Companies Act 2014.
At present one of the biggest regulatory challenges facing companies in Ireland is the introduction of the Companies Act 2014, which is scheduled to be enacted on the 1st June 2015. With over 1400 sections it is one of the largest corporate acts ever introduced by the Irish State. At a most basic level it is going to require every company in the country to obtain a new certificate of incorporation under the new regime.
The draft bill was issued in November 2014 and was signed into law by the president on the 23rd December 2014. However, despite the fast approaching commencement date we have still not being issued with a commencement order for the act and until such order is received companies will continue to be governed under the Companies Acts 1963 to 2013.
The Main Changes under the Act are:
- Introduction of a new Designated Activity Company
- Introduction of a new type Limited Company
- New companies only require one director and they can dispense with the AGM in certain circumstances.
- There are increased note requirements for abridged accounts filed with the Companies Registration Office.
- Charitable companies, group companies and property management companies can now avail of audit exemption provided that they meet small company definitions under the act. However, one member can block the company from availing of the audit exemption. Also while small charitable companies are exempt from audit under the Companies Act 2014 they are likely to be required to be audited under the Charities Acts currently being proposed.
- Companies filing late still require an audit.
- Name changes for all but Limited Companies and Public Limited Companies.
- The Office of the Director of Corporate Enforcement now has the right of access to books and documents of the company to ensure compliance with the audit exemption requirements.
- It will be easier to secure convictions in court under the new act as the act has clear sub sections dealing with each area as opposed to 50 years of acts being construed together as one.
- Single member/director companies still require a separate secretary.
- Company Secretary acts under the direction of the directors and body corporates can act as a secretary.
- Company Secretaries are not required to hold formal qualifications however, they are required to have access to information in order to fulfil their roles.
- Directors and Secretaries must be over 18 years old.
- All liquidators will have to be regulated.
- New type Limited Companies will now have a single document constitution instead of the memo and articles of association. This will have no company objects clause or any clause relating to the changing of objects. Companies that wish to retain their objects clause will have to opt to become a Designated Activity Company.
- Existing guarantee and unlimited companies will have to change their name and amend their memo and articles of association in order to comply with the Act.
Existing private limited companies, which are the vast majority of companies in Ireland, will have to choose whether to convert to the new simplified Limited Company version or whether to become a Designated Activity Company (DAC). Some companies because of their objects or undertakings will be required to become a DAC, most however, will be able to convert to the new limited company version. The good news for these companies is that the company name will still end with the suffix Limited or Ltd as before and will not be changing to Companies Limited by Shares (CLS) as previously thought. On a practical level this means that they will not have to change all their stationery and signs etc.
Companies Limited by Guarantee will now end with the suffix CLG while Unlimited Companies will end with the Suffix ULC. These companies will have to change their stationery and signs etc. to comply with the act.
We are here to help so if you would like further information on the Companies Act 2014 and how it effects your individual company then please contact Shane Grennan to discuss same or visit www.cro.ie Further information is also available on directors duties and secretaries duties under the Act.