By Simon O’ Connor, 12th March 2015
The Companies Act 2014 will introduce a conversion process which will require all private companies limited by shares to convert into one of the two new company types:
• LTD – Private company limited by shares
• DAC – Designated Activity Company limited by shares
Private company limited by shares (LTD)
The new LTD company model will only require one director for the company but it must have a separate secretary if only one director has been appointed. The company may have between 1 to 149 members and will not be required to hold an Annual General Meeting. A one document constitution will replace the memorandum of articles and association. The LTD Company will not have an objects clause because it will have full unlimited capacity to carry out any legal business. It can claim audit exemption if eligible and it can pass both special and ordinary majority written resolutions. The name of the company must end in ‘Limited’ or ‘Teoranta’.
Conversion to Private Company limited by shares (LTD)
Existing Private Companies limited by shares will not automatically become LTD companies on the 1st of June 2015 and therefore cannot avail of the features of the LTD Company until they have converted. In order to make the conversion from an Existing Private Company to a LTD company, the directors must ensure a constitution is drafted that does not alter the rights and obligations of the members of the existing private company. In some cases a company may also have to submit a special resolution. If a company requires to make additional alterations to their constitution, they will have to make a separate filing which should include the special resolution and altered constitution and pay the appropriate fee to the CRO office. Company Bureau can assist you with this conversion and can help you avoid any extra fees.
Designated Activity Company limited by shares (DAC)
The Designated Activity Company will require a minimum of two directors. The company can have between 1 to 149 members. An Annual General Meeting is compulsory where the company has two or more members. It will have a constitution document which will include a memorandum and articles of association which will state the objects for which the company is incorporated. It can claim audit exemption if eligible and it can pass majority written resolutions unless the companies constitution states otherwise. The name of the company must end in ‘Designated Activity Company’ or ‘Cuideachta Ghníomhaíochta Ainmnithe’ which may be abbreviated to ‘DAC’ or ‘CGA’.
Conversion to Designated Activity Company limited by shares (DAC)
Certain companies are required to convert to a DAC, such as an Existing Private Company that has published an offering document or acquired an admission to trade on a regulated market for its debentures. Existing Private Companies who want to re-register to a DAC if they wish to have or retain specific objects for which the company was incorporated. To make this conversion, an Existing Private Company must pass an ordinary resolution within the transition period and submit the new constitution accompanied by the resolution. A change of name is also required. If a company requires to make additional alterations to their constitution, they will have to make a separate filing which should include the special resolution and altered constitution and pay the appropriate fee to the CRO office.
Do I have to convert my company and how long do I have?
Under the new Companies Act 2014, Directors have a duty to convert their company to one of the new company types within the 18 month transitional period. It is important to note that you cannot avail of the new features of the new LTD (for example, a single-director company) until the company has been converted. At the end of the 18 month transitional period, all Private Limited Companies will default to the new LTD automatically. Whilst this default position is provided for, it is important to note that this lack of action could potentially cause legal problems for the company, its directors and also its shareholders. The company will be forced to adopt a default constitution that may not be suitable for its type of business. One potential legal issue is if certain members and creditors who would prefer to see the company re-registered as a DAC may challenge the company’s LTD status in the courts claiming prejudice on the basis of the directors’ failure to act appropriately. On this basis we strongly recommend that Directors take a pro-active approach themselves and convert to the suitable company type as early as possible.
Other Company Types
The New Companies Act has also created some new company types in addition to the above. Other company types available are as follows:
For more information on the conversion process, or any other company secretarial issue, please do not hesitate to contact us at Company Bureau on +353 1 6461625 or e-mail email@example.com. Company Bureau are renowned experts in Ireland in the field of Company Secretarial, Compliance and Corporate Services.
Contact us now for further details