FE-1 Company Law — Questions and Answers
Question 1: Under the Companies Act 2014, what is the most common type of private company in Ireland?
- A private company limited by shares (LTD) (Correct answer)
- A designated activity company (DAC)
- A public limited company (PLC)
- A company limited by guarantee (CLG)
Correct answer: A private company limited by shares (LTD)
The Companies Act 2014 introduced the LTD as the default model for private companies in Ireland. It is a simplified company form with a single-document constitution, full capacity, and no requirement for an objects clause.
Question 2: What is the concept of separate legal personality in Irish company law?
- A company is a legal entity distinct from its members, capable of owning property, suing, and being sued in its own name (Correct answer)
- A company and its directors are treated as the same person
- A company has no independent legal existence
- Shareholders are personally liable for all company debts
Correct answer: A company is a legal entity distinct from its members, capable of owning property, suing, and being sued in its own name
The principle of separate legal personality, established in Salomon v A Salomon & Co [1897] and fundamental to Irish company law, means that upon incorporation, a company becomes a legal person separate from its shareholders, directors, and employees.
Question 3: Under the Companies Act 2014, what are the duties of a director?
- To act in good faith in the interests of the company, act honestly and responsibly, exercise due care and skill, and comply with the Act (Correct answer)
- Only to maximise profits for shareholders
- To follow all instructions from the majority shareholder
- To attend all board meetings
Correct answer: To act in good faith in the interests of the company, act honestly and responsibly, exercise due care and skill, and comply with the Act
Section 228 of the Companies Act 2014 codifies directors' duties including acting in good faith in the interests of the company, acting honestly and responsibly, exercising care, skill, and diligence, and complying with the Companies Act and constitution.
Question 4: What is the doctrine of 'lifting the corporate veil' in Irish company law?
- Courts may disregard the separate legal personality of a company to look at the reality behind it in certain exceptional circumstances (Correct answer)
- Directors must always disclose their personal assets
- Shareholders can access all company financial records
- The company must make all board minutes public
Correct answer: Courts may disregard the separate legal personality of a company to look at the reality behind it in certain exceptional circumstances
In exceptional circumstances, such as fraud, agency, or where the company is used as a sham, Irish courts may lift the corporate veil and look behind the company's separate personality to hold individuals personally liable.
Question 5: Under the Companies Act 2014, what is the minimum number of directors required for a private company limited by shares (LTD)?
- One director (plus a separate company secretary, or two directors where one acts as secretary) (Correct answer)
- Three directors
- Five directors
- No minimum requirement
Correct answer: One director (plus a separate company secretary, or two directors where one acts as secretary)
Under the Companies Act 2014, an LTD company requires a minimum of one director, but must also have a company secretary who cannot be the sole director. Alternatively, a company can have two directors, one of whom may also act as secretary.
Question 6: What remedies are available to minority shareholders under the Companies Act 2014?
- An application under section 212 for relief from oppressive conduct of the company's affairs (Correct answer)
- No remedies are available — minority shareholders must accept majority decisions
- Minority shareholders can only sell their shares
- Minority shareholders can veto any board decision
Correct answer: An application under section 212 for relief from oppressive conduct of the company's affairs
Section 212 of the Companies Act 2014 allows any member to apply to court for relief where the company's affairs are being conducted, or the powers of the directors are being exercised, in a manner oppressive to the applicant or in disregard of their interests.
FE-1 Company Law
Under the Companies Act 2014, what is the most common type of private company in Ireland?