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The BJK team of accountants hold qualifications with Institute of Chartered Accountants (ICAI), Association of Chartered Certified Accountants (ACCA) and Certified Public Accountants in Ireland (CPA).
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– sole trader or
– limited company
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Companies Act 2014
After years of debate, speculation, consultation, drafts and redrafts, it is finally here – Companies Act 2014 commenced on 1st June 2015! You most likely will have received a small booklet from Companies Registration Office (CRO) already, but what exactly does it mean???
The new Companies Act 2014 will consolidate 25 different Companies Acts that we had between years 1963 to 2013 into one piece of legislation. This is the largest single piece of Irish legislation ever and it hopes to modernize and simplify company law, reduce administrative burden on business and ensure good corporate governance.
How this will affect the Existing Private Company Limited by Shares?
Companies which are currently existing Private Limited by Shares companies (EPCs) – incorporated under the previous Companies Acts – will need to be converted to one of the two new company types:
• Private Company Limited by Shares (LTD)
• Designated Activity Company (DAC)
On 1st June last all Existing Private Companies became Designated Activity Companies.
During the first 18 months from this date, the company can decide to become a Private Company Limited by Shares (LTD) or a Designated Activity Company (DAC). If at the end of this period no conversion has occurred, they will be deemed to have become a Private Company Limited by Shares (LTD) automatically.
Private Limited Company Limited by Shares (LTD) v Designated Activity Company (DAC)
Which option to choose?
Main features of LTD are:
It has a constitution document replacing previous memorandum and articles of association.
It will not have an objects clause because it has full unlimited capacity to carry on any legal business, subject to any restrictions in other legislation.
It has an ability to have a single director.
It does not need to hold an AGM.
It has limited liability and has a share capital.
It can claim eligibility for audit exemption (and dormant company audit exemption).
Name must end in “Limited” or “Teoranta”.
It must have a suitably qualified Company Secretary and these duties can be carried out by an external company, such as ourselves!
Main features of DAC are:
It must have at least two directors.
It does need to hold an AGM where it has 2 or more members.
It has a constitution document which includes a memorandum and articles of association.
It has a memorandum in its constitution which states the objects for which the company is incorporated.
It can claim eligibility for audit exemption and dormant company audit exemption.
It has limited liability and has a share capital or is a private company limited by guarantee with a share capital.
Name must end in “Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe” unless qualified for an exemption.
Some companies have to be Designated Activity Company such as banks, insurance companies, if the company is quoted on the stock exchange.
What to do next?
If you want to become a New Private Company:
Until 30th November 2016 a company can submit a special resolution together with its new model constitution together with form N1 to CRO. The registrar of companies will upon registration of the documents issue a new certificate of incorporation.
The company becomes the new company type only on the issue of this certificate.
you want to become a Designated Activity Company:
Conversion to this company type I require a change in name of the company, all Designated Activity Companies must include their company type at the end of their name.
In order to convert to a DAC, a private company (limited by shares) can pass an ordinary resolution within the 15 month transition period after the commencement of the Companies Act 2014 on 1st June 2015 and submit the new constitution and resolution together with the form N2 to the CRO. Once the N2 form and associated documents are registered, a new certificate of incorporation will be issued by the Registrar of Companies.
The company becomes the new company type only on the issue of this certificate.
What happens if I do nothing?
After the transition period CRO will re-register any company that has done nothing as a New Limited Company with restricted Memorandum and Articles. A new electronic certificate of incorporation will be issue by CRO.
Under section 57, where a company failed to convert to a Designated Activity Company (DAC), certain people will be eligible to apply to the High Court for an order directing that it should re-register as a DAC.
Want to know more?
If you are still not sure what these changes mean to you or you want to know more about the conversion process, feel free to contact us at 01 235 2318 and we will be glad to help.
Also, don’t forget, that we are happy to take the worry of your Company Secretary duties away from you and we will gladly act on your behalf, giving you a total Peace of Mind!
