Incorporating a limited company can be an exciting yet anxious experience for an Irish business or sole trader. Not only does the business transform when incorporated but the role of those involved in the business changes also.
Businesses typically have an assortment of questions to ask their incorporation provider. In this blog we examine 5 of the most frequently asked questions.
1) What Is Limited Liability?
For many businesses limited liability is the key motivation for incorporation. In Ireland, limited liability pertains to limited companies such as the LTD, PLC, CLG or DAC company type.
Whilst a sole trader is personally liable for the debts of his business, a company is a separate legal entity from its owners. The shareholders' liability, should the company fail, is limited to the amount, if any, remaining unpaid on the shares held by them. Directors are also afforded limited liability unless fraudulent or illegal activity has taken place.
2) What Is The Companies Registration Office?
The Companies Registration Office (CRO) is the central repository of public statutory information on Irish companies and business names. The CRO main functions are to:
• Incorporate companies and register business names.
• Receive and register post incorporation documents.
• Enforce the Companies Act 2014, in relation to the filing obligations of companies.
• Make statutory information available to the public.
Companies are required to submit certain particulars to the CRO in addition to an annual return and in most cases a copy of their financial statements. It is vital that all companies understand and adhere to their corporate filing obligations.
3) Can I Choose Any Name For My Company Name?
Unless an exemption is granted, a company name must include the relevant suffix for its company type as the last part of its name. In addition, there are guidelines surrounding company names, such as:
- Offensive names are not permitted.
- The name must be distinct from other names on the Register. Names which are phonetically or visually similar to those already on the Register are not permitted.
- The use of certain words within the name may require approval from the relevant authorities. For example, the use of the word 'Bank' requires approval from the Central Bank.
An incorporation application will be rejected if the proposed name is not suitable. Given this, it is advisable to seek advice from an incorporation provider before proceeding with the application. If you wish to retain your business name, the company may apply for the registration of a business name once it is incorporated.
4) Can I Be The Sole Director & Sole Shareholder Of The Company?
Private limited companies in Ireland are permitted to have a single shareholder who may be an individual or a corporate body. Since the enactment of the Companies Act 2014, LTD type companies are allowed to have a sole director. However, all other company types must have at least 2 directors. Corporate directors are not permitted.
Each company in Ireland must also have a company secretary who may be an individual or a corporate body. In companies with more than one director, it is permissible for one of the directors to also act as the company secretary.
5) What Are My Duties & Responsibilities As A Company Director?
A director has statutory and fiduciary duties and responsibilities which can be found in legislation and common law (case law). They are copious and varied and therefore cannot be summarised in a blog post. When deciding to incorporate your business it is important to fully understand the obligations and responsibilities for you and for the company. Given this, it is recommended that all directors obtain appropriate advice regarding their duties and responsibilities.
Disclaimer: Please note that this commentary does not purport to be a comprehensive review of each FAQ. Detailed appropriate advice should be taken before any particular transaction is entered into.