For companies wishing to be converted to a Limited Company (LTD) or Designated Activity Company (DAC) various Companies Act 2014 deadlines are approaching. Regan Solicitors provides an overview of the Act, the deadlines and the associated requirements. If you require further information on the Companies Act 2014 Deadline or advice on how it applies to your company please contact us on 01 6874100 or fill out our contact form and someone from our corporate legal team will be in touch with you very soon.
What is the Companies Act 2014?
The Companies Act 2014 (the “Act”) provides that during the transition period which commenced on 1 June 2015, all private limited companies must chose to convert to one of two new types of company the LTD or the DAC (designated activity company). See below for details of the key requirements of each new company type.
The New Companies Act 2014 Limited Company (LTD)
- One Director
- Is not required to hold an AGM
- A Constitution replaces memorandum and articles of association. There is no “objects” clause because it has full unlimited capacity
- Cannot offer shares or securities to public – cannot list securities
- “Limited” or “Teoranta”
The New Companies Act 2014 Designated Activity Company (DAC)
- At least two directors
- Must have an AGM if more than 1 shareholder
- Constitution includes a memorandum and articles of association. Stated objects for which the company was incorporated. Can carry on the activity of credit institution, insurance undertaking.
- Designated Activity Company or “Cuideachta Ghnomhaochta Ainmnithe”
The Companies Act 2014 Deadlines
For DAC, companies need to re-register before the 31st of August 2016 and must complete the following:
- Ordinary resolution of shareholders
- Revised memorandum and articles
- Form N2
- Changes to stationery, website, registrations etc.
For LTD, companies need to re-register before the 30th of November 2016 and need to do the following:
- Special resolution of shareholders
- Revised constitution (no memorandum)
- Form N1
Consequences of failing to meet the Companies Act 2014 Deadlines
If a company does nothing, it will automatically convert to the LTD model at the end of the transition period (1 December 2016). If this happens, the company will be deemed to have a constitution comprised of its existing memorandum and articles of association (excluding the objects clause and any restriction on amending the memorandum and articles). These may not “work” well with the Act, giving rise to uncertainty and confusion around the company’s regulations.
The Act introduced some new reporting requirements which will take effect in the first financial year of the relevant company commencing after 1 June 2015. For many companies that will be the year commencing 1 January 2016.
Directors Compliance Statement: This is required where the company has a turnover of more than €25m and a balance sheet total of more than €12.5m.
Audit Committee: If the company (alone or if aggregated with subsidiaries) has a turnover of more than €50m and a balance sheet total of more than €25m in the current and previous financial year (or explain why not in the Directors’s Report)
Directors Report: Directors report to contain a statement that each director has taken steps to ensure he is aware of all relevant audit information & to inform the auditors
Act Now To Meet The Companies Act 2014 Deadlines
It is likely that there will be a backlog of conversion applications as the deadlines approach. To be certain of meeting the statutory deadline, to retain control of the decision and to avoid the legal uncertainty of not having an up-to-date Constitution and other potential knock-on effects of missing the deadline, taking action now is recommended.
If you have questions about any of the information above or require help taking action to ensure your business is structured correctly post the Companies Act 2014 deadlines, please contact us on 01 6874100 or fill out our contact form and we will be in touch shortly.