‘Topics’ Newsletter May 2015 – New Companies Act 2014
Welcome to a Special edition of our Monthly Newsletter ‘Topics’ in which we summarise the main points of the New Companies Act 2014, due to commence 1st June 2015. For more detailed information on the New Companies Act, 2014 please visit www.cro.ie.
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New Companies Act 2014
- It is due to be introduced from 1st June 2015
- It will affect all companies is one way or another
- It is proposed to simplify the administration burden on company directors
- Limited companies will operate under either LTD, DAC or CLG
- New forms introduced for filing at Companies Registration Office (CRO)
How will the Act affect Existing Private Limited Companies (EPC)
- It is assumed most existing EPC’s will convert to Private company limited by shares – (LTD) see below
- Existing companies which do not opt to convert to LTD will be deemed to be ‘Designated Activity Company’ (DAC) which in affect means keeping it’s current structure.
- Transition period of 18 months to 30th November 2016 to convert
- Private Guarantee companies are deemed to be DAC’s. See below
- Companies Limited by Guarantee are deemed to be CLG. See below
- LTD companies will allow one single director but must have a separate company secretary
- New requirements to become directors. See below
- Removal of need for AGM & board meetings for LTD companies
- Change of name of company necessary pending on type of company (LTD: DAC;CLG)
Private Companies limited by shares
It is assumed existing private companies limited by shares will convert to LTD to avail of the new rules listed below. It should be noted that Private Companies which are limited by shares for the duration of the Transition Period operate as Designated Activity Companies (DAC). Such companies do not need to change their name unless they are converting to DAC status. Once the Transition Period has ended they will be converted to LTD status unless the company has already done so or changed to a different type.
Features of the LTD company include:
- It has the contractual capacity of a natural person – the ultra vires rule does not apply.
- It has a constitution
- It has limited liability and has a share capital.
- It has a limit of a maximum of 149 members.
- It can have a single director.
- It can pass majority written resolutions (special and ordinary).
- It can claim eligibility for audit exemption.
- Name must end in ‘Limited’ or ‘Teoranta’
document which replaces the need for a memorandum and articles of association.
Private company limited by guarantee (CLG)
Companies which are limited by guarantee and do not have a share capital are deemed to be Companies Limited by Guarantee (CLG) under section 1189. There is a requirement for Companies Limited by Guarantee to have the company type added to the end of the company name. All newly incorporated Companies Limited by Guarantee will have the company type at the end of their name from 1st June 2015. (Unless exemption granted under section 1180). “Company Limited by Guarantee” or “Cuideachta faoi theorainn Ráthaíochta” must form the end of the company name
Private Guarantee Companies
Private guarantee companies are deemed to be Designated Activity Companies. (DAC). These companies do not need to convert to DAC status but must make an adjustment to their company names. All Designated Activity Companies, which are limited by guarantee must have the words “Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe” at the end of their name unless exempted.
The words “designated activity company” may be abbreviated to “d.a.c.” or “dac”
Company Directors – How it will affect you?
- Option to convert to LTD companies allow a single director
- All new directors must age 18 or over
- Cannot be a director of more than 25 companies except under certain exemptions
- Fiduciary duties of a director are set out in part 5 of the Act
- Rules re loans with directors will not be valid in absence of paperwork
- Directors compliance statement to be included in directors report to the accounts for companies with balance sheets exceeding €12.5m & turnover in excess of €25m.
Mortgages / charges
- The Companies Act 2014 will introduce a new two-way procedure in which a charge can be registered. These processes replace the Companies Acts 1963-2013. The Commencement Date of the Companies Act 2014 is 1st June 2015.
- Details of certain mortgages or charges created by a company must be delivered to the CRO and registered within 21 days either of the creation of the charge or of notice to create the charge. Failure to register the charge within 21 days has the effect of making the charge void against a liquidator of the company and any creditor of the company.