The new Companies Act 2014, which commenced on 1 June 2014, aims to radically reform and simplify company law in Ireland. The new Act aims to streamline certain transactions and reduce the compliance burden on companies.

One of the new procedures introduced is known as the Summary Approval Procedure (‘SAP’) and is covered in Chapter 7, Part 4 of the Companies Act 2014. It combines several validation procedures from previous Acts into a single process. It enables companies to engage in certain restricted activities, subject to those parties that the restrictions are designed to protect (such as shareholders or creditors) granting their consent.

Restricted Activities That Can Be Authorised Using This New Procedure 


The restricted activities which can be authorised through the SAP are as follows: 

  • A company providing financial assistance for the acquisition of its own shares (section 82);
  • A reduction in share capital (section 84);
  • A variation of share capital on re-organisations (section 91);
  • The prohibition on pre-acquisition profits or losses being treated as profits available for distribution by a holding company (section 118);
  • The prohibition of loans to directors and connected persons (section 239);
  • The domestic merger of certain Irish companies (section 464); and
  • A members’ voluntary winding up (section 579). 


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The Process: Directors’ Declaration, Special Resolution & Filing

The directors (or the majority of directors) of a company must make a declaration in writing regarding the restricted activity.

The content of this declaration will differ as certain activities carry extra requirements. However, in all cases it must include confirmation that a full inquiry has been made into the affairs of the company and that the company is solvent and able to pay its debts as they fall due for a period of 12 months after the restricted activity is carried out.

This declaration must be made not earlier than 30 days before either the meeting of the members to approve the special resolution (i.e. passed by 75%, or a unanimous resolution in the case of a merger), or the last member signs a written resolution to approve the activity. 

This declaration is then sent to the members with the notice of the meeting or is attached to the resolution in the case of approval by means of written resolution. An expert report from the company’s auditor is required to confirm that the declaration provided is “not unreasonable” in the case of a reduction in capital, variation of capital on a re-organisation, the treatment of pre-acquisition profits, and a members’ voluntary winding up.

This resolution cannot be dated more than 12 months prior to the commencement of the activity. The company then has 15 days to deliver a copy of the special resolution to the Registrar of Companies and 21 days from the date the activity commences to deliver a copy of the declaration required under section 202.

Directors’ Liability

If the company is wound up within 12 months of the date of a declaration and it fails to pay its debts within 12 months after the commencement of the winding up, it is presumed that each director who signed the declaration did not have reasonable grounds for doing so under section 210 of the Companies Act 2014.

In such a case a liquidator, creditor, member of the company or the Director of Corporate Enforcement may make an application to the court to bring a civil sanction against the directors involved and they may be held personally responsible without limited liability for all of the company’s debts and liabilities.

Seeking Professional Advice

As with other new provisions under this Act, businesses should seek professional advice on how best to approach this new procedure. This is especially true in this case as the steps required vary depending on the transaction in question.  However, with the right professional advice, business should find that this new procedure considerably reduces their compliance burden when undertaking certain transactions.



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