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Tuesday, 16th April 2024
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Essential to convert share capital to euros Back  
As the deadline for euro changeover looms, a firm of Dublin solicitors has reminded companies that they must convert company share capital to euros by 31 December 2001.

The reminder comes from Beuchamps Solicitors who say that the need to convert company share capital to euros could have an immediate effect on most businesses.

According to Beauchamps, European legislation provides that after 31 December 2001, any reference to a national currency will be held to mean a reference to the euro. The Economic and Monetary Union Act, 1998 is an Irish piece of legislation that provides the mechanism whereby companies can redenominate and or renominalise their share capital into euros.

Redenominate simply means changing the share capital of a company >from punts to euros. It is achieved by an ordinary resolution of the company’s members at either an a.g.m. or an extraordinary general meeting or if the Articles of Association permit, by written resolution signed by all the members. A copy of the resolution together with the amended memorandum and article of association should be filed in the Irish Companies Registration Office within 15 days of the passing of the resolution.

Renominalisation on the other hand means adjusting the nominal value in euros per share to a convenient round figure i.e. where simple denomination leads to inconvenient amounts. But in order to do this the company must first decide whether to increase or reduce its share capital, and then decided whether to keep the number of shares unchanged or allow the number of shares to alter.

The nominal share value in euros is to be calculated as the total share value divided by the number of shares. The nominal share value is not to be rounded. The conversion rate is 1 euro = ?0.787564.

Beauchamps warned that if a company does not redenominate before the end of the ‘transition period’, being 31 December 2001, it can not redenominate or renominalise pursuant to the 1998 Act. This means that it will be left with an inaccurate share capital statement in its memorandum and article of association.

‘Accordingingly it is essential to redenominate before 31 December 2001 and companies will then have the ability to renominalise up to 30 June 2003.’ However Beauchamps believe that both f these processes should be done together.

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