Background information

New legislation, the ‘Companies (Rescue Process for Small and Micro Companies) Act 2021’ was passed in July 2021. The legislation amends the Companies Act 2014 to provide for a new dedicated rescue process for small and micro companies.

The legislation is part of commitment which were contained in the Programme for Government, published in October 2020. It is also part of the Government’s response to the economic challenges of the pandemic.

According to the Department of Enterprise Trade and Employment: “It is recognised that Ireland’s existing framework, examinership, while internationally recognised and successful in its own right, may be beyond the reach of small companies due to the associated costs.” As such the Company Law Review Group (CLRG) was asked to review the matter and issued recommendations.

Content of measure

According to the Government:

• The Act provides for a Small Company Administrative Rescue Process (SCARP) that mirrors key elements of existing examinership framework in an administrative context.
• The proposed process will be cost efficient and capable of conclusion within a shorter period of time than examinership.
• The Act makes miscellaneous amendments to the Companies Act to enhance the rights of employees in liquidations.

It is intended that SCARP will be more cost efficient and capable of conclusion within a shorter period of time.

Discussing the Act, Minister for Trade Promotion, Digital and Company Regulation, Robert Troy said: “Over the past year, this Government has focused on supporting businesses and ensuring jobs were protected through what has been a very difficult year. We quickly recognised that additional measures would be necessary to support businesses in the face of the rapidly evolving Covid-19 crisis. We set our sights on a proactive and comprehensive review of the regulatory framework for the rescue of viable small and micro companies and an assessment of all available policy options to enable these companies to continue in business and return to full operation and profitability.”

Use of measure

Not yet available.

Target groups

Workers	Businesses	Citizens
Other groups of workers	SMEs One person or microenterprises	Does not apply to citizens

Actors and funding

Actors	Funding
National government	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	Informed
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Unknown

Involvement

N/A

Views and reactions

The Small Firms Association welcomed the new Act. It stated: "This is good news for small businesses who find themselves in distress. This law will bring in efficient and timely restructuring for those companies worst hit by the devastation of Covid-19 and is a huge step forward in improving the business environment for entrepreneurs and small business owners."

Sources

• 13 July 2021: Oireachtas passes new small firms restructuring rules (www.rte.ie)
• 13 July 2021: SFA welcomes the passing of the Companies (Rescue Process for Small and Micro Companies) Bill 2021 (www.sfa.ie)
• 14 July 2021: Companies (Rescue Process for Small and Micro Companies) Act 2021 (www.irishstatutebook.ie)
• 14 July 2021: New rescue process will save businesses and jobs - SFA (www.rte.ie)
• 08 December 2021: Minister Troy announces the commencement of dedicated rescue process for small companies (enterprise.gov.ie)