Friday, May 22, 2015
There are now 6 working days until the Companies Act 2014 (the “Act”) comes into force in Ireland. The Act will radically change the existing legal framework for companies in Ireland. Each day, we will provide you with a snapshot of key changes to consider in advance of the Act commencing on June 1st.
One of the key aims of the Companies Act 2014 (the “Act”) is to make it easier for companies and persons dealing with companies to do business and enter into transaction. The concept of “registered persons” is designed to help achieve this. This is because directors and “registered persons” will be deemed to have authority to bind the company, meaning that third parties will not have to enquire as to the authority of these persons and therefore, in theory remove the need to seek documentary evidence as to such a person’s authority to bind the company.
Section 39 of the Act provides that where the board of directors of a company authorise a person as being a person entitled to bind the company, the company may register that person at the Companies Registration Office (CRO). Section 40 states that the board of directors and registered persons are deemed to have authority to exercise any power of the company and to authorise others to do so. It is worth noting that if there is a limit on that person’s power in any way to bind the company, e.g. they may only enter into specific contracts or only into transactions up to a certain monetary limit, they should not be registered.
To record a registered person, a company must file a Form B46 at the CRO. Given the nature of the authority vested in a person by registering him or her as a “registered person”, companies and directors need to extremely careful about approving such authorisation. It is important to note that if a registered person’s authority is revoked or limited and they are no longer authorised to bind the company, a further B46 filing should be made confirming the revocation of such authority. Until removed from the register, third parties could rely on that person having full authority to bind the company.
It will be interesting to see whether companies will avail of the option of registering a person, or whether they will continue to delegate authority without doing so. In practice, it is still quite likely that banks and other third parties to a transaction will, in any event, require documentary evidence as to the authority of persons signing transaction documents. It may however prove useful for a company to have a registered person where the directors or required signatories on a transaction are unavailable.
The content of this article is provided for information purposes and does not constitute legal or other advice.