E-Business In Ireland
Introduction
E-Business, raises significant commercial and regulatory issues for conducting business online. These issues - and the commercial, technical and legal responses to them - require an imaginative and entrepreneurial approach.
Information on how the main Irish and EU legislative provisions affect e-business are set out in the sections listed below.
Electronic Communication
The Electronic Commerce Act 2000 came into force on the 20th September, 2000 validating use of electronic signatures.
The Act gives legal recognition to electronic communications, electronic information and electronic contracts. A contract may be evidenced in either the traditional paper-based format or in electronic format, as the parties to the contract themselves decide. The Act does not compel contracting parties to communicate or conduct business electronically and does not distinguish between B2B and B2C contracts.
The Act provides for the submission of information in electronic form to public bodies, where the public body concerned first consents to the electronic submission.
Encryption is permitted. There is no requirement to disclose private keys. It provides for the establishment of Certification Service Providers (CSP’s) and there are no prior licensing or authorisation requirements.
Electronic communications and electronic signatures are admissible in court proceedings. There are certain limited exclusions, namely wills, trusts, Enduring Powers of Attorney, affidavits or sworn declarations, and the rules, practices and procedures of any court or tribunal and the transfer of any interest in real property.
It is possible to conclude a binding electronic contract for such interests in real property.
Existing defamation law provisions apply to all electronic communications in Ireland, including the retention of information by electronic means.
The Act provides that consumer contracts concluded electronically in Ireland will be subject to all existing consumer laws.
On the 26th Febuary 2003 the European Communities Directive (2000/31/EC) Regulations 2003 came into force. Under these Regulations an ISP will not be liable if it is a mere conduit, does not select the receiver of the transmission and does not select or modify the information in the transmission.
The same rule shall apply to caching – automatic, intermediate and temporary storage of that information - performed for the sole purpose of making more efficient the information’s onward transmission to other recipients.
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Encryption and Digital Signatures
The production, importation and use of encryption technologies are not subject to any specific regulatory controls other than the obligations relating to lawful access.
The export from Ireland of encryption products is regulated by EU legislation and Irish legislation which reflects the commitments made under the 1996 Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies of which Ireland is one of the 33 co-founding countries.
The Electronic Commerce Act, 2000 gives legal recognition to electronic signatures. The Act recognises current encryption technology and is designed to be technologically neutral.
The Irish Government has indicated in very clear and unambiguous terms, that it does not propose to bring into being, a regime that will provide for compulsory or forced disclosure of private encryption keys.
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Intellectual Property Rights
Copyright
There is no requirement in Irish or EU law to register copyright. Once a work qualifies for copyright protection, copyright subsists in it.
Computer programs are protected as literary works. A computer program in its source code, object code, and any other form is protected by copyright, provided that it is original. The standard of originality required is low and essentially requires that the program is not a reproduction of another program.
Copyright will subsist under Irish copyright law for the lifetime of the author and 70 years after the author's death, regardless of the date when the work was published or otherwise lawfully made available to the public.
The Copyright and Related Rights Act, 2000 substantially updates Irish copyright law. The Act consolidates most of the previous legislation and implements a number of EU Directives. The Act attempts, in its terminology to be as technology-neutral as possible, so as to ensure certainty in the law in the future.
The Act creates new rights, including;
- rights for performers
- rental and lending rights
- database rights
- satellite broadcasting and cable retransmission rights
- moral rights for all authors include the rights of integrity and paternity of copyright works
The Act seeks to incorporate into Irish law the EU commitment to protect intellectual property rights and to fight infringements upon such rights, such as software piracy. There are extensive provisions dealing with infringement and substantial penalties for breach of them. The Act also addresses specific issues such as encryption and technological protection measures, as well as copyright and the Internet.
EU Directive 2002/29/EC (Copyright Directive) came into force during June 2001 and it had to be implemented by member states by 22nd December 2002.
Trademarks
Under Irish law there are two main systems for protecting trademarks - the traditional common-law remedy of passing off, which covers unregistered marks, and the statutory protection of registered marks under the Trademarks Act, 1996.
A trademark is defined as any sign that can be represented graphically which is capable of distinguishing the goods and services of one undertaking from those of other undertakings.
Trademarks are registrable in respect of both goods and services. Registering a trademark confers a property right which gives the owner of the trademark exclusive rights in respect of the registered mark for the goods or services for which it has been registered.
A trademark is registered for a period of 10 years from the date of registration. The period may be renewed for further successive periods of 10 years.
