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The interim period of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 has been further extended to 31 December 2022 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 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 Act also extends the provisions allowing 240,000 companies and 950 industrial and provident societies in Ireland to hold their Annual General Meetings (AGMs) and general meetings by electronic means. The continuation of these important amendments will provide additional breathing space to struggling businesses and provide continuity for businesses to the end of this year.
The Minister for Trade Promotion, Company Regulation and Digital, Robert Troy, said:
"I am pleased to confirm Government has approved the extension of important temporary provisions to assist struggling or recovering businesses 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.
"I expect that this will likely be the final extension of these temporary provisions. I would stress that the underlying motivation for the further extension of these important measures is very much focused on ensuring that businesses are provided with adequate time to recover from the difficult trading circumstances of the pandemic.
"While I and the government greatly welcome the return to growth and the very positive figures we are seeing for many sectors across the economy, it is nevertheless difficult to quantify and ascertain the condition of many businesses, small businesses in particular, following the extensive shuttering of large parts of the economy. Previous analysis by the World Bank has indicated that it can take a number of years before the economic impact of disruptive events work their way through the system. So, while we are buoyed by the positive economic news, we are also mindful that other challenges may emerge and for this reason caution is still warranted.
"While this is likely to be the final extension of these particular measures, work is continuing to put virtual AGMs and general meetings on a permanent statutory footing. Government and I will continue to support Irish businesses across the spectrum of government activity to ensure that our economy and our businesses prosper."
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 21st 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 further extended to 31 December 2022.
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.