Summary Approval Procedures under the Companies Act 2014

The Summary Approval Procedure (SAP) is covered in Chapter 7 of Part 4 of Companies Act 2014.  This is a new procedure which permits certain types of transactions to be carried out that would otherwise be prohibited.

The SAP outlined in the Companies Act 2014  requires both a special resolution to be passed by members and a declaration to be made in writing by a majority of the directors (which must be delivered to the Companies Registration Office).  The timing requirements for such resolutions and declarations are also contained in the section. 

In relation to four of the seven restricted transactions (capital reduction, capital variation on a reorganisation, the treatment of pre-acquisition profits and voluntary winding up), section 208 requires an independent person’s report to be made.  

The report consists of an opinion as to whether the directors declaration is “not unreasonable” and S208 requires the independent person making the report to be a “person who is qualified at the time of the report to be appointed, or continue to be, statutory auditor of the company”.

Section 208 also requires the report to be “drawn up in the prescribed form”.  The Companies Act 2014 (Section 208 Report) Regulations 2015 – S.I. No. 218 of 2015 – prescribes the form of a section 208 report.  

Further details on the SAP are contained in section 3 of the Technical Release 05/2015.

Chartered Accountants Ireland is continuing to consider the implications of the provisions dealing with the SAP under the Act, and may issue further commentary in due course.

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