By Andrew Lambe, 12th August 2016
With the Company Act 2014 conversion deadline fast approaching, we are seeing an influx of enquiries from Central Bank regulated entities including Undertakings for Collective Investment in Transferable Securities (UCITS) management companies, Alternative Investment Fund Managers(AIFM’s), depositaries and investment firms, Insurance brokers and financial services companies who are unsure of what type of company format they are legally required to convert to.
Credit Institutions and Insurance Undertakings
Section 18(2) of the Companies Act 2014 forbids Private Companies Limited by Shares (LTD) from carrying on the activity of both a Credit Institution or an Insurance Undertaking. Therefore, existing Credit institutions and insurance undertakings must convert to a Designated Activity Company (DAC), assuming they are not already incorporated as a Public Limited Company (PLC). A copy of their new Certificate of Incorporation should be submitted to the Central Bank of Ireland.
Other Financial Service Providers
A similar requirement has not been imposed by the Companies Act 2014 on other specific forms of regulated financial service providers (“RFSPs”). As matters stand, the Bank has not adopted a general policy requiring such other RFSPs to register as a specific type of company. Therefore, the Central Bank will not require these companies to convert to DACs as it is at the discretion of each company to decide on their corporate structuring. The impact of different company types on the Central Bank’s mandate of safeguarding stability and protecting consumers is being kept under review and this may, where appropriate and in respect of certain classes of RFSPs, lead to the imposition of additional regulatory requirements on specific types of company.
Whilst RFSP’s can elect to become LTD companies, and the Central Bank does not require any specific clauses in the Constitution – It is still strongly advised that such companies proceed with the conversion process prior to the deadline of November 30, 2016, and adopt an up to date Constitution which is compliant with the Companies Act 2014. Not doing so is in breach of section 60 of the Companies Act. Having your company charter (Memorandum & Articles of Association) referencing old and now defunct legislation (Companies Act 1963-2013), may still potentially cause legal issues for your company.
It is important to note that Financial Brokers currently trading as sole traders/partnerships are not directly affected by the new Companies Act.
For more information on conversions or how the Companies Act 2014 affects you, please don’t hesitate to contact us.
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