The following are the more usual forms of commercial business entities found in Ireland:-

3.1

LIMITED COMPANIES

The principal business entity in Ireland is the company. This is similar to the U.S. corporation. The primary laws relating to companies are contained in the Companies Acts, 1963 to 1990 (the "Companies Acts"). The Companies Acts provide for the incorporation and regulation of the two most common forms of companies, namely the private limited company and the public limited company ("PLC").

A limited company is a company whose shareholders' liability to contribute to the assets of the company is limited to the amount they have paid or are to pay for shares in the company allotted to them. A private company is one which restricts the right to transfer its shares and prohibits any invitation to the public to subscribe for any shares or debentures of the company. A private company has a minimum of one member and a maximum of 50.

A PLC is not subject to such restrictions; but it must have a minimum of seven shareholders and an allotted share capital in excess of IR£30,000 paid up on issue at least to the extent of 25% of the nominal value of the shares allotted and 100% of any share premium payable. As with any limited company, if the shares of a PLC are partly paid, the shareholders' liability extends to any unpaid amounts on shares issued to them. A PLC can have as many shareholders as it wishes provided it has a minimum of seven. There is no requirement that shareholders of Irish companies be Irish.

Both PLCs and private limited companies incorporated in Ireland are obliged to file their accounts publicly each year in the Companies Registration Office. The extent of disclosure required is related to the size of the company. The larger the company, measured in terms of the balance sheet total, annual turnover and number of employees, the greater the disclosure required. In certain circumstances, disclosure can be avoided altogether by private limited companies. Small and medium sized companies may prepare short form profit and loss accounts and are free from the obligation to disclose particulars of turnover in audited accounts.

Since January 1, 1994 unlimited companies, that is companies whose members have unlimited liability for the companies' debts, are required to publicly file accounts where the only members of such companies are limited liability companies.

The incorporation of companies is a relatively inexpensive task, comprising the lodging of two principal documents, the Memorandum of Association, which contains the company's objectives and details of its share capital, and the Articles of Association which regulate the manner in which the affairs of the company are to be conducted. After receiving this documentation, the registration fee and details of the officers, initial shareholders and registered office of the proposed company, the Registrar of Companies issues a Certificate of Incorporation. The company comes into existence as of the date stated on the Certificate of Incorporation. A PLC must obtain a further certificate from the Registrar of Companies, namely a certificate of entitlement to do business, before doing any business or exercising any borrowing powers. This certificate can be obtained by filing with the Registrar a statutory declaration as to the share capital of the PLC and after identifying certain preliminary expenses and sponsors (called promoters') remuneration.

The usual classes of shares issued by companies in Ireland are ordinary shares, preference shares with a fixed or fluctuating coupon and redeemable shares. The most common par value is one Irish Pound, although it is possible to have shares denominated in larger or smaller amounts and in different currencies. A limited company may, in certain circumstances, purchase its own shares.

A limited company may alter its authorised but unissued share capital with little formality, but generally it may not reduce its issued share capital without the sanction of the Courts.

The day-to-day management of companies is normally entrusted to a board of directors. Every company must have at least two directors and a secretary (who may be one of the directors). Neither the directors nor the secretary need be Irish, but for administrative reasons and indeed to assist in tax residency requirements, it is customary to appoint a local representative as a director.

The Companies Acts require that every company appoint an auditor or auditors who will report to the shareholders on the accounts prepared by the directors. Each company must hold an annual general meeting, principally to consider the accounts of the company which contain the auditor's and directors' reports. If the net asset value of either a PLC or a private limited company falls to 50% or less of its called up share capital, the board of directors must convene an extraordinary general meeting of shareholders for the purpose of considering whether any, and if so what, measures should be taken to deal with the situation. The statutory form of auditor's report must always include a statement of the auditor's opinion as to whether or not such circumstances have arisen as at the balance sheet date.

There are no requirements for minimum payment of dividends or interest. There is, generally, no withholding tax on dividends or on the redemption of capital.

3.2

PARTNERSHIPS

A form of business enterprise often encountered in Ireland is the partnership. This is normally formed by a partnership deed. The principal governing legislation is the Partnership Act, 1890. There are no specific capital structure requirements for partnerships prescribed by Irish law. The Limited Partnership Act, 1907 provides for a variation of this entity by permitting a limited partnership with one or more general partners to manage the firm's business who have unlimited liability and one or more limited partners who invest fixed amounts of money in the partnership, but who are not liable for its debts and obligations beyond the amount of their capital investments. Although a general partner has unlimited liability, it is possible for a limited liability company to be the general partner. Limited partnerships are relatively uncommon these days.

A further variation of the partnership entity was introduced by the Investment Limited Partnership Act, 1994. This Act introduced a new form of vehicle for collective investment in Ireland, namely the investment limited partnership ("ILP"). The principal advantage offered by an ILP is that by reason of its tax transparency investors may gain access to double tax relief which would not be open to investors in unit trusts.

An ILP is subject to investment restrictions on the nature and spread of securities and to restrictions on the use of derivative instruments unless it markets solely to a professional investor.

In addition each ILP must have an Irish custodian and each general partner must be approved by the Central Bank, including the approval of any replacement of a general partner. Each ILP must also publish a prospectus or placing memorandum and must submit monthly, half-yearly and annual accounts to the Central Bank. At least one general partner must be an Irish incorporated company having its head office in Ireland and a minimum share capital of IR£100,000, with two Irish directors.

Partners of qualifying ILPs who are non resident for Irish tax purposes will not be liable for Irish income tax or Capital Gains Tax on income or capital invested in the ILP. Furthermore, there is no capital duty on the contribution of capital to a partnership or stamp duty on the transfer of interests within the partnership.

3.3

BRANCH OPERATIONS

A popular structure with foreign investors in Ireland is the establishment of a branch of a foreign corporation (e.g. the U.S. parent company). Foreign corporations which establish a place of business in Ireland (usually interpreted as a physical presence in the country) are obliged to register with the Registrar of Companies in accordance with the provisions of Part XI of the Companies Act, 1963. Registration is completed by filing with the Registrar copies of the corporation's charter and bye laws, particulars of the directors and secretary, details of the corporation's address in Ireland and the name and address of one or more persons resident in Ireland authorised to accept service of proceedings or any notices required to be served on the corporation.

Since February 1, 1994 non-Irish incorporated companies with branches in Ireland are required to file their accounts publicly each year in the Companies Registration Office.

This article is intended to provide general guidelines. Specialist advice should be sought about specific facts.