Trademark owners can prevent third parties from using;
- an identical sign for identical or similar goods
- a similar sign for similar goods where there is a likelihood of confusion among consumers, including the likelihood of association between the sign and the trademark
- an identical or similar sign for dissimilar goods when the trademark has a reputation and where use of the sign takes unfair advantage, or is detrimental to the distinctive character or repute, of the trademark
The EU Community Trade Mark (CTM) gives trademark protection throughout the EU on the basis of a single application and obviates the requirement to lodge individual trademark applications in the EU member state. Applications for a CTM can be made at the Office for Harmonization in the Internal Market in Alicante, Spain.
E-business should bear in mind that the simple fact of putting up a website means that their business has global exposure and their “virtual” presence is visible to potential customers world wide.
One of the trickiest issues is the improper use of of trademarks online. For example the improper use of metatags by unscrupulous website owners who unlawfully use a third party’s trademark as a metatag on their site, with the intention of directing web traffic searching for the third party website to their site. Case law in this area is developing. It is probably fair to say that within the EU the courts will act to prevent such improper use of trademarks on the grounds that such conduct constitutes the infringement of the trademark or passing off so care is needed in the formulation of metatags.
The misuse of hyperlinks could give way to problems. As with the misuse of metatags, case law in this area is developing. Grounds of action will very much depend on the particular circumstances.However it is reasonable to assume that misuse of hyperlinks could amount to breach of copyright, infringement of a trademark or passing off.
Domain Names
The use of domain names is synonymous with the Internet. Many businesses have found when applying for a domain name that builds on or reflects their trademark, that domain name allocation does not have regard to pre-existing intellectual property rights. This has given rise to the phenomenon of “cybersquatting.
Where the cybersquatter has been unable to demonstrate use of the domain name that infringes a trademark in good faith or has been unable to demonstrate a legitimate connection with the trademark, courts in some jurisdictions have granted injunctive relief. However, it is important to remember that where evidence of good faith usage exists, or a legitimate connection, the courts in jurisdictions such as the UK have refused to grant injunctive relief.
Patents
The principal Irish legislation governing patents is the Patents Act, 1992. An inventor may apply for an Irish or European patent.
Patents are granted by the Irish Patents Office or by the European Patent Office (EPO). The patent holder has the legal right to prevent third parties not having his consent from making, using, or commercialising the invention covered by the patent during a maximum period of 20 years.
Provided that certain requirements are met, royalties from patents are currently exempt from tax in Ireland.
A patent will be granted in respect of an invention if the invention is novel, involves an inventive step, and is capable of industrial application. The Patents Act 1992 specifically states that a program for a computer shall not be regarded as an invention.
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Privacy and Data Protection
It is likely that personal data will be processed whenever individuals interact over the Internet. Personal data is usually understood to mean data, which refers to living persons.
With the enactment of the Data Protection (Amendment) Act 2003 on the 10th of April 2003 Ireland finally transposed the remaining sections of the EU Data Protection Directive into Irish Law.
The 2003 Act makes important changes to Irish legislation in this area including the following:
- The principles dealing with "fair processing" of personal data have been modified and extended.
- There are new rules governing the use of personal data for direct marketing purposes.
- The transfer of personal data to countries outside the EEA will be subject to new controls.
- The rights for individuals to access their personal data are strengthened.
- The powers of the Irish Data Protection Commissioner have been extended.
- There are new requirements for annual registration with the Data Protection Commissioner.
- The requirements concerning keeping personal data secure are strenghtned.
- Any business outsourcing the processing of personal data (i.e. payroll) will have to have appropriate contractual agreements in place with the data processor concerned.
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Taxation
Corporation Tax
As and from the 1st January 2003, the standard rate of Corporation Tax of 12.5% appies to all trading profits and 25% for non trading profits.
An Irish tax resident company is liable to Corporation Tax on its total profits. Companies which are not tax resident in Ireland, but which operate in Ireland through a branch or agency, are only liable to Corporation Tax on profits generated by the Irish branch or agency.
Currently, Ireland operates 36 double taxation treaties with other countries, including almost all OECD countries.
In the context of e-business, one of the most important taxation issues is whether the enterprise in question has a presence in Ireland which amounts to a permanent establishment. It may not always be possible to clearly establish whether or not the enterprise concerned has such a permanent establishment in Ireland. As a general rule of thumb, the more substantial the activities which the enterprise carries out in Ireland, the greater the likelihood that it will be considered as having a permanent establishment in Ireland for taxation purposes. If the enterprise in question trades in Ireland with its own staff and equipment, it will almost inevitably be regarded as having a permanent establishment.
Whilst there is no agreed international approach to the application of the permanent establishment concept in the context of e-business operations, it is unlikely that the mere use of computer equipment in Ireland, such as a server, would be sufficient to create a permanent establishment for Irish taxation purposes.
VAT
Value Added Tax (VAT) is a tax on consumption, rather than on production. VAT is charged on goods and services supplied in the course of a taxable business. Credit is given for VAT to registered traders. VAT rates currently range from 0-21% depending on the classification of product or service being provided.
