Types of Companies in Ireland
Types of Companies in IrelandUpdated on Wednesday 27th January 2021
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Businessmen who are actively seeking for a location where they can set up a new business can choose Ireland, which is one of the main economies in Europe. The Irish authorities have created a suitable business environment which is appealing to both local and foreign investors.
It is important to know that Ireland applies a small corporate tax, of only 12,5%, being the second lowest corporate tax applied by a jurisdiction within the European Union’s area. The commercial legislation was modified in 2014 and, under the regulations of the new Companies Act, there are new types of legal entities that can be set up by foreign investors; our team of lawyers in Ireland can offer more details on the legal aspects referring to the company types in Ireland.
Investors can be assured that our team of Irish lawyers have the necessary expertise in incorporating any of the business forms prescribed by the new Companies Act; with the assistance of our lawyers, businessmen can receive advice on the latest modifications of the commercial legislation, on the documents that must be submitted for each type of legal entity and others. Provided that foreign businessmen will not be able to be present in the country during the registration of the company, our lawyers can easily represent them through the power of attorney.
Our law firm also offers services for individuals, such as legal counsel in case of divorce in Ireland.
What are the main types of Irish companies?
Those who want to establish a company in Ireland should study the regulations imposed under the new Companies Act, which created new types of companies, enlarging as such the legal possibilities referring to the management of the capital and rights of the shareholders, the minimum number of founders who can register a particular type of business form and others.
The following video offers in-depth information on the types of companies available in Ireland:
The new Companies Act in Ireland prescribes that limited companies can be registered as one of the below mentioned business forms; our team of Irish lawyers can assist in presenting the main differences between these types of companies and can advise in choosing the most suitable limited company:
- private company limited by shares (LTD) – the shareholders of this type of company benefit from limited liability, which is limited to the number of shares owned in the company;
- designated activity company (DAC) limited by shares – the management of the business can carry out only specific activities, as mentioned in the statutory documents;
- designated activity company (DAC) limited by guarantee – in a DAC limited by guarantee, the company’s shareholders are liable for any debts incurred by the company to the amount of the shares they own, but also to the amount they have participated with at the company’s share capital;
- company limited by guarantee (CLG) – this type of limited company is generally used by charitable organizations, as it does not stipulate any minimum share capital during the incorporation of the legal entity;
- public limited company – the minimum share capital is established at EUR 25,000 and the shares of the company can be sold on the stock market to the general public.
Besides the above mentioned types of legal entities, foreign investors are also allowed to register any other type of business form prescribed by the new Companies Act. The Companies Act 2014 stipulates that a business in Ireland can also take the form of the following legal entities:
- unlimited company – this business form is incorporated through a constitution, a document which is comprised of two documents, the articles of association and the memorandum;
- Societas Europaea company – this legal entity follows the European Union’s regulations and its management can be set up under a one-tier system or a two-tier system;
- single member company – this business form is incorporated with a single shareholder and it is also necessary to appoint one director and a company secretary;
- undertakings for collective investments in transferable securities (UCITS) – it can be formed for opening an investment fund and the particularity of UCITS is given by the fact that once it was registered and authorized for activity in an EU member state, it can be marketed on other EU markets without any prior authorization from the institutions of the respective countries;
- European economic interest groupings (EEIG) – the EEIG can be formed by any legal entity that is regulated under the private or public legislation of an EU country, but it may also be set up by individuals performing specific types of activities;
- cross border merger – it can be formed by Irish companies together with any other businesses operating in the EU or in the European Economic Area (EEA), and it needs the approval of the High Court of Ireland.
Below, investors can find out important aspects on the above mentioned legal entities, but it is important to know that our team of Irish lawyers can offer in-depth assistance on each of the business forms that can be set up here, as well as advice on the incorporation procedure applicable to each case.
What is a private company limited by shares in Ireland?
Under the provisions of the Companies Act, the company limited by shares can be incorporated as a private company limited by shares (LTD), which is one of the most common types of companies registered in Ireland. The most important aspect of a LTD refers to the fact that the liability of the shareholders is limited to the numbers of shares owned in the company. This legal entity is regulated by a Constitution, which replaced the usual statutory documents, represented by the articles of association and memorandum.
There are no minimum share capital requirements and the legal entity is required to have at least one member. The number of the company's members is limited at 149. It is also important to know that there are restrictions related to the transfer of shares and that the shares of this business form can't be sold to a general public. The LDT is the most preferred type of company chosen for incorporation in Ireland. As mentioned above, the company may have only one director, but in this case, it is necessary to appoint a company’s secretary.
The legal entity will need to register with the Companies Registration Office (CRO), just like any other type of commercial company. At the same time, the company is required to file with the CRO various accounting documents, such as the annual return (which has to be deposited regardless if the company performed trading activities or not). The Irish LDT is regulated by the Part 2 of the new Companies Act, on which our team of attorneys in Ireland can offer more details.
What is a designated activity company limited by shares in Ireland?
The designated activity company (DAC) was created under the new Companies Act. The business form represents a limited company governed by a Constitution, which has also incorporated the memorandum and articles of association. The company’s memorandum has to provide information on the objects of activity that will be carried out.
The provisions under which a DAC functions are prescribed by the Part 16 of the Companies Act. When incorporating a DAC, the investor will have to stipulate in the company’s trading name the words “designated activity company”, but our team of lawyers in Ireland can provide more information on other requirements that have to be met by this type of company.
