S.I. No. 275/1994 - European Communities (Single-Member Private Limited Companies) Regulations, 1994

S.I. No. 275 of 1994.

EUROPEAN COMMUNITIES (SINGLE-MEMBER PRIVATE LIMITED COMPANIES) REGULATIONS, 1994.

I, RUAIRÍ QUINN, Minister for Enterprise and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972), and for the purpose of giving effect to Council Directive No. 89/667/EEC of 21 December 1989^(1), hereby make the following Regulations:

^(1)O.J. No. L395, 30-12-1989, Pp. 40-42.

1 Citation, Commencement and Construction

1.

1. (1) These Regulations may be cited as the European Communities (Single-Member Private Limited Companies) Regulations, 1994.

• (2) These Regulations shall come into operation on the 1st day of October, 1994.

• (3) These Regulations shall be construed as one with the Companies Acts, 1963 to 1990.

2 Interpretation

2.

2. (1) In these Regulations, unless the context otherwise requires—

"accounts" means the balance sheet and profit and loss account of a company referred to in section 148 of the Principal Act, together with any notes to or other documents annexed to the accounts in question giving information which is required by any provision of the Companies Acts, and required or allowed by any such provision to be given in a note to or a document annexed to a company's accounts;

"the Act of 1990" means the Companies Act, 1990 (No. 33 of 1990);

"the Companies Acts" means the Principal Act, and every enactment which is to be construed as one with that Act;

"the Directive" means Council Directive No. 89/667/EEC of 21 December 1989;

"enactment" includes an instrument made under an enactment;

"the Principal Act" means the Companies Act, 1963 (No. 33 of 1963);

"single-member company" shall be construed in accordance with Regulation 3 (1);

• (2) A word or expression that is used in these Regulations and is also used in the Directive has, unless the contrary intention appears, the meaning in these Regulations that it has in the Directive.

• (3) In these Regulations—

( a ) a reference to a regulation is a reference to a regulation of these Regulations unless it is indicated that reference to some other Regulation is intended,

( b ) a reference to a paragraph or subparagraph is a reference to the paragraph or subparagraph of the provision in which the reference occurs unless it is indicated that reference to some other provision is intended.

3 Single-member private companies, limited by shares or by guarantee

3.

3. (1) Notwithstanding any enactment or rule of law to the contrary, a private company limited by shares or by guarantee may be formed by one person, and may have one member (in these Regulations referred to as a single-member company), to the extent permitted by the Companies Acts and these Regulations.

• (2) Any enactment or rule of law which applies in relation to a private company limited by shares or guarantee incorporated under the Companies Acts shall, in the absence of any express provision to the contrary, apply with any necessary modifications in relation to a single-member company as it applies in relation to such a company which is formed by two or more persons or which has two or more persons as members.

• (3) Without prejudice to the generality of paragraphs (1) and (2), the Companies Acts shall have effect with the modifications specified in these Regulations.

4 Formation of a single-member company

4.

4. Notwithstanding section 5 (1) of the Principal Act, one person may, for any lawful purpose, by subscribing his or her name to a memorandum of association and otherwise complying with the requirements of the Companies Acts and these Regulations relating to registration, form an incorporated company being a private company limited by shares or by guarantee.

5 Company becoming a single-member company

5.

5. (1) A private company limited by shares or by guarantee registered with two or more subscribers to its memorandum of association, in accordance with the Companies Acts, shall become a single-member company, on such date as the number of members is reduced to one and all the shares in the company are registered in the name of a sole person.

• (2) Where a company becomes a single-member company pursuant to paragraph (1) it shall cause that fact and the date on which it became a single-member company and the identity of the sole member to be notified in writing in the prescribed form to the registrar of companies within 28 days after the date on which the number of members is reduced to one.

• (3) If a company fails to comply with the requirements of paragraph (2), the company and every officer of the company who is in default shall be guilty of an offence.

6 Change in status of a single-member company

6.

6. (1) A company which is incorporated as, or becomes, a single-member company, in accordance with the Companies Acts and these Regulations, shall cease to be a single-member company on such date as the number of members increases to more than one but shall continue to be a private company limited by shares or guarantee, as the case may be, while the number of members does not exceed 50.

• (2) Where a single-member company ceases to be such pursuant to paragraph (1), it shall cause that fact and the date on which it ceased to be a single-member company to be notified in writing in the prescribed form to the registrar of companies within 28 days after the date when the number of members increased to more than one.