From 1st July 2003 the place of supply of electronically supplied services is deemed to be the member state where the customer resides. Suppliers of electronically supplied services from outside the EU to customers within the EU will be subject to VAT at the prevailing rate of the Member State concerned. Suppliers of electronically supplied services from within the EU to customers outside the EU will no longer have to charge VAT.
Customs and Excise Duties
Goods, which are imported from outside the EU, are liable to customs duty at the appropriate rate specified in the EU’s common customs tariff (CCT). Following the creation of the single market, goods imported into Ireland from elsewhere within the EU are not subject to customs duties. Excise duties are chargeable on a limited range of goods such as petrol and diesel, LPG, beer, spirits, wine and tobacco products. In addition, specific Vehicle Registration Tax applies to all road vehicles, calculated at rates set as a percentage of the open market selling price for the vehicles in question. Special reliefs may apply to vehicles imported temporarily into Ireland by non-residents of Ireland or vehicles imported on the transfer of residence to Ireland from outside of Ireland.
Capital Gains Tax
Gains from the disposal of capital assets (adjusted for inflation) made by individuals resident or ordinarily resident in Ireland are subject to Capital Gains Tax (CGT) at the current standard rate of 20%.
Losses arising in the same year may be offset against gains, which would otherwise be taxable. There are a number of exemptions and reliefs available. Rollover relief will apply where companies re-invest the proceeds from the disposal of capital assets into new qualifying business assets within a specified period. Capital assets may also be transferred between Irish resident group companies without triggering a liability to CGT.
Capital Acquisitions Tax
In broad terms, Capital Acquisitions Tax (CAT) applies both in the case of gifts and inheritances. CAT arises when the person receiving the gift or the inheritance, as the case may be, becomes beneficially entitled to the property for less than full consideration. There are technical rules, governing how the tax is calculated and depending on the date of the gift or inheritance, certain thresholds or exemptions may arise. The rate of tax for gifts and inheritance is taken on or after the 1st December 1999 is currently 20% on the appropriate taxable amount. There are a number of relevant exemptions and reliefs.
Stamp Duty
Stamp Duty is payable on a transfer of land and buildings or on the creation of leases of real property and also on certain other legal instruments such as Stock Transfer Forms. Rates vary from between 1% - 9% of the relevant consideration or open market value. There are various exemptions and reliefs. Transfers between associated companies where the necessary 90% beneficial ownership relationship exists are exempt from stamp duty, provided the asset transferred is retained within the same group relationship for a period of two years. If it is not, a claw-back will apply and stamp duty will arise.
Transfers on certain reorganisations takeovers and mergers are exempt. Almost all transfers made by a liquidator to a shareholder attract stamp duty at a nominal rate. Most transfers of foreign shares or of foreign real property and a wide range of financial investment services are exempt, as are transfers of Irish Government stocks or transfers arising on foot of a Will or between spouses, including certain transfers arising as a consequence of divorce. Normally speaking, transfers of property, other than stocks and shares between related persons, attract stamp duty at half the normal rate of duty.
Personal Taxation
Income Tax is charged on an annual basis. As and from the 1st January 2002, the tax year is now the same as the calendar year. For a liability to Irish Income Tax to arise, the individual must be tax resident in Ireland in the particular tax year for a period of 183 days or more, or 280 days or more in that and the preceding tax year with at least 30 days in each year.
Taxable income is calculated as the aggregate of income from all sources in the current tax year. Income Tax due on taxable income is reduced by certain tax credits and reliefs, which are available to each taxable individual.
National Social Insurance
In Ireland, social security is provided by means of social welfare insurance and associated levies known as Pay Related Social Insurance (PRSI). It is compulsory for all employees aged 16 years and upward to be covered by social insurance. Both employers and employees contribute towards the scheme and contributions are calculated as a percentage of earnings. Broadly speaking, most employed persons would contribute at the rate of 2% on the first €551.00 of income per month and at the rate of 6% thereafter. Employers presently would contribute at the rate of 12% with no ceiling.
Local Taxation
There are no provincial, municipal or local taxes on company profits. The only applicable local tax is a commercial property tax levied by the appropriate local authority on an annual basis.
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Competition Law
There are no special Irish or EU competition law rules relating to e-business. Existing EU and Irish law applies, principally the EU Treaty, the EU Mergers Regulation (Regulation 4064/89 as amended by Regulation 1310/97) and the Competition Act 2002.
In assessing the impact of competition law on any given e-business activity, the first issue to be addressed is the identification of the relevant market. Existing relevant market definitions applicable to e-business activities include top-level connectivity, dial-up Internet access, Internet advertising, paid-for content, and IT consultancy. It is important to state that these market definitions are not immutable and will change over time.
