The share capital of a company represents the way in which ownership is established within a company. Although any business starts with a certain number of shares, distributed amongst the shareholders, further shares can be added to increase the value of the company.
In this article we discuss two important matters concerning the share capital in Ireland: both the company’s authorized capital, and its issued share capital. The latter has a minimum value for some types of companies, and this can be an important factor when choosing the business form that will be incorporated.
Our attorneys in Ireland, specialized in business law, can offer you an in-depth presentation on the share capital of a company. If you would like to know more about other types of business issues, please do not hesitate to reach out to us.
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The authorized share capital in Ireland
The list below summarizes the conditions for the authorized share capital:
- it represents the maximum value of share capital the company can issue;
- this amount of shares will be established at the incorporation of the business;
- if the shareholders wish to increase the value of the company, the share capital can be raised after the company starts its activity;
- the maximum value is established according to the Memorandum and Article of Association.
Certain conditions may apply if the authorized capital is raised after incorporation. This may mean that a special shareholders’ meeting will need to take place to approve the increase. In most cases, the reduction of the share capital in Ireland is made under a High Court Order and certain steps are mandatory for this process. If you want to find out more on the subject, you can require the help of our law firm in Ireland.
The issued share capital in Ireland
The issued share capital represents the value that is being paid by the shareholders; regardless of the business incorporation you chose for your company, the issued share capital (ISC) must be smaller than the authorized share capital. The ISC represents the value that the shareholders may have to pay, in the situation in which the business may not succeed.
Modifications to a company’s share capital are to be notified to the Companies Registration Office (CRO). Our team summarizes some of the situations in which this may be required:
- any new allotment of shares is notified to the CRO via a special form within one month of the date on which the allotment took place (valid for companies limited by shares and companies limited by guarantee that have a share capital);
- the company needs to submit a set of documents 15 days after the resolution to increase the share capital was passed; these documents include the signed resolution, a special form, and an updated company constitution;
- a company with share capital that consolidates shares, divides, redeems, or cancels shares, or converts shares into stock will need to notify the CRO within one month of the date on which these alterations to its shares took place; a special form is also submitted for this purpose.
The company is not required to inform the Companies Registration Office in the event in which it will transfer stock or shares. This will be visible in the annual return that needs to be filed with the CRO by the company.
Our team offers complete solutions for company formation, from drawing up the incorporation documents and handling the submission of the share capital, to more complex post-incorporation issues. Together with our team of accountants in Ireland, we are also able to provide personalized tax advice packages for businesses. Reach out to us to find out more about our services.
Minimum capital conditions for Irish limited liability companies
According to the Companies Act 2014, limited liability companies are not obliged to have authorized share capital, but all other business incorporation forms must have both types of share capital.
While there is no minimum capital requirement for the private limited company, public limited liability companies have to deposit a share capital in the amount of EUR 25,000 upon incorporation. Out of this amount, at least 25% needs to be fully paid up before the company starts its business activities.
The lack of a mandatory minimum allotted share capital upon incorporation is one of the reasons why the private limited company can be preferred by investors. Moreover, the private limited company is only required to have one director while for the public company it becomes a condition to have two directors.
We remind investors that the following types of companies can be incorporated in Ireland:
- Private company limited by shares;
- Designated activity company;
- Designated activity company limited by guarantee;
- Company limited by guarantee;
- Public limited company;
- Other types of companies: single member company, unlimited company, European Society (SE).
Our team offers complete company formation services in Ireland, and we can provide both pre-incorporation and post-incorporation assistance. If you have questions about the available business forms, the minimum capital, conditions for foreign investors, as well as questions about the use of a holding company, among others, you can reach out to our local team of lawyers in Ireland.
Corporate compliance in Ireland
Once the company is registered, it will need to comply with the ongoing requirements for annual reporting, tax filing and payment, hiring employees, as well as the aforementioned notifications to the CRO should any changes in its share capital or particulars occur.
The most important taxes for companies are the following:
- the 12.5% corporate income tax for trading companies (25% for non-trading businesses);
- 25% dividend withholding tax, unless reduced through a treaty;
- 23% standard VAT, with additional reduced rates of 0%, 4.8%, 5.5%, 9%, and 13.5%;
- PRSI contributions made by the employer, and others.
Company formation in Ireland can be a straightforward process with our assistance. If you need further information about the share capital in Ireland, please contact our Irish lawyers, who can offer you consultations on the shareholders legislation.