Proposed amendments to Ireland’s corporate governance laws a welcome change for PLCs

The recently published General Scheme of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 (140-page / 790KB PDF) contains a number of proposed amendments to Ireland’s Companies Act, some of which specifically relate to regulation concerning PLCs.

Gerry Beausang, a corporate law expert at Pinsent Masons, welcomed the proposed amendments. “When enacted, the Bill will provide greater clarity regarding the regulation of PLCs and will better reflect the realities of securities in most Irish public companies are traded today. The proposed amendments which impact PLCs will also help to address some of the gaps and shortfalls that currently exist under the Companies Act,” he said.

One of the proposed amendments impacting PLCs relates to the regulation of company investigations concerning interests in shares. Current legislation granting a PLC the power to investigate the ownership of its shares does not set a time limit for when information needs to be produced in response to a PLC notice requesting information. Under the proposed amendment, the person responding to such a notice would have an obligation to do so within five days and, where they do not provide all the requested information, the PLC would be able to apply for a court order freezing all rights on those shares.

According to Beausang, the defined timeline provided by the proposed amendment would allow PLCs to identify those interested in their shares far sooner than they can now.

He also highlighted a proposed alternative ‘special majority’ for schemes of arrangement – the usual means for public takeovers in Ireland – as another welcome amendment. Under the current Companies Act, a scheme of arrangement must be approved by way of a special majority at a meeting of the relevant shareholders or creditors. However, according to Beausang, this does not allow for the fact that most publicly traded shares are held via a central securities depository (CSD).

“The Bill seeks to amend the current wording in section 1087D of the Companies Act so that the necessary quorum to approve the scheme will include a ‘super quorum’ in the place of those companies whose shareholders are held in a CSD,” he said.

“In the context of PLCs whose securities are publicly traded, the settlement of trading is typically made via a CSD. This proposed amendment recognises how PLCs operate differently to other companies in certain respects and how the ‘majority in number’ principle does not operate realistically for traded PLCs in reaching a special majority,” he said.

The Bill also proposes a change to the record date for participation and voting in a general meeting. Currently, investors’ voting instructions for a general meeting of a ‘relevant issuer’ – which includes PLCs which have issued securities registered under a CSD – must be submitted at least 72 hours before the general meeting taking place, with proxy forms required to be delivered 48 hours before an adjourned meeting. In the case of a ‘relevant issuer’, if a meeting is adjourned for more than 48 hours, the opportunity for submitting another proxy form is reopened. This occurs because the current legislation still applies the 48-hour rule to a PLC that is a relevant issuer. However, shareholders with shares in a CSD cannot make use of the opportunity to refresh proxy instructions because the law does not accommodate a changed record date or a change in previously submitted voting instructions.

“The Bill proposes amending section 1087G to provide that the record date for the original meeting shall also be the record date for any future adjourned meeting where an adjourned meeting is held within 14 days of the notice given to members. Weekends and any public holidays are excluded from the time counting towards the minimum 72-hour notice required,” Beausang said.

“This is aimed at closing off the possibility of new proxy forms being submitted if a meeting is adjourned which was causing practical challenges for CSDs.”

Another proposed amendment is a permanent requirement for specific details to be included in notices for virtual meetings, including details on the electronic platform to be used for the meeting, and details for access to that platform.

Beausang also highlighted a proposed amendment in the Bill which would ensure that, in the case of PLCs, a group of subsidiary companies wholly owned by the same parent can take part in a merger by absorption in one transaction rather than many transactions.

“Currently, only one company at a time can merge by absorption into a successor company,” he said. “This is a welcome amendment as it reduces the number of transactions that need to take place and increases efficiency.”