From 1st October private companies limited by guarantee or by shares may be incorporated with one share holder only as a result of the European Communities (Single-Member Private Limited Companies) Regulations, 1994. These regulations which were introduced to comply with an EC Directive are widely welcomed and long-awaited and change Irish company law which previously required a minimum of two shareholders in a private limited company. Unfortunately, the Regulations do not take the opportunity to change the requirement for private limited companies to have at least two directors. With the increase in the responsibilities of directors under the Companies Act, 1990 making it even more difficult to find non-executive directors, the changes introduced by the Regulations would have been more significant if combined with a reduction in the minimum number of directors.
The effect of the Regulations will mean that:
(i) the shareholder can dispense with the holding of annual general meetings but accounts and annual returns must still be filed with the Companies Registration Office.
(ii) the shareholder will not be liable for the debts of a company where the company's business is carried on with less than two members.
(iii) the shareholder is entitled to assume the powers given to a company at a general meeting once the shareholder's decision is recorded in writing, notified to the company and filed in the Companies Registration Office, where applicable.
(iv) the shareholder may not exercise powers, under the Companies Acts, to remove an auditor without holding a general meeting.
(v) where the shareholder represents the company and enters into a contract, the company must, where the contract is not in writing, ensure that the terms of the contract are set out in a written memorandum and are recorded in the minutes of a directors' meeting of the company following the making of the contract.
The Regulations also provide for the conversion of private companies limited by guarantee or by shares already in existence to single-member companies.
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