Anti-competitive agreements are prohibited and are defined as agreements that have as their object, or effect, the prevention, restriction or distortion of competition. Exemptions from this blanket prohibition include de minimis agreements in the case of EU competition rules and agreements for which an individual exemption or licence has been obtained from either the EU Commission or the Irish Competition Authority, as appropriate. Some block exemptions apply to defined classes of agreements.
In the case of complaints, orders can be obtained to modify or terminate the offending agreement, and the restrictive provisions in the agreements are void in law and unenforceable. Fines of up to 10% of turnover can be imposed for anti-competitive agreements. In addition, third party actions for injunctive relief and/or damages can be maintained. Anti-competitive conduct is also prohibited.
Undertakings with a dominant position are prohibited from abusing that position. No exemptions are permitted, and courts can impose fines of up to 10% of turnover, make orders to modify or terminate the anti-competitive conduct, and third party actions for injunctive relief and/or damages can be maintained.
The enactment of the Competition Act 2002 represents a significant strengthening of the competition law regime within Ireland. The investigatary authorities can prosecute breaches of the Competition Act under the criminal law with the attendant criminal sanctions.
The Act contains powers of entry into premises with the appropriate search warrant, the power to search for and seize documentation, the power to interrogate, arrest and prosecute suspects for breaches of competition law.
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Employment Law
Collective employment issues
Ireland has a well-developed and sophisticated system of a Labour Court and the Labour Relations Commission. Secondary picketing and other forms of disruptive industrial action are not permitted and the Courts will grant injunctions to restrain such conduct.
Trade Unions require a negotiating licence. As a result of the various industrial relations acts, Ireland has achieved a very high standard of harmonious industrial relations and unofficial or “wild cat” strikes are now exceptional.
Employment Law and Indivuals
Ireland has a well-developed but reasonably balanced system of employment law protecting the rights of individual employees. The following is a very brief description of the most important legislation.
The Minimum Notice and Terms of Employment Act, 1973 and the Terms of Employment (Information) Act, 1994.
This legislation prescribes, in accordance with standards applicable in the EU the information concerning the terms and conditions of employment of an employee (to be set out in writing) and the minimum notice to which an employee will be entitled in the event of termination of employment.
Organisation of Working Time Act, 1997
This Act transposes into Irish law EU Council Directive 93/104/EC on the maximum working hours. Consequently, Irish law is similar to the law of the rest of the EU.
Parental Leave Act, 1998 and Adoptive Leave Act, 1995
This legislation is broadly reflective of European standards and is not regarded as exceptionally onerous.
Protection of Young Persons (Employment) Act, 1996
This sets out minimum ages of employees of persons for particular employments.
Protecting Employees (Part -Time Work) Act 2001
With the passage of this piece of legislation part time workers are entitled to the same conditions of employment on a pro rata basis to those of comparable full time employees. This would include the provision of sick pay, health insurance and share options.
Worker Protection (Regular Part-Time Employee) Act, 1991
This legislation imposes non-onerous standards of employment rights protection in relation to part-time employees who previously would not have had sufficient hours of work per week to qualify for the full protection of other protective legislation.
Redundancy Payments Acts 1967 to 2001
Apart from special legislative provisions dealing with collective redundancies, these Acts govern the procedures and entitlements of employees in the event of termination of employment due to redundancy. Redundancy is defined in the generally internationally acknowledged sense.
Statutory redundancy rights are very limited amounting to one week wages/salary per year of employment plus a half a week wages/salary for every year of employment under the age of 40 with the particular employer and one week per every year of employment after the age of 40. Due to the restrictive benefits of Irish redundancy legislation, voluntary redundancy packages are now the norm and generally speaking, companies will negotiate (excepting in the case of insolvency) redundancy settlements varying between 3 weeks to 6 weeks remuneration per year of service (irrespective of age) but with certain discounts for older employees approaching retirement.
Unfair Dismissals Act 1977 and Unfair Dismissals (Amendment) Act 1993
Except for dismissals motivated by the pregnancy of the employee, racial or other discriminatory factors, trade union activism, qualification for protection of unfair dismissal legislation in Ireland is based on achieving 52 weeks continuous service.
The relevant legislation is the Unfair Dismissals Act, 1977 and the Unfair Dismissals (Amendment) Act, 1993.
There is a statutory ceiling on compensation based on 2 year gross income but the median award of the Employment Appeals Tribunal is in the region of €14,000. Approximately one third of cases brought by employees are successful. Compensation is payable only for proven loss of income due to dismissal.
The Employment Equality Act, 1998
Ireland has a significant corpus of legislation prohibiting discrimination on the grounds of race, gender, religion or nationality. The provisions of Council Directive 75/117/EEC on the approximation of the laws of the Member States relating to the application of a principle of equal pay for men and women, has been transposed into Irish Law by the Employment Equality Act, 1998 which has rendered unlawful any gender based discrimination.
