IRISH BUSINESS LAW

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The main business models in the Irish Business law include the sole trader, partnerships,

and company; these make up the major business models. The sole trader is where an individual

in charge of the whole entity on his own. The business entirely depends on him for existence.

The main advantages of a sole trader are the fact that decision making is easy as there are no

consultations to make before a decision is made, which is paramount in the other business

models. The individual can work solely on the project in person and enjoys all the profits while

accounting for all the losses incurred in the business. The disadvantage is that the capital may be

minimal since the entire capital is dependent on one source.

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The partnership model of business is where individuals come together, pull their

resources together and manage the company as one. They share duties in the management

process of the organization and can make decisions as one. Its formation is more straightforward

as it requires fewer formalities in its creation. It is also easier to withdraw capital from a

partnership which makes it an advantage. The disadvantages are that the business has legal

entities and solely depends on the owners. It has the unlimited liability and a limited ability to be

expanded as it can only have a maximum of twenty partners. The membership of a partnership

pertains that each member enjoys some rights and freedom as stipulated in the 1890 Act.

Each partner has the right to take part in the management and the running of the business

entity. This can be effected through a written agreement showing the wishes and the interest of

every partner in the business. The second is that each partner has the right to be consulted in case

there is a need for a greater decision making or a change in the running of the business. They

also have their say that each one's views are heard and are considered in the final decision

making. The third is that each partner has the right to have access to the financial books and the

finances of the partnership, therefore, knowing the progress of the partnership. This is mainly

done because of the liability of the partner as the success or the failure of the business is on their

shoulders and are affected. The third is that every partner has the right to have equal profit

sharing or sharing of profits according to the agreed ratios amongst the partners.

The other right is the right to be paid or indemnified is cases, where the company is faced

with any situation such as a partner, incurs expenses and uses their money in the course of the

business. Partnerships have two types of liabilities, limited and unlimited liability. Whereby in a

place where there is an unlimited liability at least one member has to have limited liability. So
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that he will be accountable for the business debts when the partnership during the dissolution of a

company.

The retirement of a partner can only do dissolution of a partnership by an agreement, or

when a time of business has elapsed, in case of death of the partner and the bankruptcy of the

company and finally when a court gives an order for the business to be closed.

Companies on the other is an expanded form of partnership whereby it involves more

than twenty members. The membership exists in the form of shares are sold to individuals and

the by becoming the shareholders of the company. The main advantage of this is that it has a

large capital base. This is brought about by the fact that it has a membership of up to infinite.

There is the aspect of the separate legal entity making it a tedious exercise to dissolve the

business. The disadvantages are that the company has sophisticated law regulations. A company

has some features such as limited liability which results from a separate legal identity, secondly

is the transferability of shares from one partner to another. The third is the perpetual succession

this useful in the process of transferring of the company to the coming generations. It will ensure

that the company doesn't reach a place of dissolution in the case of demise of a partner or

retirement as seen in the prior business models.

The concept of separate legal personality, this is where a company has a different

distinction from its members. It is therefore distinct from its members that is it is independent in

matters pertaining law from its shareholders. In other terms, the company can sue or get sued in a

court of law on its name. As per the case of Mr. Salomon against the A. Salomon Company, the

case had to be run in such a way that the complainant had to sue the company in its name, not the

shareholders involved in the ownership of the company.

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Lifting the corporate veil is the verdict by the court to treat the rights and duties of the

business as the liabilities of its shareholders. It results as there is a separate legal entity of the

members which leads to limited and unlimited liability. The lifting of the corporate veil only

occurs to those shareholders with unlimited liability. That is their personal property is not going

to be used to pay the company's debts. It happens in cases where the right is being misused by

the shareholders or in the case where it is used for fraud or to run away from legal duties. It

entails looking at those involved in the management of the company in person.1

The company directors are those involved in the management of the company on behalf

of the shareholders. They are appointed by the stakeholders or by the members in a general

meeting governed by the constitution; they must be designated as individuals and have a

maximum work contract of five years. The company can only be complete when it has more than

one director mainly divided into departments or depending on the constitution of the company.

