COMPANIES ACT 2014. NEW COMPANIES LAW WHAT YOU NEED TO KNOW
Updated: This legislation came into effect on 1 June 2015 with some limited exceptions under SI 169 of 2015.
After 15 years of preparation, consultation and revision, a comprehensive new Companies Act was enacted on 23 December 2014. With nearly 1,500 sections and 17 Schedules, this is the largest piece of legislation ever enacted by the Oireachtas. The bulk of the legislation became effective on 1 June 2015.
This note sets out a summary of some of the key changes that may be of relevance to you if you are a shareholder, director or a person involved with an Irish company.
You will need to take specific advice on how the legislation affects you and your business.
Focus on the Private Company
Up to now, our company law was based on the needs of large public limited companies, but the great bulk of Irish business is done by small private companies.
The new law focuses on the private limited company with shares and simplifies the law. Company Law as you have known it, but made easier. The law in relation to companies remains substantially the same, but there are some significant changes.
All directors, and all secretaries who are individuals, will have to be at least 18 years of age. Directors also have new obligations and exposures.
Transition Period and obligation to convert your company
There will be a transition period of 18 months, after the law comes into effect. During that time, all existing private companies with shares must choose to become either a company limited by shares ("CLS" or "LTD"type) or a Designated Activity Company ("DAC"), or another type of company (e.g. a PLC).
The form most likely to be chosen is a CLS type company. It may be useful to convert prior to the end of the transition period (as the more restrictive law on DAC's apply to existing companies until they convert) and that option is available. In the great majority of cases, unless the company has converted earlier to a CLS, the company will be deemed to be a CLS at the end of the transition period, and the directors will be required to prepare a new constitution in accordance with the new Act, to give it to the shareholders and to file it in the CRO.
Companies limited by shares
The CLS company type will have a number of advantages:-
full capacity (the existing rule of ultra vires whereby companies cannot act outside of their objects will no longer apply);
needs only one director and shareholder (but it must also have a secretary if it has only one director);
a simplified constitution;
need not have an authorised share capital if so desired;
no need to change the company name or stationery (it will continue to include Limited or Ltd). Accordingly in many cases conversion to a CLS type may be the best option for you.
Designated Activity Companies
Some companies will have to, or may choose to, become a Designated Activity Company, where the company is or needs to be limited to carrying on a specific activity.
Please contact us if you have any questions on Companies Act 2014.
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The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting. All information and taxation rules are subject to change without notice.
No liability whatsoever is accepted by M. McLoughlin & Co. for any action taken in reliance on the information in this article