By Simon O’ Connor, 20th May 2015
The Companies Act 2014 in Ireland will be commenced on the 1st of June 2015. The Act is the largest piece of legislation to be enacted in the history of the state. The Act simplifies and modifies Irish company law and has a massive focus on Private Limited Companies as they account for over 90% of companies in Ireland today.
All existing Private Companies Limited by Shares will be obliged to convert to one of the new company types that the Act will introduce – LTD (Private company limited by shares) or DAC (Designated Activity Company). Other company types such Unlimited Companies, Public Limited Companies and Guarantee Companies will not need to convert to a new company type but will be obligated to change their names to end with the appropriate suffix.
The main features of the two new company types are:
Private Company Limited by Shares (LTD)
- A LTD company requires only one director. If a LTD company has only one director it must appoint a separate secretary.
- The LTD company type does not have objects stated in its constitution and therefore can carry out any legal business.
- The LTD company type is eligible for audit exemption.
- The LTD company type will have either “Limited” or “Teoranta” at the end of its name. • The LTD company type is a private company and is limited by shares. It cannot be limited by guarantee.
- LTD companies can pass majority written resolutions.
- The LTD Company can dispense with the need to hold an Annual General Meeting.
- The LTD company type can have up to 149 members.
Designated Activity Company (DAC)
- A Designated Activity Company has a memorandum of association in its constitution which states the objects for which the company is incorporated.
- It has limited liability and has a share capital or is limited by guarantee.
- It must have at least two directors.
- It can have up to 149 members.
- It cannot dispense the need to hold an Annual General Meeting where the company has two or more members.
- It can pass majority written resolutions where the constitution allows.
- It can claim eligibility for audit exemption.
- “Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe” must be stated at the end of the company name unless exempted.
All companies will be given an 18 month timeframe from starting from the 1st of June to make the conversion to a new company types. It is important to note that a company cannot avail of any of the features of the new company types until the company has been converted. If a Private Limited Company fails to convert to one of the new company types in the given timeframe, it will be automatically converted to a LTD company. This may cause legal matters for the company, its shareholders and its directors. For this reason, we advise Directors to prepare for the new Act and covert to a new company type as early as possible.
EuroCompanyFormations.com can assist you with converting your Existing Private Company to the new LTD Company form or the new DAC Company form. For more information on converting to a new company type, please do not hesitate to contact us.Contact US