Maternity rights, Transfer of Assets of a Company, Human Rights legislation
Maternity Rights
The Maternity Protection Act, 1994 and a considerable amount of secondary legislation provide substantial protection for working mothers. Maternity leave is now paid leave of 18 weeks with an optional 8 weeks of unpaid leave although Irish employers and international employers located in Ireland will readily pay the additional one month remuneration for the unpaid leave period.
Transfer of Assets of a Company
Due to Ireland’s membership of the EU, Ireland has transposed into domestic law, the provisions of the earlier Council Directive on the approximation of the laws of Member States relating to the safeguarding of employees rights in the event of transfers of undertakings, businesses or parts of business. This has been done by secondary legislation, the European Communities (Safeguarding of Employees’ Rights on Transfer of Undertakings) Regulations, 1980.
Effectively, where a business or portion of the business assets are to be transferred, employees will have the right to be transferred in their employment to the new entity.
This is a complex area of law but the relevant decisions of Ireland’s specialised Employment Appeals Tribunal are in line with the jurisprudence of the European Court of Justice.
Human Rights legislation
In an employment context, the most significant legislation in recent years is the Equal Status Act, 2000, which was brought into force on the 26th April 2000.
Although not specifically intended to have a significant effect on employment, the Equal Status Act has been used by some employees to maintain claims based on gender, racial discrimination, ethnic origin, sexual orientation and disability based discrimination.
As a result of Section 48 of the Equal Status Act, 2000 and the amendments made to the Employee Equality Act, 1998, many of the deficiencies in the earlier legislation have been addressed. Ireland now has a strong and effective body of legislation protecting not only employment rights but also the general access of minority groups to goods, provision of services, provision of accommodation, access to education, access to social clubs, protection against harmful or malicious advertising and access to licensed premises. In addition, the Unfair Dismissals Acts have brought into effect legislation protecting employees against dismissal based on ethnic origin or sexual orientation.
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Corporate Structures
Types of Corporate Entity
Any individual may form a company in Ireland by complying with the requirements of the Irish Companies Acts, 1963 to 2003. A number of forms of corporate entity can be established under Irish company law.
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Private company limited by shares: -
The liability of the members is limited to the amount, if any that is unpaid on their shares. The incorporation of single-member private limited companies is permitted.
Private company limited by guarantee, not having a share capital: -
The liability of the members is limited to the amount they have undertaken to contribute to the assets of the Company in the event of it being wound up.
Unlimited public or private companies:-
The liability of the members is unlimited.
Public limited company: -
A public limited company (plc) is limited by shares. It must have at least seven members. The nominal value of the allotted share capital must be not less than €38,092, at least 25% of which must be fully paid up before the company commences business or exercises any borrowing powers.
Undertakings for Collective Investment in Transferable Securities (UCITS):-
UCITS are public limited companies formed under the European Union (UCITS) Regulations, 1999 and the Companies Acts. Their sole object is collective investment and transfer of securities of capital raised from the public, which operate on the principle of risk spreading. The competent authority, which must approve all registrations of UCITS wishing to carry on activities in Ireland, is the Central Bank of Ireland.
European Economic Interest Groupings (EEIG): -
An EEIG is a mechanism through which businesses in the EU can engage in cross-border commerce. The purpose of an EEIG is to facilitate or develop the economic activities of its members.
EEIG must have a minimum of two and a maximum of twenty members, which can be companies or natural persons, and must reside in different EU member states. On registration, the grouping will be a corporate body with perpetual succession and will have separate legal personality from its members. To register an EEIG, Form IG 1 must be completed and lodged, together with a contract signed by the relevant members. The contract should include the following;
- the name of the grouping;
- the official address of the grouping;
- the objects for which the grouping is formed;
- the name, business name, legal form, permanent address or registered office, number and place of registration, if any, of each member of the grouping;
- the duration of the grouping, except where this is indefinite
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Relevant Information for Incorporation
The most popular form of business organisation in Ireland is the private limited company. The minimum number of members is one and the maximum is fifty, not including the existing and previous employees. There must be some restriction on the rights to transfer shares and the public may not be invited to subscribe for shares or debentures. Private limited companies, including single member private limited companies, are incorporated by the registration of the following documents and forms with the Registrar of Companies: -
Memorandum and Articles of Association.
These are the constitutional documents of any registered company. The Memorandum of Association sets out the name of the company, the objects for which it is established, whether the liability of the members is limited and, in the case of limited companies, how the liability is limited, i.e. by shares or by guarantee. The Articles of Association set out the internal rules and procedures for the governance of the company. Many companies registered in Ireland will simply adopt the model provisions contained in a schedule to the Companies Act, 1963.
