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The interim period of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 has been extended to 31 December 2021 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 ensures that 240,000 companies and 950 industrial and provident societies in Ireland can hold their Annual General Meetings (AGMs) and creditors meetings virtually. It also makes provision in respect of business solvency by increasing the period of examinership to 150 days and increasing the threshold at which a company is deemed unable to pay its debts to €50,000. The continuation of these important amendments will provide additional breathing space to struggling businesses.
The Minister for Trade Promotion, Digital and Company Regulation Robert Troy TD said:
"The interim period was designed to give Government the flexibility it needs to adapt to the evolving nature of the pandemic. Extending this period to the end of the year was the prudent thing to do and gives necessary certainty to business when it needs it most.
"While the situation in relation to COVID-19 is improving and we are hopeful that the restrictions will continue to be eased, it remains necessary to ensure that the changes brought in by the 2020 Act continue to apply to make it easier for businesses to operate during the pandemic. It is important to me that there is certainty for business as the economy reopens.
"I know companies are currently planning AGMs for 2021 and I want to ensure that these can be held in line with Government’s public health advice. The amendments enabling remote meetings will therefore continue to apply until 31 December 2021."
He continued:
"Similarly, amendments in respect of insolvency provisions also continue to apply until the end of the year. The threshold at which a company is deemed unable to pay its debts and can be wound up by the courts remains at €50,000. There are local businesses across Ireland still struggling with the financial impacts of the pandemic. It is our responsibility to provide them with breathing space where possible.
"The extension to 150 days in examinership remains in place. It is important that viable companies and co-operatives have sufficient flexibility to restructure and trade through the crisis. Extending this temporary provision gives that.
"I know that this announcement will be widely welcomed by business and I want to assure the business community that I will continue to deliver pragmatic responses to the challenges emerging from the pandemic."
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, 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 Office of the Director of Corporate Enforcement, 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 extended to 31 December 2021.
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 amendments proposed for the Companies Act in relation to examinership will continue to automatically apply to Industrial and Provident Societies.
The main features of the 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 examinership and creditors meetings automatically apply to co-operatives.
The government recently approved priority drafting of The Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 which includes miscellaneous amendments to the Companies Act 2014 and Industrial and Provident Societies Act 1893 to make permanent provision for virtual meetings.
The Department of Enterprise, Trade and Employment (DETE) plays a key role in implementing the government’s policies of stimulating the productive capacity of the economy and creating an environment which supports job creation and maintenance. The department has lead responsibility for Irish policy on global trade and inward investment and a remit to promote fair competition in the marketplace, protect consumers and safeguard workers.