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Company Formation Frequently Given Answers

Company Formation

Frequently Given Answers

What is needed to form an Irish company?

company formation

In order to form an Irish company, the entity must have two designated directors and one company secretary. One director may also act as company secretary.

The directors can be of any nationality but one director must be an Irish resident and the registered company must have its address in the Irish republic.

 

Foreign nationals must provide copy of passport.

Once you have decided on your company name, you are ready to begin.

What are directors and how many do I need to start a company?

Directors are effectively the managers of the company. They direct the company in the interests of the members and report to the shareholders in relation to the company’s performance. Directors can be shareholders and also one may act as the company secretary. An Irish company must have two directors.

What are shareholders and how many are needed to start a company?

Shareholders/members are the actual owners of the company and a company must have a minimum of one shareholder. In the case of a Private Company limited by shares, the maximum number of members is 99. In the case of a Public Limited Company there must be at least seven members.

When one person holds all of the shares it is known as a “Single Member Company”, as one person owns the entire share capital of the company.

Shares give the holders certain rights such as the right to vote at meetings.

Shares are issued through share certificates outlining specific details of the shares, these are also recorded in the company’s meeting book, register of transfers and register of members and the share certificate is stamped with the company seal.

In order to transfer shares to a new owner, the original share certificate must be cancelled and new certificates issued under the company seal. Also a share transfer form must be signed and recorded in the company register and minute book.

What is an AGM and does this apply to all companies?

The AGM is an annual general meeting and must be convened within 9 months of the company’s year-end. All limited companies must convene an AGM within this time frame.  There could be an exception for a single member company.

At an AGM, the directors will generally consider ordinary business such as approving the financial statements, election of directors, declaration of dividend, re-appointment of outgoing directors or any other business stipulated in memos and articles of the company.

EGM is an extraordinary general meeting.  Directors call an EGM when they see fit or when they are obliged to convene an EGM in certain circumstances e.g. where the company’s net assets (total assets less total liabilities) have fallen to or below 50% of it’s called up share capital.

What is a dividend?

A dividend is a distribution of the company’s assets, usually retained earnings, to the shareholders. Dividends can only be proposed by directors and must be approved by members.

What is a limited company?

A limited company is a completely separate legal entity from the individuals or groups who own and manage the company.

While a limited company is owned solely by the members, financial liability in the event of the business failing is limited to the amount they have contributed to the company and does not include their personal assets.

A private limited company is the company type usually most suited to small businesses.

What does the term ‘Limited by Shares’ mean?

Limited by shares means that the company has shareholders, and that the liability of the shareholders to creditors/liabilities of the company is limited to the capital originally invested, i.e. the minimal value of the shares and any premium paid in return for the issue of the shares by the company. A shareholder’s personal assets are thereby protected in the event of the company’s insolvency, however, money invested in the company will be lost.

What does the term ‘single member company’ mean?

A single member company is a private company, limited by shares or by guarantee, which is incorporated with one shareholder or whose membership is reduced to one person. Because of concern that the division between the company and the shareholder may be liable to erode in a single member company, certain formal requirements are imposed.
The company must still have at least one director and a secretary who cannot also be the sole director. There will therefore always be two officers of the company.

What is the term ‘authorised share capital’ mean?

Limited Companies are formed with both an authorised share capital and an issued share capital. The authorised share capital is the total number of shares existing in the company multiplied by the nominal value of each share. Not all such shares may have been issued. The issued share capital is the same calculation in respect of all the issued shares.

What is a ‘director’?

In relation to a company or other formal organisation, a director is an officer (that is, someone who works for the company) charged with the conduct and management of its affairs. A director may be an inside director (a director who is also an officer or promoter or both) or an outside, or independent, director.

What are ‘articles of association’?

The Articles of Association of a company set out the member’s powers and the director’s powers as stated by the members.

The articles of association of a company, often simply referred to as the articles, are the regulations governing the relationships between the shareholders and directors of the company, and are a requirement for the establishment of a company under Irish law, UK law and many other countries. Together with the memorandum of association, they form the constitution of a company.

What is a ‘memorandum of association’?

The memorandum of association of a company, often simply called the memorandum, is the document that governs the relationship between the company and the outside world.

The Memorandum of Association is the principal document by which the company’s registration is ratified. It states the company name and objectives of the company, i.e. its primary function and also establish the share capital structure of the company.

What does ‘company limited by guarantee’ mean?

In Irish company law a company limited by guarantee is an alternative type of corporations used primarily for non-profit organisations that require legal personality . A guarantee company does not usually have a share capital, but instead has members who are guarantors instead of shareholders. The guarantors give an undertaking to contribute a nominal amount (typically very small) towards the winding up of the company in the event of a shortfall upon cessation of business.

What is a ‘sole trader’?

A Sole Trader is someone who starts up a business on their own. It is the simplest of businesses to set up as there are very little legal formalities, obligations or constraints attached.

What is a certificate of incorporation?

Certificate of incorporation is a legal document relating to the formation of a company or corporation.

What is the responsibility of a company sectary?

A company secretary is the person who is responsible for ensuring that the company meets its statutory obligations.

 

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