Form A1:
This form sets out particulars of the address of the registered office, the first directors and company secretary, statutory declaration of compliance with the provisions of the Companies Acts, statement of capital for the purposes of assessment of Companies Capital Duty, a declaration that the activities of the company will be carried on in Ireland, and a description of the company’s business activity under the EU’s NACE classification system.
Branches and Places of Business
Under the European Communities (Branch Disclosure) Regulations, 1993, any non-Irish company that establishes a “branch” in Ireland must be registered within one month of establishment of the branch. Similarly, under Part XI of the Companies Act, 1963 any non-Irish company that establishes a “place of business” in Ireland must register it within one month of doing so.
The distinction between a "branch" and a place of business has not been clearly defined. A branch is generally accepted as being an extension of the parent body that has local management and an ability to negotiate business without recourse to its head office abroad.
A “place of business” can be regarded as an office, which performs only operations or promotional activities for the business of the company, with resulting business being dealt with directly by head office. It is likely that most places of businesses established in Ireland by non-Irish limited liability companies are in fact branches and in these cases the regulations apply instead of the Companies Act, 1963.
Establishment of a Branch
Documentation delivered to the Registrar of Companies for registration of a branch must include;
- a certified copy of the company’s charter, statute or Memorandum and Articles of Association or other instrument constituting or defining the constitution of the company;
- a copy of the latest accounting documents as publicly disclosed pursuant to the accounting requirements of the company’s home state;
- other documents required include a Certificate of Incorporation of the Company, its name, registered address and registration number, the name, address and activities of the branch, and the names and addresses of persons authorised:
(a) to represent the company in Ireland;
(b) to accept service of proceedings in Ireland;
(c) to ensure compliance with the Branch Regulations in Ireland
- the appropriate forms are Form F12 where the parent company is incorporated in an EU Member State and Form F13 where the parent company is incorporated in a non-EU state. Since January 1999, the procedures for authentication of documentation from non-Irish jurisdictions have been simplified, with Ireland adhering to the provisions of the Hague Convention. Therefore, a Government official, a notary public or officer of the Company, can authenticate a Memorandum of Association by Affidavit or Declaration.
Establishment of a place of business: -
The documents to be delivered to the Registrar of Companies for registration of a place of business must include:
- a certified copy of the company’s charter, statute, or Memorandum and Articles of Association, together with a certified translation, if they are not in English or Irish;
- a list of the directors and secretary and their residential addresses;
- the names and addresses of one or more persons resident in the State who are authorised to accept service on behalf of the company;
- the address of the company’s principal place of business.
- Form F1 must accompany the above documents.
Costs: -
In addition to the Companies Registration Office filing fee, where the company is limited by shares, Companies Capital Duty in the amount of 1% of the value of the total issued share capital is also payable.
Generally, new companies will be incorporated with the minimum number of shares in issue, i.e. two shares in the case of a private company limited by shares having two members and one share in the case of single-member companies. However, if the company subsequently increases its issued share capital, the total nominal value of the issued share capital will attract a charge to capital duty at a rate of 1%.
Broadly speaking, capital duty is 1% of the actual value of assets of any kind contributed in connection with the subscription for the shares, less any liabilities that have been assumed or discharged by the company in consideration of the contribution.
In addition, the promoters of the company may well incur legal fees with regard to advice in connection with the formation of the company and the drafting of the constitutional documents.
Company Law Enforcement
The Company Law Enforcement Act, 2001 provided for the incorporation of the Office of the Director of Corporate Enforcement. Mr. Paul Appleby was appointed as the first Director of Corporate Enforcement with effect from the 28th November 2001. His mandate under the Act is to improve the corporate compliance environment in the Irish economy by encouraging Irish companies to comply with their obligations as contained in the Companies Acts and to bring to account those who disobey the law.
The Director has extensive investigative and enforcement powers, which include the following:-
- the commencement of fact-finding investigations into Irish companies
- the initiation of prosecution of persons suspected of breaches of the Companies Acts
- the supervision of official and voluntary liquidations of companies and of unliquidated insolvent companies
- overseeing the restriction and disqualification of Company Directors and other corporate officers
- the supervision of those acting as liquidators and receivers
- the regulation of undischarged bankrupts acting as company officers
Apart from the foregoing, the Director has also certain other remedial measures available to him, which include:-
- directing the holding of an Annual General Meeting
- seeking an Order of the Court directing a company or its officers to remedy a defect or to comply with the provisions of the Companies Acts
- applying to the Court for Injunctive Relief
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Consumer Law
Ireland has a significant and well developed body of consumer protection legislation and regulation with specific legislation in relation to sale of goods and supply of services, consumer credit, consumer contracts, package travel, product safety, distance contracts, doorstep selling, and unfair terms in consumer contracts.
