By Simon O’ Connor, 20th of April 2016
Since the introduction of the Companies Act 2014 there has been a lot of confusion with company’s questioning if they need to convert to the updated company types introduced under the new Act. This has been particularly confusing for Companies Limited by Guarantee.
On the 1st of June 2015, Companies Limited by Guarantee without a share capital where automatically converted to CLG’s. The CLG is the new updated version of the Guarantee Company format and is governed by Part 18 of The Companies Act 2014.
Although this company type has been automatically updated on the 1st of June, modifications still need to be made in order for the company to be compliant with current company law. This includes changing the company suffix and adopting a new constitution.
Please note that Private Guarantee Companies are now deemed to be Designated Activity Companies under the new Act. These companies do not need to convert to DAC status but must make an adjustment to their company name.
Guarantee Companies without a share capital have been given up to the 30th of November 2016 to amend their suffix and replace “Limited” with “Company Limited by Guarantee”. If the company fails to replace this by the end of the transitional period, the CRO will automatically issue a new Company Certificate with the new suffix on the 1st of December 2016.
The CRO will not issue a new constitution to the company meaning that their existing Memorandum and Articles of Association will remain in place. This basically means that the company will refer to outdated company law and will be unable to avail of the new features of the CLG such as Audit exemption or communicating with members electronically. Adopting a new constitution will also help companies obtain charitable status if applicable.
Multi-Unit Development Act 2011
There are a lot of property management companies who have set up as a Guarantee Company without a share capital but have not yet applied the provisions of the Multi-Unit Development Act (MUD Act 2011). The MUD Act enable’s apartment/Unit owners to take control of common areas and the management of the complex for the benefit of all residents.
The main features of the act are as follows:
- Apartments/Units cannot be retailed until the Owners Management Company (OMC) has been established
- Unless the circuits court state otherwise, voting rights are ‘one unit one vote’
- A Director can only be appointed for a maximum of 3 years
- Annual Meeting are mandatory and reports must be distributed to all members
- An OMC must maintain a sinking fund for any refurbishment, improvement and non-recurring maintenance of the development.
- OMC’s which have been struck off 6 years or less do not need to go through the High Court in order the get reinstatement
- An OMC, a developer or a member are all permitted to apply to the court for an order to enforce the act
If the management of the company want to apply the provisions of the MUD Act, the company should include these provisions in their new constitution and also include “Owners’ Management Company” which can be abbreviated to “OMC” in their Company Name.
What should I do?
We strongly recommend that all company owners take a proactive approach to the new Companies Act and make the change before the deadline date. Doing so will permit them to avail of the new features of the CLG and also help them obtain charitable status. For more information on company conversions, please do not hesitate to contact our Company Secretarial Administrator, Sinéad Floody on +3531 6461625 or email email@example.com.Contact us now for further details