Setting up a software company in the Republic of Ireland
To form a company in the Republic of Ireland you will need to send the following documents, along with the registration fee (€100 Physical Registration or € 50 Digital Registration), to The Companies Registration Office (CRO):
- Memorandum of association
- Articles of association
- Form A1
Before being able to write these documents you will need to decide what type of company suits your plans better. There are a number of company types:
The shares in a company are owned by its shareholders. If the company is a limited liability company, the shareholders’ liability, should the company fail, is limited to the amount, if any, remaining unpaid on the shares held by them. A company is a separate legal entity and, therefore, is separate and distinct from those who run it. Only the company can be sued for its obligations and can sue to enforce its rights.
There are four types of limited company:
A private company limited by shares: The members’ liability, if the company is wound up, is limited to the amount, if any, unpaid on the shares they hold. The maximum number of members is 99.
A company limited by guarantee not having a share capital: 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 the amount specified in the memorandum. If a guarantee company does not have a share capital, the members are not required to buy any shares in the company. Many 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.
A company limited by guarantee having a share capital: As this will be a private company the maximum number of members is 99. The members have liability under two headings; firstly, the amount, if any, that is unpaid on the shares they hold, and secondly, the amount they have undertaken to contribute to the assets of the company, in the event that it is wound up.
A 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. It should be noted that it is unlawful to issue any form of prospectus except in compliance with the Companies Acts 1963-2013. The nominal value of the company’s allotted share capital must not be less than €38,092.14, at least 25% of which must be fully paid up before the company commences business or exercises any borrowing powers.
Bearer Shares: Please Note that a Public Company, if so authorised by its articles, may issue bearer shares under section 88 of the Companies Act 1963. Table A of a memorandum and articles does not contain such authorisation, so a public company would have to include an express authorisation in its articles of association before any issue of bearer shares can occur. A private company, however, cannot issue bearer shares. Section 33 of the Companies Act 1963 requires a private company to restrict the right to transfer its shares in its articles of association. Bearer shares, which are transferred by simple delivery of the share warrant, would be in conflict with such restrictions. Regulation 2 of Table A part 2 states that (d) “the company shall not have power to issue share warrants to bearer”.
Single Member Company
A single member company is a private company limited by shares or a guarantee company having a share capital, which is incorporated with one member, or whose membership is reduced to one person. However, the company must have at least two directors and a secretary. The sole member, if he/she so decides, can dispense with the holding of General Meetings, including Annual General Meetings (AGMs). However, certain modifications laid down in the European Communities (Single-Member Private Limited Companies) Regulations 1994, have to be made. Also the accounts and reports that would normally be laid before the AGM of a company still need to be prepared and forwarded to the member.
In an unlimited company, there is no limit placed on the liability of the members. Recourse may be had by creditors to the shareholders in respect of any liabilities owed by the company which the company has failed to discharge. Such company must have a minimum of two shareholders.
Once you have decided what kind of company you are going to register you will be able to write the Articles and Memorandum of Association. Samples of these documents can be obtained from legal stationers, accountants, solicitors or company formation agents.
Memorandum of association
This document sets out the conditions upon which the company is granted incorporation. It must contain provisions dealing with certain matters e.g. the name and objects of the company and, if it is a company with limited liability, that fact must also be stated. The memorandum must be in accordance with, or as near as circumstances permit, to the appropriate table in the First Schedule to the Companies Act 1963. It must be printed and divided into paragraphs and numbered consecutively.
Articles of association
This document sets out the rules under which the company proposes to regulate its affairs. Articles are required to be registered by a company limited by guarantee and having a share capital or an unlimited company. Articles must be printed and divided into paragraphs and numbered consecutively. A company limited by shares or a guarantee company not having a share capital may register articles with the CRO. Model form articles are set out in the First Schedule to the Companies Act 1963.
Form A1 requires you to give details of the company name, its registered office, details of secretary and directors, their consent to acting as such, the subscribers and details of their shares. It incorporates a statutory declaration that the requirements of the Companies Acts have been complied with, and as to the activity which the company is being formed to engage in.
Applications to incorporate companies can be submitted under any one of three schemes, each of which has a different customer service standard:
- Fé Phrainn
- Online A1 scheme
Visit [www.cro.ie](http:www.cro.ie) for further details about these registration methods.
Persons wishing to incorporate new companies are required to classify the principal activity of the company using the NACE classification for economic activities.
A company director must ensure that an annual return on behalf of the company is delivered to the CRO at least once in every calendar year. The annual return (Form B1) is a document setting out certain prescribed information in respect of the company. This document has to be filed with the CRO annually, regardless of whether or not the company is trading.
In almost every case, accounts must be attached to that return; the financial year end of those accounts must be no earlier than nine months before the date of the return. To comply with that requirement, it might be necessary to change your company’s statutory annual return date (ARD).
WARNING Don’t forget to send the B1 form on time or you may face penalties of over € 1000, legal persecution and even being prohibite to act as company director.
For further details about company directors and secretary responsibilities please read the CRO leaflets:
Getting assistance & raising finance
There are many organizations that are willing to provide assistance to new business in the Republic of Ireland. We recommend to read the “KPMG Start-Up Success” guide (See useful links) to find a detailed list of these organizations. The main organizations are: