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Latest News

Ethics and Governance

From a governance perspective, COVID-19 will test the robustness of our legislation and our ability to take a more technological, and perhaps modern, approach, writes Claire Lord. The Irish Government recently announced additional measures to protect citizens by delaying the spread of COVID-19. One of these measures is social distancing, which requires individuals to keep a two-metre space between them and other people. This measure and the increasing restrictions on international travel is making it difficult for Irish companies to hold ‘in-person’ board meetings and to proceed with shareholder meetings, particularly annual general meetings (AGMs), in the usual way. Against this backdrop, what can companies do to allow business to proceed so as to comply with the law while protecting the health of its directors, employees and shareholders? Board meetings Generally speaking, the board of an Irish company can meet ‘virtually’. This means that board meetings can be conducted by telephone, video conference or a similar facility. For a virtual board meeting to be properly convened, all directors must be able to hear each other and speak to each other. At a virtual board meeting, the quorum is made up of those participating in the meeting. All participating directors are entitled to vote in the usual way and the location of the meeting, consequent on social distancing requirements, is likely to be the location of the chair. The board of an Irish company can also usually pass resolutions in writing. For a written resolution to be valid, it must be signed by all directors of the company at that time. A written resolution takes effect when the last signature is collected. A written resolution can be signed in counterpart and can be circulated and signed electronically. The fully signed version must be retained with the minute book of the company. The written resolution procedure can be used even if one of the directors is not permitted to vote. Where this is the case, the remaining directors sign the resolution and note the name of the director who is not entitled to vote and the reason why. It is always recommended that a directors’ meeting is held where the business to be transacted is contentious, or if it is anticipated that the business to be approved will not be supported unanimously. Directors must also meet where they are required to make a declaration of the company’s solvency as part of the summary approval procedure to approve certain restricted activities. Where these circumstances exist, meeting “virtually” is sufficient. The board of a company must also consider the location of its board meetings or decision-making where it is important from a tax residency perspective for them to be able to demonstrate that the company is managed and controlled in Ireland. Shareholder meetings Companies with AGMs due to occur in the months ahead should consider how best to proceed with their AGMs in a way that complies with the law, and affords shareholders the ability to participate, while observing the Government’s restrictions on mass gatherings. An AGM must have a physical location that is specified in the AGM notice. The quorum for an AGM is determined based on the number of shareholders present in person or by proxy, usually at the physical location of the meeting. Therefore, to avoid a large  number of shareholders attending at the physical location for the meeting, shareholders should be encouraged to appoint a proxy to attend and vote on their behalf. Ideally, shareholders should be encouraged to appoint the same proxy where possible (while always considering how a quorum will be achieved).   While an AGM must have a physical location, a company can permit participation by shareholders at an AGM via technology, once that technology permits shareholders to participate and vote electronically.   Multi-member and single-member private companies limited by shares (LTDs) and single-member companies of other types can dispense with the legal requirement to hold an AGM by opting to carry out the business of the AGM by way of a unanimous written resolution.  Similarly, all company types can pass resolutions in writing.  In the case of LTDs and designated activity companies (DACs), this right applies regardless of any provisions in the company’s constitution.  Similarly, LTDs and DACs can pass majority written resolutions where a particular process is followed. Business as usual? We face significant uncertainty in the months ahead with the spread of COVID-19. Finding ways to conduct business regardless, while protecting the health of others, will test our ingenuity. From a governance perspective, it will allow us to see if our legislation is robust enough to support a more technological and, dare I say it, modern approach.   Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.

Apr 01, 2020
Tax

Now available: a dedicated page on the COVID-19 Temporary Wage Subsidy Scheme This page is a summary of advice for members on the COVID-19 Wage Subsidy Scheme. Updated daily, it is providing the Institute's advice on the scheme under the following headings: Employer eligibility Publication of employers Treatment of employer top-up payments Revenue reconciliation Dealing with Revenue  Clarifications from Revenue  For more information see also Revenue’s guidance and Revenue’s FAQs, which are being updated regularly.  

Apr 07, 2020
Tax

Under the terms of the scheme, an employer can make an additional payment or ‘top-up-payment’ to their employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s Average Net Weekly Pay.   According to updates to Revenue’s FAQs (section 1.6) published yesterday, such additional payment cannot be regrossed, the payment is treated as gross pay and liable to Income Tax and USC according to the employee’s tax credits and rate bands.   The legislation (Part 7) is silent on the calculation of the ‘top-up-payment’ and the treatment of such payment, so much depends on Revenue’s operation of the scheme and their guidance.   Such guidance is updated regularly, the FAQs are at version 5 since their first publication two weeks back.  We therefore recommend that members review the current Revenue guidance and keep a watch out for our timely updates which we are publishing to our COVID hub.  We will continue our regular engagement with Revenue and other government agencies to clarify operation of the scheme and other related tax measures.  Revenue has also added examples to the FAQ document (sections 4.4.1, 4.4.2, 4.4.3) showing how to calculate the Average Net Weekly Pay, the impact of the ‘top-up-payment on the amount of the subsidy the employer will receive and the PRSI class.  It is worth reviewing the examples to better understand how Revenue are operating the scheme.   Please also bear in mind that the Temporary Wage Subsidy Scheme is a government measure to provide financial assistance to employers and support their efforts to retain employees.  Any payments or repayments to Revenue under the scheme are to/from employers, not too and from employees.    Some details on the Revenue reconciliation of refunds received and amounts due to employers under the scheme are included.  Revenue say that further details on how they will administer the reconciliation and recover any amounts owing to them will be published in due course.     

Apr 06, 2020