• (3) If a company fails to comply with the requirements of paragraph (2), the company and every officer of the company who is in default shall be guilty of an offence.

7 Non-application of section 36 of Principal Act

7.

7. (1) Section 36 of the Principal Act shall not apply to a private company limited by shares or by guarantee.

• (2) Without prejudice to paragraph (1), a person who, before the coming into force of these Regulations, is liable by virtue of section 36 of the Principal Act (members severally liable for debts where business carried on with fewer than, in the case of private company, two members) for the payment of the debts of a private company limited by shares or by guarantee, shall not be so liable for the payment of the company's debts contracted on or after the date on which these Regulations come into force.

8 Annual General Meeting

8.

8. (1) The sole member of a single-member company may decide, in the manner provided for in Regulation 9, to dispense with the holding of annual general meetings and, if he or she does so, section 131 of the Principal Act shall not apply to the company.

• (2) A decision pursuant to paragraph (1) shall have effect for the year in which it is made and subsequent years, but shall not affect any liability already incurred by reason of default in holding an annual general meeting.

• (3) In any year in which an annual general meeting would, but for a decision pursuant to paragraph (1) be required to be held, and in which no such meeting has been held, the sole member or the auditor of a single-member company may, by notice to the company not later than three months before the end of the year, require the holding of an annual general meeting in that year.

• (4) If such a notice is given, the provisions of section 131 of the Principal Act, other than subsection (2) thereof, shall apply with respect to the calling of the meeting and the consequence of default.

• (5) Where a decision to dispense with the holding of annual general meetings for a single-member company pursuant to paragraph (1) is in force, the requirements in—

( a ) section 148 of the Principal Act that the directors lay accounts before the annual general meeting,

( b ) section 158 of the Principal Act that a directors' report shall be attached to the balance sheet,

( c ) section 193 of the Act of 1990 that the auditors shall make a report on the accounts of the company at the annual general meeting, and

( d ) Regulation 5 of the European Communities (Companies: Group Accounts) Regulations, 1992 ( S.I. No. 201 of 1992 ) that a parent undertaking lay group accounts before the annual general meeting,

shall be deemed to be satisfied where the said accounts and reports are sent to the sole member of the single-member company in accordance with section 159 of the Principal Act, with the modification that they shall be sent not less than 21 days before the appropriate date.

• (6) A reference in any other provision of the Companies Acts to the accounts of a company laid before the annual general meeting of a company or the report of the auditors on or the report of the directors accompanying such accounts shall, in the case of a single-member company where a decision to dispense with the holding of annual general meetings pursuant to paragraph (1) is in force, be construed as a reference to the accounts and reports sent to the sole member in accordance with paragraph (5).

• (7) If a decision to dispense with the holding of annual general meetings under paragraph (1) ceases to have effect, sections 148 and 158 of the Principal Act, section 193 of the Act of 1990, and Regulation 5 of the European Communities (Companies: Group Accounts) Regulations, 1992 shall, with any necessary modifications, apply in relation to the accounts and reports in respect of the financial year in which the decision ceases to have effect and subsequent financial years.

• (8) For the purposes of the Principal Act, the requirements—

( a ) in section 127 that the annual return must be completed within 60 days after the annual general meeting,

( b ) in section 148 that the accounts must be made up to a date not earlier than the date of the annual general meeting by more than 9 months, and

( c ) in paragraph 5 of Part I of the Fifth Schedule that the list containing specified particulars of persons who are members on the 14th day after the company's annual general meeting

shall in the case of a single-member company where a decision to dispense with the holding of annual general meetings pursuant to paragraph (1) is in force, be read as relating to a similar period relative to the appropriate date.

• (9) For the purposes of this Regulation, each year the "appropriate date" shall be

( a ) in the case of a single-member company formed as such and where a decision to dispense with the holding of annual general meetings is taken before the first such meeting is due, the last day of the month in which the anniversary of its formation falls;

( b ) in the case of a private company limited by share or by guarantee formed after the commencement of these Regulations which becomes a single-member company pursuant to Regulation 5 before holding its first annual general meeting and where a decision to dispense with the holding of annual general meetings is taken before the first such meeting is due, the last day of the month in which the anniversary of its formation falls; and

( c ) in the case of all other single-member companies, the last day of the month in which the anniversary of the last annual general meeting of the company was held falls.

