Conversion of Share Capital to Euros

As a consequence of the enactment of the Economic and Monetary Union Act, 1998 and the provisions of the EU Directives 1103/97 and 974/98 Irish corporates are obliged to convert their share capitals to Euros. There is a transitionary period running from the 1st January 1999 to the 31st December 2001, during which period, Irish corporates can voluntarily convert their share capital to Euros. As and from the 1st January 2002, this conversion to Euros will be mandatory.

The timing of conversion will be a matter for each individual company, but it is probably true to say that most companies intend to show their balance sheets in Euros as soon as possible. The requirements for re-denomination are reasonably technical. The basic requirement is to effect an Ordinary Resolution in general meeting. However, in practice, a Special Resolution is necessary for the adoption of the new Memorandum and Articles of Association and therefore the entire process of re-denomination of capital should be done by way of Special Resolution.

The re-denominated nominal share par value is calculated by using the official exchange rate for the Euro (1 Euro = IR£0.787564) and dividing the total value of the shares converted into Euros by the number of shares in issue, or nominal capital as the case may be. This will generally give rise to an unrounded nominal value in Euros for each share.

On conversion, it is necessary to carry out renominalisation or rounding of the share capital into convenient Euro amounts. This may be achieved by rounding down or rounding up as the company decides.

A printed copy of the Resolution must be filed with the Registrar of Companies within 15 days of its passing. Failure to do so will expose both the company and its officers to sanctions.

If a Company has different classes of shares, these must be dealt with separately; applying the same principles set out above with appropriate resolutions from each class or classes of shareholder involved.

Because a change of capital has taken place, it will be necessary to alter the capital clauses in the Constitution of each company, which involves a Special Resolution. Copies of the Resolutions, together with the altered Constitution must be filed with the Registrar of Companies within 15 days of the passing of the Resolutions.

There are other relevant provisions to be addressed and our lawyers can deal with these and any other issues upon being contacted.

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