December 2023 following government approval this week.
"To assist in the ongoing operation of struggling or recovering businesses the increased threshold at which a company is deemed unable to pay its debts of €50,000 is being retained. This ensures that fundamentally viable companies will not be wound up for relatively small debts of €10,000.
"Retaining virtual general meetings will allow companies and co-operatives to continue to comply with their legal obligations in what is a challenging trading environment and to allow members to hold the directors accountable.
"Temporary measures that provide for an extended examinership period and the remote execution of documents and which were particularly pertinent during the more acute phases of the pandemic when there were travel restrictions, are not being extended into 2023."
The Minister continued:
"Supply chain disruptions, changing consumer spending patterns, trending increase in inflation and potential energy supply disruptions have placed further significant burdens on struggling enterprises still reeling from the effects of the COVID-19 pandemic. Despite these challenges government supports have so far prevented the level of business failures that would otherwise have been expected from trading restrictions.
"Nevertheless, the unwinding of COVID-19 pandemic supports and the effects of renewed inflationary pressures have the potential to expose distress among a cohort of Irish businesses. This coincides with analysis carried out by the World Bank which indicates that it will take a number of years before the economic impact of disruptive events work their way through the system.
"The further extension of these important provisions will provide longer term certainty for businesses at this critical phase of the response to the pandemic and serves to bolster the government’s commitment to backing business, supporting economic recovery and making sure as many people as possible retain their jobs."
From the onset of the COVID-19 business closures, the Department of Enterprise, Trade and Employment led on proposed amendments to the Companies Act 2014, intended to support companies mitigate the impact that COVID-19 continues to have on the normal operation of business. This included a significant number of representations and extensive engagement with the Company Law Review Group (CLRG), a statutory advisory body charged with advising the Minister for Enterprise, Trade and Employment on all matters pertaining to company law.
Membership of the CLRG is broad and representative of key stakeholders in company law including: the Irish Congress of Trade Unions, the Irish SME Association, the Corporate Enforcement Agency, the Revenue Commissioners, the Attorney General’s Office, the Law Society, the Irish Business and Employers’ Confederation, insolvency practitioners, legal practitioners and academics.
This engagement led to the enactment of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020, which was commenced on 21 August 2020.
The temporary measures contained in the Act amend the Companies Act to address both operational issues arising under the Act, along with insolvency measures considered necessary to alleviate pressure on company liquidity with a view to protecting viable businesses and preserving employment. The interim period of the Act has now been further extended to 31 December 2023 in respect of the following measures:
In parallel, the department engaged with the co-operative movement regarding difficulties facing co-operatives in holding annual general meetings (AGMs) and general meetings in circumstances where public gathering and physical proximity are restricted as a result of the COVID-19 pandemic.
In an effort to identify feasible solutions to both sets of issues, the general approach in relation to the proposed amendments applying to companies was followed closely and adapted where necessary to reflect the unique requirements of co-operatives.
The interim period of the Act has now been further extended to 31 December 2023 in respect of providing co-operatives with the ability to hold hybrid or virtual general meetings.
The main features of the 2020 Act can be broadly summarised as follows, to:
The main provisions in relation to co-operatives include, to:
As a result of previous amendments to the Industrial and Provident Societies Acts in 1978 and 2014, the company law proposals on creditors meetings automatically apply to co-operatives.