This body of consumer protection legislation provides not only for redress on an individual basis in private law, but also in some cases for state monitoring and criminal sanctions.
The E-Commerce Act, 2000 provides that all existing consumer legislation applies to on-line contracts. The role of the Director of Consumer Affairs is specifically extended to apply to all such on-line consumer transactions.
The Director is an independent statutory person with wide-ranging powers and functions. These include the monitoring of all aspects of the various pieces of consumer legislation, the publication of information about this monitoring, the licensing and regulation of certain types of business and the prosecution of offences under the legislation.
On the 15th May 2001 the EU Distance Selling Directive (97/7/EC) was implemented into Irish law by the European Communities (Protection of Consumers in Respect of Contracts Made by Means of Distance Communications) Regulations, 2001 (the 2001 Regulations). The implementation of these 2001 Regulations considerably strengthen the protection available to consumers in concluding distance contracts and increases the obligations that must be met by suppliers of goods and services by the means of distance contracts.
On the 22nd of January 2003 the European Communities (certain aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003 came into force transposing into Irish Law the provisions of EU Directive 199/44/EC. These regulations implement new rules governing contracts for consumer goods and associated guarantees.
The Convention on Jurisdiction and the Enforcement of Judgement in Civil and Commercial Matters, signed on the 27th September 1968 (“the Brussels Convention”) has recently been revised by the EU. A new Regulation became law throughout the EU during 2002. Under this Regulation, consumers within member states of the EU will be able to sue in their own home country, retailers from whom they have bought goods or services and it also will facilitate the enforcement of any resulting judgement in the Courts of the suppliers’ country.
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Exclusion and Limitation of Liability Clauses
Irish consumer legislation contains specific provisions in relation to exclusion and limitation of liability, which are too detailed to discuss here.
However, two significant pieces of legislation deal with consumer contract provisions in general terms, namely the Sale of Goods and Supply of Services Act, 1980 (the Act) and the European Community (Unfair Terms in Consumer Contracts) Regulations 1995 (the Regulations).
The Act implies into consumer contracts for the sale of goods undertakings as to title and description, as well as conditions as to quality and fitness. This Act also implies terms into service contracts, including undertakings that the supplier has the necessary skill to render the service and that he will provide the service with due skill, care, and diligence. The implied terms in a contract for sale of goods cannot be excluded or varied where the buyer deals as a consumer.
The implied terms in a contract for services, where the buyer is dealing as a consumer, may be excluded or varied only where it is fair and reasonable to do so and where this has been specifically brought to the consumer's attention.
The Regulations seek to further protect the consumer, whom the law regards as being generally in a weaker bargaining position. They specifically outlaw certain terms. In essence, if a term of a consumer contract is found to be unfair and it has not been individually negotiated with consumer, it will not be binding on the consumer.
The Regulations deal in detail with what is fair and reasonable. The concept of fairness includes a requirement of good faith. The Regulations set out indicative factors in relation to this good faith test. They also set out a non-exhaustive list of terms that may be regarded as unfair.
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Advertising
Irish law does not distinguish between on-line advertising and off-line advertising. On-line advertisements are subject to the same legal provisions that govern all forms of advertising.
Relevant legislation and protection includes that governing misleading advertising and the protection of consumers, the application of industry voluntary codes of practice, as well as certain sectoral regulatory rules such as those governing advertising for financial products and services or prescription medicines.
The Director of Consumer Affairs may, following a complaint or on his own initiative, request that any person engaged or proposing to engage in misleading advertising, to discontinue or refrain from such advertising. If the request is not met the Director or any other person can apply to the High Court for an order prohibiting the publication of the advertisement.
It is an offence for anyone to apply any false or misleading trade description to goods.
Advertising industry codes of practice are administered by the Advertising Standards Authority for Ireland (ASAI). The code of sale promotion practice regulates marketing techniques such as prize promotions and premium offers. Special rules deal with advertising of alcoholic beverages, advertising aimed at children, advertising dealing with health and beauty products and services, advertising dealing with the provision of financial services and products, employment business opportunities, and distance selling.
On-line advertising is of course globally accessible. Advertisers on Irish websites must therefore be conscious of the fact that their advertisements may breach the laws of other jurisdictions.
The EU Directive on Electronic Commerce (2000/31/EC) sets out the conditions that must be complied with in the use of what is defined as commercial communication i.e., any form of communication designed to directly or indirectly promote the goods, services or image of the advertiser.
The provisions of the Electronic Commerce Directive dealing with the regulation of unsolicited commercial communications were transposed into Irish Law on the 26th February 2003 by the european Communities (Directive 2001/30/EC) Regulations 2003.