The directors do not have shares in the company unless as stipulated by the law being used. Their

resignation can be done by giving written notice or withdrawing from the election list. They are

to purchase these shares if need be within two months of appointment. They have to follow the

set down rules that guide the way they perform lest they get removed. Though they have more

prominent managerial duties, they are regarded as the employees of the company.

The duties of the directors can be divided into the following. First, are the general duties

which are the duties of a director to take an oath of their agreement to follow the constitutional

acts of the company, they also have the duty of transparency and notify the company in writing

when they have interest in purchasing of shares.

1
Thulier Clarus “Company Law in Ireland”( Anthony Press, 2015)
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The second are the fiduciary duties these are the duties of the directors to hold ethical

responsibilities towards the company. This is regarding trust as all the secrets and finances of the

company are left in their hands. For this to occur, the director’s actions must be of utmost good

faith towards the company, act honestly and with responsibility for the conduct of the company's

affairs. All actions done by the directors must be by following the stipulated laws of the

company.

The directors must avoid having common conflicts of interest with the company, and if

by chance such occurs they should let it be known and should be general y genuine. They also

must exercise proper skill, care, and diligence in the discharge of their duties.

A company's director can be liable for the loss of the assets of the company and held

accountable in case of presence of debts of a company. It can be done in case the court has

ordered them to be reprimanded if they have breached the company's Act. They can be penalized

if they are found trading in fraudulent activities is against the company's wishes. Fraudulent

activities can make the company be on the wrong side of the law. Hence the director's actions

can be costly towards the company. It, therefore, makes the director liable so that he keeps his

work on the side of the business. Directors have the task to keep proper records in books of

accounts pertaining the industry. If they fail to do this, they must be held liable since it might

lead to the loss of the company. Accounts of the company are very critical, and it is important to

handle them cautiously. If tampered with, they can lead to severe losses that even make the

company bankrupt. Therefore is a director in charge losses some of the business assets in the

form of accounts they should be liable for the loss. Breaching of any other stipulated laws of the

company that may lead to a loss in the organization makes the director responsible for the losses

caused.
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Under certain circumstances, a company can be dissolved when the company is receiving

low cash flows or when it is at its breakeven point. It will mean that the company may fail to

provide for the dividends of shares. It can also lead to dissolution if there is particular

carelessness in accounting practices, it may also be dissolved if there is poor management of the

organization or if they fail to use the company's resources well. Another reason for the

dissolution of the company may be due to failure in the succession plans. Failure for the

company to find future generations to run the company may lead to the dissolution of the

company.2

There are several ways of dissolving a company based on the above reasons and the

cause of the dissolution. The first is compulsory dissolution it is when the creditors take legal

actions against the company presenting a petition seeking to wind up the company. Company

dissolution is the least costly way of closing down a company. The process is simple and

includes then paying the creditors in full before closing down of the bank accounts and then the

compliance of the last reports. It must be done three months after the company stopped

producing and doing any form of business it must also not change its name during the three

month period.

The second way of dissolving a company is when members voluntarily decide to

liquidate the company. They should consult a practitioner who is licensed to perform the

dissolution process. It's done in such a way that the bills and debts are paid twelve months prior

the dissolution day and must ensure they meet the requirements of the statutes.

2
Mahmud Samad Court Applications Under the Company’s Act (A&C Black, 2013)
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The third way of dissolution of a company is through dormancy of the company. It may

be easier and cheaper to keep the company dormant rather than dissolving it entirely. It is

cheaper this way of reopening it may be more expensive as well as the procedures for the

dissolution. The directors have to meet the required legal requirements to keep the company

dormant. They include filling the annual company tax returns; this makes the company remain

registered at the companies' house even after being inactive for an extended period. It gives the

company the ability to be reopened once and run its business usually as before.

In conclusion, companies have separate legal entities which make it had to dissolve have

many steps to follow in the process of their dissolution.

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Bibliography

1. Thulier Clarus “Company Law in Ireland” (Anthony Press, 2015)

2. Mahmud Samad Court Applications Under the Company’s Act (A&C Black, 2013)