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Question & Answers: Do I need to convert my LTD company?
By Simon O’ Connor, 13th April 2016 (Updated 4th May, 2017)
The Companies Act 2014 commenced into law on the 1st of June, 2015. The change to Company law left every company, director and shareholder with one question, ‘Do we need to convert our LTD company to a new company type?’
The CRO granted all companies an 18-month transitional period which began on the 1st of June 2015 and ended 30 November 2016. During this period existing Private Limited Company by shares fell under Designated Activity Company (DAC) format as they are very similar in structure. If after the 18-month transitional period a company had not converted to a new company type, the CRO automatically converted those companies to the new LTD type.
But, what did the CRO actually do? The CRO issued a new Certificate of Incorporation for the unconverted companies, and the existing Memorandum & Articles of Association (M&A) became the Company’s new Constitution.
What if I took the default conversion option?
Theoretically, the default option is a breach of director’s duties under the new Act. Don’t worry, there are no penalties for allowing the CRO to convert your company. However, this may have left your company legally exposed. If you take action you will be able to avail of the new features introduced in the new Act such as the single director company and audit exemption but your current Memorandum & Articles of Association does not permit these features.
What Should I do?
We strongly advise all companies update their existing Memorandum and Articles of Association into a new Constitution. The decision is up to the owners of the company, however, doing so will help the company avoid any legal issues in the future.
Please note that this does not apply to companies incorporated after the 1st of June 2015.
We strongly advised that you use a formation agent to make these updates on your behalf, for information on our Post Conversion Package please click here or contact our Company Secretarial Administrator, Sinéad Floody on +3531 6461625 or email sinead@companybureau.ie.