The company will require at least two directors and a number of maximum 149 members; our attorneys in Ireland can provide further advice on how to register an Irish DAC. In the situation in which the company has more than two members, it is necessary to hold the annual general meeting (AGM) and the company can become eligible for audit exemption if specific conditions are met.
What is a designated activity company limited by guarantee in Ireland?
In a DAC limited by guarantee, the company’s shareholders are required to establish a minimum share capital. It is allowed to modify the contribution of each of the shareholder to the company’s assets in the situation in which the legal entity will encounter various financial difficulties (the company may be in danger of being liquidated or wound-up). This can be completed through a special resolution.
What are the legal requirements for opening Irish companies?
A public limited company can be incorporated if the investors will respect several regulations. For example, it is necessary to have at least seven members in order to register a public limited company (PLC), while the minimum share capital necessary for this legal entity is established at EUR 25,000. During the incorporation procedure, 25% of the company’s capital must be deposited in a corporate bank account.
Also, investors should know that the shares of a PLC can be transferred to a general public and, at the same time, they can be traded on the stock market. In a company operating as a PLC, the investors will need to appoint at least two directors, and it is also required to hold the annual general meeting (AGM).
In a company limited by guarantee (CLG), the company’s founders are liable for the company’s debts in the amount they have contributed to the company’s assets. It is important to know that the amount can’t exceed the value stated in the company’s memorandum.
In a CLG, the company’s shareholders are not required to set up a minimum share capital, as prescribed by the Part 18 of the Companies Act (which provides the regulatory framework for this type of company). Our law firm in Ireland can provide more information on the regulations that refer to this business form.
In an unlimited company, the investors will have unlimited liability. The provisions related to this type of business form are prescribed by the Part 19 of the Companies Act, which provides the legal aspects of the following types of unlimited companies available in Ireland: the private unlimited companies with share capital and the public unlimited companies with a share capital.
The Societas Europea (SE) was created in order to remove the legal differences between the commercial legislation available in the European Union’s (EU) member-states. The main idea behind a SE is to provide a comprehensive legal framework applicable throughout EU. A main characteristic of the SE is that the company can be relocated from one EU country to another without having to go through all the required steps (dissolution and re-incorporation). The legal entity is regulated by the Council Regulation 2157/2001 and the European Communities Regulations 2007. S.I.21/2007.
As the name suggests, the single member company can be incorporated by a single member, but it is necessary to appoint minimum two directors and a company’s secretary. The company is not required to hold the general meetings that are usually prescribed under the applicable legislation.
Undertakings for collective investment in transferable securities (UCITS) in Ireland
The UCITS is a type of company which is incorporated following the regulations prescribed by the European Union under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 1989 & 1999. The UCITS is incorporated for performing investment activities and it represents a special type of company, as it must be approved by the Central Bank of Ireland, which is the main regulator of the investment companies operating in this country.
European Economic Interest Groupings (EEIG) in Ireland
Those who want to open a company in Ireland as a EEIG will need to follow the regulations prescribed by the SI No. 191 of 1989 - European Communities (European Economic Interest Groupings) Regulations 1989, as well as the SI No. 447 of 2010 European Communities (European Economic Interest Groupings) (Amendment) Regulations 2010. This type of company is set up for performing trading activities within the EU area.
What is a cross border merger in Ireland?
In a cross border merger, a company will merge with another legal entity situated in the European Economic Area. The merger can include more than one company, following the regulations of the EU Regulation, Statutory Instrument 157 of 2008. In order to start a cross border merger, it is necessary to obtain at least 75% of the votes of the shareholders, in a procedure that is concluded during the general meeting of the shareholders.
Are there any other Irish company types?
Yes, besides the legal entities that have been presented so far, foreign businessmen can also choose to start a business in this country through a subsidiary or a branch office. This option is generally used by companies that are interested in expanding their business activities on other markets.
When choosing between a branch office and a subsidiary, the decision should be based on the manner in which the parent company wants to assume the liability and the responsibility for the overseas office. Thus, a subsidiary is considered an independent structure, while the branch office is dependent to its parent company.
It is also important to know that the branch office is a structure that benefits from a simpler registration procedure, as well as simplified accounting requirements during a financial year, unlike the subsidiary, which has to comply with the same procedures that are imposed to locally incorporated businesses.
Thus, when choosing to register a subsidiary, the investors must be aware that the company will be liable to the Irish corporate tax system, while the branch office will be taxed only to the amount of money generated by the operations that were developed through the office in Ireland.
Are foreigners allowed to start an Irish sole trader?
Yes, foreigners may easily register a sole trader in Ireland, provided that certain requirements are met. For example, persons who are citizens of one of the countries included in the EEA do not need any special permission for starting a business here. However, persons outside this region will need to request for permission to do so.
In this case, such persons are invited to apply to the Immigration Investor Programme or Start Up Entrepreneur Programme; our team of lawyers in Ireland can assist persons outside the EEA with advice on any request they may have regarding their relocation to this country for business purposes.
Persons interested in receiving more details on the types of companies available in Ireland can address to our Irish law firm, where they can receive legal assistance from our lawyers for the incorporation of any of the above mentioned business forms. Do not hesitate to contact us if you need consultancy services for the incorporation of an Irish company.
We also provide other types of legal services to national and foreign clients, such as legal assistance during divorce in Ireland.