9 General Meetings — Powers exercisable by sole member

9.

9. (1) Subject to paragraph (2), all the powers exercisable by a company in general meeting under the Companies Acts or otherwise shall be exercisable, in the case of a single-member company, by the sole member without the need to hold a general meeting for that purpose.

• (2) Paragraph (1) shall not empower the sole member of a single-member company to exercise the powers in sections 160 (2) (b), 160 (5), and 160 (6) of the Principal Act to remove an auditor from office without holding the requisite meeting provided for in the said provisions.

• (3) Subject to paragraph (2), any provision of the Companies Acts which—

( a ) enables or requires any matter to be done or to be decided by a company in general meeting, or

( b ) requires any matter to be decided by a resolution of the company,

shall be deemed to be satisfied, in the case of a single-member company, by a decision of the member which is drawn up in writing and notified to the company in accordance with this Regulation.

• (4) Where the sole member of a single-member company takes any decision which may be taken by the company in general meeting and which has effect, pursuant to paragraphs (1) and (3), as if agreed by the company in general meeting, he shall, unless the decision is taken by way of written resolution which he has already forwarded to the company, provide the company with a written record of that decision.

• (5) Where the sole member notifies a decision taken by way of written resolution, or a written record of a decision taken pursuant to paragraph (4), to a single-member company of which he is the sole member, the notification shall be recorded and retained by the company in a book or by some other suitable means maintained for the purpose.

• (6) The exercise by the sole member of a single-member company of any power, right or obligation under this Regulation, to which section 143 of the Principale Act, as amended, applies, shall, within 15 days, be notified by the company in writing to the registrar of companies and be recorded by him.

• (7) If the sole member fails to comply with paragraph (4), or if a company fails to comply with paragraphs (5) or (6) the sole member, the company and every officer of the company who is in default shall be guilty of an offence.

• (8) Failure by the sole member to comply with paragraph (4) shall not affect the validity of any decision referred to in that paragraph.

10 Quorum

10.

10. Notwithstanding any provision to the contrary in the articles of a single-member company, one member present in person or by proxy shall be a quorum.

11 Non-application of other provisions of Principal Act

11.

11. Sections 213 (d) and 215 (a) (i) of the Principal Act shall not apply to a private company limited by shares or by guarantees.

12 Connected person

12.

12. The sole member of a single-member company shall be deemed to be a connected person for the purposes of section 26 of the Act of 1990.

13 Contracts with sole members

13.

13. (1) Subject to paragraph (2), where a single-member company enters into a contract with the sole member of the company and the sole member also represents the company in the transaction, whether as a director or otherwise, the company shall, unless the contract is in writing, ensure that the terms of the contract are forthwith set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the company following the making of the contract.

• (2) Paragraph (1) shall not apply to contracts entered into in the ordinary course of the company's business.

• (3) If a company fails to comply with paragraph (1), the company and every officer of the company who is in default shall be guilty of an offence.

• (4) Subject to paragraph (5), nothing in this Regulation shall be taken to prejudice the operation of any other enactment or rule of law applying to contracts between a company and a director of that company.

• (5) Failure to comply with paragraph (1) with respect to a contract shall not affect the validity of that contract.

14 Offences

14.

14. A person guilty of an offence under any provision of these Regulations shall be liable, on summary conviction, to a fine not exceeding £1,000.

GIVEN under my Official Seal, this 8th day of September, 1994.

RUAIRÍ QUINN,

Minister for Enterprise

and Employment.

EXPLANATORY NOTE.

These Regulations implement Council Directive No. 89/667/EEC on single-member private limited liability companies. The Directive requires Member States to provide for the formation of a company having one member and to permit a company to be a single member company, subject to certain safeguards. In relation to Ireland, it applies to private companies limited by shares or guarantee.

The Regulations provide that a sole person, whether natural or legal, will now be able to form or become a single-member limited liability company. The Regulations further provide that, subject to certain modifications, all the provisions of the Companies Acts which apply to private companies limited by shares or by guarantee will apply to single-member companies. For instance, the sole member, if he so decides, can dispense with the holding of General Meetings, including Annual General Meetings (AGM). However, certain notifications will have to be made. Also the accounts and reports that would normally be laid before the AGM of a company will still need to be prepared and forwarded to the member.