COMPANY TYPES
Companies can be either private or public, with their liability
to creditors limited or unlimited.
PRIVATE LIMITED COMPANY
This is the most common form of company registered in Ireland
at present.
The shares in the company are owned by its shareholders.
As a limited liability company, the shareholders’ liability,
should the company fail, is limited to the amount, if any,
which they have yet to pay for the shares held by them.
A company is regarded as a separate legal entity and, therefore,
is separate and distinct from those who own (shareholders)
or run (directors) it. The company itself (and not the individual
shareholders) is the appropriate “person” to be
sued in the event that debts are incurred by the company
and which remain unpaid despite demands by creditors.
The maximum number allowable of shareholders/members is
99.
A private company which qualifies as small or medium may
prepare and file abridged financial statements with its
Annual Return in the Companies Registration Office. These
companies may also avail of the exemption from audit providing
they satisfy certain criteria.
COMPANY LIMITED BY GUARANTEE NOT HAVING A SHARE CAPITAL
Because this Company does not have a share capital it cannot
be classed as a private company. Therefore, as this is a
public company, there must be a minimum of seven members.
The members’ liability is limited to the amount they
have undertaken to contribute to the assets of the company,
in the event it is wound up, not exceeding a specified amount
and subject to a minimum of €1. If a guarantee company
does not have a share capital, the members are not required
to buy any shares in the company.
Many clubs, associations, charitable and professional bodies
find this form of company to be a suitable vehicle as they
wish to secure the benefits of separate legal personality
and of limited liability but do not require to raise funds
from the members.
Depending on their activities, these companies may also
make application to the Revenue Commissioners for exemption
from certain taxes and duties.
PRIVATE UNLIMITED COMPANY WITH SHARE CAPITAL
This type of company will only be used in situations where
the risk associated with unlimited liability is deemed small
or manageable e.g. property holding, trusts.
The incorporation of unlimited companies without a share
capital is a very rare occurrence indeed. More commonly
an unlimited company will have a stated share capital, divided
into shares of a fixed amount.
Such a company is one which does not impose any limits
on the liability of its members/shareholders. In effect
this means that if such a company is wound up, its members
are liable to contribute to its assets:
“an amount sufficient for the payment of it’s
debts and liabilities, and the costs, charges and expenses
of the winding-up”
This liability extends to the full amount of members’
personal estates after their having met personal debts.
Past members may incur liability too:
- if he was a member within 12 months of winding up.
- if the relevant debt or liability which the company
is unable to discharge was contracted for while he was
still a member.
- if the existing members are unable to meet the company’s
debts and obligations.
So, why would one form such a company, you may ask
!
There are two main reasons.
(1) Prior to the enactment of the Companies Act 1990,
this was the only type of company which could purchase
it’s own shares or otherwise return it’s capital
to it’s members without the tedious procedure of
making an application to the High Court for sanction,
as was the case with a private limited company. This flexibility
rendered this type of company a useful vehicle for family
investment companies.
(2) The other major advantage of such companies was in
the area of disclosure. Unlimited companies were not subject
to the provisions of the Companies (Amendment) Act, 1986.
This meant that such companies did not have to file annual
accounts in the Companies Registration Office.
However, Part III of the European Communities (Accounts)
Regulations 1993 seeks to apply the provisions of the
Companies (Amendment) Act 1986 on the preparation and
filing of accounts to unlimited companies and partnerships
whose membership/shareholders comprises:
1) Companies limited by shares or by guarantee, or
2) bodies incorporated in another jurisdiction and would
be equivalent to those in 1), or
3) bodies governed by the laws of an EU member state
that are of a legal form comparable to those referred
to above
4) any combination of the above.
The Companies Act 1963 defines “member” as
“every person who agrees to become a member of a
company and whose name is entered in it’s register
of members”.
Therefore, if a private individual were to act in a nominee
capacity for such a corporate member and be entered in
the register of members then the full membership of the
unlimited company would be comprised of members with no
limit on their liability and therefore would not be subject
to the provisions of Part III of the European Communities
(Accounts) Regulations 1993.
PUBLIC LIMITED COMPANY
This company type must have a minimum of seven members.
Their liability is limited to the amount, if any, unpaid
on shares held by them.
Companies applying for a listing on a Stock Exchange
must be public limited companies.
It should be noted that it is unlawful for such companies
to issue any form of prospectus except in compliance with
the Companies Acts 1963 – 2006.
