By Simon O’ Connor
On the 1st of June 2015, the new Companies Act 2014 was introduced to modernize and simplify Irish company law. One of the main features of the new Act was the introduction of new company types; Company Limited by Shares (LTD) and Designated Activity Company (DAC).
An 18 month transition period which will end on the 30th of November, 2016 has been given to allow all Private Limited Company (EPC) directors and shareholders time to decide and convert to either the new LTD type or the new DAC type. At the end of the 18 month window all Private Limited companies (EPC) that have not yet converted to a new company type will be automatically converted and given a default constitution by the CRO. We have highlighted 5 reasons why we believe that you should convert your company rather than choose the default option.
1.The current document that governs your company (Memorandum & Articles of Association) references obsolete legislation from the Companies Act 1963-2013. The default option will not include updating the provisions in your existing Memorandum & Articles of Association to correspond with the new provisions in Companies Act 2014. This could potentially cause legal issues for your company.
2.Certain members and creditors may prefer to see the company converted to the Designated Activity Company (DAC) format. They could potentially challenge the company’s LTD status in the courts claiming prejudice on the basis of the directors’ failure to act appropriately.
3.The default constitution provided for a LTD Company format may not be the most suitable option for your company. For example, if you wish to offer securities for sale, are regulated by the Central Bank, or if you wish to restrict the activities of the company in a joint venture situation.
4.Converting to your company and taking the pro-active approach shows you in a positive light to Creditors, banks, investors and customers.
5.Whilst there is no offence or penalty, it is a breach of your duties as a company director under the new act not to convert.
If you would like more information on the conversions process or would like to convert your company, please contact the experts in registeracompanyinireland.com on +3531 687451 or fill out a contact form on our website.
5 reasons why you should convert your company rather than choose the default option
By Simon O’ Connor