Companies Act 2014 – What you need to know as a Director of an Irish Limited Company
By Simon O’ Connor,
The new Companies Act 2014, which is due to be implemented on the 1st of June 2015, is the largest piece of legislation in the history of the state to ever be enacted. The new Act is being introduced to simplify company law, reduce administrative burden on businesses and to ensure good corporate governance.
All existing Private Companies Limited by Shares will be obliged to change to one of the two new company types – LTD (Private company limited by shares), or DAC (Designated Activity Company). Other company types, including PLCs, Guarantee Companies and Unlimited Companies will not need to convert to a new company type but will be required to change their names to end with the appropriate suffix.
New Company Types
Private company limited by shares (LTD) – The new LTD company model will only require one director, but in this case must appoint a separate secretary. The company can have anywhere between 1 to 149 members and will not be legally obliged to hold an Annual General Meeting (AGM). A one document constitution will replace the memorandum of articles and association which will allow a LTD company to carry out any legal business as it will not have an objects clause. It can claim audit exemption where eligible and it can pass both special and ordinary majority written resolutions. The name of the company must end in the suffix ‘Limited’ or ‘Teoranta’.
Designated Activity Company limited by shares (DAC) – The DAC company type will require a minimum of two directors. The company can have anywhere between 1 to 149 members. An Annual General Meeting (AGM) is compulsory if the company has two members or more. It will have a constitution document which unlike the LTD company type will include a memorandum and articles of association which will state the objects for which the company is incorporated. It can claim audit exemption where eligible and it can pass majority written resolutions unless the companies constitution states otherwise. The name of the company must end in the suffix ‘Designated Activity Company’ or ‘Cuideachta Ghníomhaíochta Ainmnithe’ which may be abbreviated to ‘DAC’ or ‘CGA’.
The new Act is due to commenced on the 1st of June 2015. All companies will be given 18 months from this date to make the conversion to one of the new company types. It is important to understand that company cannot avail of any of the features of the new company types until the company has been converted. If a Private Limited Company fails to convert to one of the new company types in the given timeframe, it will be automatically converted to a LTD company. This may cause legal issues for the company, its directors and its shareholders. For this reason, we advise Directors to prepare for the new Act and covert to a new company type as early as possible.
Register a Company in Ireland can assist all existing Private Companies convert to the new LTD Company format or the new DAC company format. For more information please do not hesitate to contact us on +353 1 6874519 or complete our Contact Form and one of our representatives will contact you with the required information as soon as possible.