Buying And Living in a Multi-Unit Development Property in Ireland
9. Management Company Formation
9.1 Introduction
The main reasons why companies are formed to manage multi-unit developments are because they offer an efficient and effective organisational structure and means of management.
Companies in Ireland must adhere to the rules of company law, particularly the Companies Acts.
The purpose of this section is to provide a brief overview of the role and function of companies and some of their primary obligations under company law.
9.2 What is a company?
A company is a form of business organisation that is a separate legal entity and distinct from those who run it.
The Companies Acts generally allow one or more persons to form a private company for any lawful purpose by subscribing to a memorandum of association.
While there are a number of different ways in which companies can be formed, in general, most companies are formed as either private or public companies.
The majority of companies registered in Ireland are private companies.
When a company is legally established "incorporated", it can be established as one of a number of different company types e.g. private limited companies, public limited companies and unlimited companies.
There are four types of private company:
- Private limited by share capital;
- Single member private limited by capital;
- Unlimited company;
- Guaranteed limited company with share capital.
There are three types of public company:
- Public limited company;
- Public unlimited company;
- Guaranteed company without share capital.
There are various stages involved in setting up a company and depending on the company structure different operating and reporting processes may apply.
Detailed formation on this process and the governance procedures relating to different types of company structure is available on the website of the Companies Registration Office (CRO) at www.cro.ie
The CRO is the statutory authority for registering new companies in Ireland.
9.3 Why are management companies formed?
While there is no legal obligation to form a management company, the developer building the development usually establishes a company to own, manage and maintain the common areas as company law offers an efficient and effective administration structure and means of ownership.
9.4 How is a company formed?
Perspective companies are obliged to file certain documents with the CRO.
The company becomes incorporated after it has submitted details such as its name, activity, registered address, members, secretary, directors, and Memorandum and Articles of Association.
When these documents are filed with the CRO they become public documents which any person is entitled to view copies from the CRO.
9.5 What legal obligations do companies have?
Depending on the type of company and the business in which it is involved, the precise obligations of the company under company law will vary.
However, all company types must have one secretary and a minimum of two directors, one of whom must be resident in Ireland.
Knowing how the company is structured, governed, and what requirements it must adhere to under company law are critical in terms of understanding what the legal obligations and duties of the management company are.
They will also help you understand what rights, particularly as regards access to information, you are entitled to as a member.
Under the Companies Acts, companies must report certain information to the CRO on an annual basis, such as filing of annual returns and accounts (see section 13).
Some of the principle duties and obligations that all companies must abide by under company law include:
- Drafting a Memorandum and Articles of Association;
- Appointing and keeping a register of members, directors and a company secretary;
- Registering with the Companies Registration Office (CRO);
- Keeping records on the financial activities of the company; Filing annual returns on the financial activities of the company to the CRO;
- Holding meetings and recording minutes of these meetings (Minutes are the written record of a meeting);
- Providing information as set out under company law to the company's members.
The company must also have a legal address to which all formal notices addressed to the company may be sent.
While the registered office can be anywhere in the State, it must be a physical location, not just a post office box number.