On-line traders should also have careful regard to the provisions of the Brussels Regulation adopted by the EU Commission on 22nd December 2000 and which took effect throughout the EU in March 2002. Under its provisions, consumer protection provisions will apply where the consumer has contracted with an on-line business, pursuing commercial activities in the consumers’ home state or, directs such activities to the consumers’ home state.
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Dispute Resolution
Ireland has ratified and transposed into domestic law in the Arbitration Acts of 1954, 1980 and the Arbitration (International Commercial Act) 1988, the International Arbitration Conventions comprising the Geneva Convention, the New York Convention and the Washington Convention dealing with the enforcement and recognition of international arbitral awards.
The role of the Irish Courts is to facilitate and support the arbitration and especially to enforce a foreign Arbitral Award. The Courts’ response to domestic arbitrations is distinctly different with much greater possibilities for judicial intervention in the arbitration process.
The enactment of the Arbitration (International Commercial) Act, 1998 was promoted on the basis of Ireland being a very suitable place for international arbitration especially in matters relating to construction contracts and information technology disputes. Under domestic Irish law, an arbitration clause will survive the repudiation of a contract or its avoidance.
Whether the proposed arbitration is domestic or international, the Irish Courts have held themselves to be empowered to grant interim injunctive relief (for example, removal of directors) pending determination of a dispute by full arbitration.
Irish lawyers have now considerable experience of ICC Arbitrations and other international arbitrations. International arbitration is largely more effective and free of judicial intervention than domestic arbitration and as a result, Ireland has become a very attractive forum for international arbitrations.
The Irish Courts and legal system will provide very effective enforcement of foreign Arbitral Awards in Ireland and it has been commented that an international Arbitral Award will frequently be easier to enforce than a domestic Judicial Decree.
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Cybercrime
The Criminal Damage Act, 1991 creates a number of criminal offences under Irish law concerning access to computers and damage to data. It is an offence to damage intentionally or recklessly computer data and computer programmes or to threaten to do so or to possess anything with the intention of doing so.
It is also an offence to access data without proper authorisation. This is more commonly known as computer hacking. This activity constitutes a criminal offence when it is carried out by an insider, for example, an employee or from the outside by someone who has no legitimate connection with the data system, even if this person is outside of Ireland.
The Electronic Commerce Act, 2000 introduced a number of offences, mainly relating to the misuse of electronic signatures and signature creation devices.
The Criminal Justice (Theft & Fraud Offences) Act, 2001 makes it an offence to dishonestly operate or cause to be operated a computer with the intention of making a gain for oneself or for another, or of causing loss to another person.
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Proceeds of Crime
Ireland has enacted comprehensive legislation dealing with the proceeds of crime. The Criminal Justice Act 1994 introduced among other offences, money laundering and the handling of the proceeds of drug trafficking.
It imposed upon designated bodies, such as banks and insurance companies, the obligation to identify their customers and to keep records of proof of their identity. The Act also provides that property used in the commission of an offence, and lawfully seized from a convicted person following his/her arrest, may be forfeited.
In the late 1990’s, Ireland enacted and amended existing legislation with the aim of seeking out and seizing the profits of criminal activity and denying the use and enjoyment of such profits - namely, the Criminal Assets Bureau Act, 1996, the Proceeds of Crime Act 1996, the Disclosure of Certain Information for Taxation and Other Purposes Act 1996, and amendments to the Revenue and Social Welfare Acts.
The Criminal Assets Bureau is a multi-agency body consisting of members of the Irish police service ( AN Gardai Siochana), officers of the Revenue Commissioners, and of the Department of Social Community and Family Affairs, together with a Bureau Legal Officer and an administrative and technical staff. It is headed by a senior police officer.
The Criminal Assets Bureau uses two main methods to deal with assets it believes to have been gained from unlawful activity. In the first instance, if the Bureau is satisfied that property worth at least €12,697 is directly or indirectly the proceeds of crime, it can apply to the High Court for an order prohibiting the disposal of the property.
The High Court may also appoint a receiver to manage or dispose of the property, and may ultimately make a Disposal Order directing that all or part of the property be transferred to the Minister for Justice, and when sold, the proceeds be paid into the Irish exchequer. Secondly, the Bureau serves tax demands on those individuals who it can prove to have received money or property without having paid tax.
Since the establishment of the Bureau, criminals have begun disposing of their properties and their investments. They have moved large sums of cash offshore, and a number of major criminal figures have fled the jurisdiction.
This article is intended to provide only general information and does not purport to be comprehensive or to render legal advice. Should you wish to receive more detailed advice on any of the matters touched upon, please contact the author.
For further information or general enquiries contact: -
Patrick Ryan
Email: pryan@kilroys.ie
© Kilroys Solicitors 2005
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