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Partnerships

July 6, 2011 – 5:17 pm

Like the ‘Sole Proprietorship’, the Partnership is almost totally exposed to third party actions. Legally, a Partnership can often be formed with no written agreement, however, one would be ill advised not to set-out the rights and obligations of the partners. If no such agreement is in existence, standard legal interpretations will generally be imposed unless there is clear evidence that the partners are subject to their own set of criteria, which would be the case for those belonging to a professional institution such as the Law Society. One point that should always be born in mind is that in the case of economic difficulties each partner will be liable not only for his shareholding but for all partnership debts which means that any person with assets should be very careful before going into business with a less well off counterpart as whilst the gains will be equal the potential losses will not!

ADVANTAGES
1. It brings together two or more people who have a personal interest in the welfare of the business enterprise.

2. A partnership is generally seen as more professional than a sole proprietorship

DISADVANTAGES
1. There is always the potential of partnership disagreements.

2. Each partner’s personal assets will often be subject to creditor action, no matter his personal obligations/liabilities under the’ partnership agreement’.

3. Generally, the burden of being a partner falls unfairly on the wealthier individual. In other words, if X and Y become partners but X has twice the assets of Y, then – accepting an equal partnership – X and Y will share equally in the profits but X has twice as much to lose should the partnership fail.

4. The cost of drafting a ‘partnership agreement’ can be prohibitive. As with sole proprietorships, the problem with partnerships is that it is very difficult, if not impossible, to separate partnership business activities from the individual partners.

5. A partnership structure inevitably requires ‘insurance’ cover to be taken out. In most cases this will cost far more than a Standard Irish “Limited Liability” company.

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Business Advice

Companies Act

July 6, 2011 – 5:15 pm

The Irish Companies Act which although similar to the legislation employed in Northern Ireland and the United Kingdom, nevertheless is considered to be more restrictive.

The principal features of Republic of Ireland companies are:
1. Directors must be individuals and not corporate entities.
2. At least one of the named individual directors must be resident in Ireland. There are no other constraints on non-resident or foreign directors.
3. A company secretary can be either an individual or company and may or may not be resident in the State.
4. All companies must have at least one subscriber/shareholder at the time of incorporation although as with the other positions mentioned above initially these will be taken by your company registration agent who upon registration will resign and appoint the permanent officers.
5. The company must have a real and substantive presence in Ireland and not merely a local registered office.
6. The company must at the time of incorporation be very specific about its intended objects and complete a NACE Code.
7. The Companies Registration Office (CRO) does not offer a same day expedited service as available in the UK and many States in the United States. However, In-a-Minute Companies is part of the Fe Phrainn Scheme, which means that company registration should take no more than 10 working days.
8. Irish law demands that all limited companies have an official seal.
9. Any alterations to a company’s structure will normally require the payment of a small government duty.
10. Stamp duty is approximately 1%, which is levied upon issued but not nominal share capital.
11. Shares should ideally be denominated in Euros (€’s) as to denominate shares in Irish Pounds (Ir£’s) will result in such shares having to be cancelled when this currency is no longer legal tender involving potentially significant expense as shares would have to be cancelled and re-issued in the new currency.

To Electronically Register Your Irish Limited Company for €325.00 + VAT including hardcopy documents and a special main objects clause for trades people (worth an extra €25) click below:
www.startingmybusiness.biz/irlltdtrades

Directors’ and Secretary’s responsibilities
Every limited company in the UK must have at least one director and a secretary; these can be either individuals or corporate entities. There are no nationality or age restrictions with the exception of Scotland where the minimum age is 16. Those disqualified by the court and undercharged bankrupts are not eligible.

The position of a director is one of responsibility and not one to be undertaken lightly. Directors must comply with the Companies Act and the general law and they have three primary duties namely to act honestly and in good faith and in the best interests of the company as a whole (fiduciary duty), to exercise such a degree of skill and care, when carrying out their duties as a director, as might reasonably be expected from someone of their ability and experience (duty of skill and care) and a duty to carry out the statutory obligations imposed by the Companies Act and other legislation.

Company secretary’s duty is to ensure company rules (Memorandum and Articles of Association) are followed and official records maintained. They are also responsible for keeping the Registrar of Companies informed of any changes of directors or secretary, filing annual returns and resolutions to change the memorandum and articles. Failure to comply can result in heavy fines or for the company to be struck off the register. Company Secretary also minutes all meetings of the board and shareholders and maintains statutory registers, such as registers of shareholders and directors. Certain registers must be kept at your registered office where they can be inspected by the members of the company and in some cases by the general public.

Irish companies require at least two individuals over the age of 18 to act in the capacity of director with at least one such director being a permanent resident of the country. In simple terms, the directors constitute the decision making body of a company commonly known as the board of directors and are liable at law for a company’s actions. The directors have a duty of care to the shareholder(s) of the company to act in the company’s best interests even where doing so might come into conflict with their own personal interests. The concept of a company being a fully separate legal entity to the directors is accepted in Irish law save where they have acted in a fraudulent and/or reckless manner which could not be deemed reasonable by normal standards – In which case, the corporate “veil” can be lifted fully exposing the individuals behind a company to the full rigors of both civil and criminal law. However, in the vast majority of cases this will not occur provided the board of directors have acted in good faith even if their decisions have negative consequences for the company.

A company secretary occupies similar pivotal position in an Irish company than he/she/it does in a UK company and has direct legal responsibility to maintain company records, file annual returns and/or carry out any other functions that may be elucidated within the Memorandum & Articles of Association. Like a director a Company Secretary has a duty of care to the shareholders/subscribers.

Northern Irish companies require at least one individual over the age of 18 to act in the capacity of director with at least one other person also acting as either the company secretary, shareholder and/or a second company director. In other words, in all cases there must always be at least two legal entities to form a Northern Irish company. In simple terms, the director/s constitute(s) the decision making body of a company commonly known as the board of directors and is/are liable at law for a company’s actions. The director/s have a duty of care to the shareholder(s) of the company to act in the company’s best interests even where doing so might come into conflict with their/one’s own personal interests. The concept of a company being a fully separate legal entity to the directors is accepted in Northern Irish law save where they have acted in a fraudulent and/or reckless manner which could not be deemed reasonable by normal standards – In which case, the corporate “veil” can be lifted fully exposing the individuals behind a company to the full rigors of both civil and criminal law. However, in the vast majority of cases this will not occur provided the board of directors have acted in good faith even if their/one’s decision(s) have negative consequences for the company.

A Company Secretary occupies a pivotal position in a Northern Irish company and has direct legal responsibility to maintain company records, file annual returns and/or carry out any other functions that may be elucidated within the Memorandum & Articles of Association. Like a Director a Company Secretary has a duty of care to the shareholders/subscribers.

LEGISLATION AFFECTING RETAIL TRADE
There are number of laws affecting the retail trade in general. These deal from consumer rights to trading hours and employees’ rights. Depending on what area you trade in (e.g. alcohol and/or tobacco), you may also be legally obliged to get a licence. For more detailed information on retail legistration, please refer to our CD entitled “How to Set Up a Retail Business”

LEGISLATION AFFECTING HOSPITALITY TRADE
There are number of laws affecting the hospitality trade in general. These deal from consumer rights to trading hours and employees’ rights. There is specific legislation relating to different areas of hospitality. For more detailed information on retail legistration, please refer to our CD entitled “How to Open a Hotel or Restaurant”

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