The Investment Funds, Companies and Miscellaneous Provisions Act modifies the legal restrictions placed on private companies wishing to raise money by issuing shares.

Under the new legislation, which gives effect to an EU directive aimed at protecting investors, companies could potentially be required to produce a detailed share prospectus and comply with stringent regulations originally intended for large publicly quoted companies if they are involved in a share placing where shares are offered to more than 99 people.

Preparing a share prospectus can cost hundreds of thousands of euros and take several months, a significant burden for a small or medium-sized private company to bear.

"Our initial assessment is that the practical effect of the changes will be to restrict, to an extent, the ability of Irish private limited companies to raise funds by way of issues of equity securities, " said Jack O'Farrell, a partner in the corporate law department at A&L Goodbody.