The Companies Act 2014
The Companies Act 2014 is due to come into effect on 1 June 2015. It represents significant update of company law in Ireland, replacing existing legislation that stretches from 1963 to 2013.
The main areas of change relate to the private Limited Company with one of the objectives being to make the running of these companies easier.
All existing companies will need to choose the model under which they wish to operate. There will be two options available for current private Limited Companies:
- Companies Limited by Shares (‘LTD’)
- Designated Activity Company (‘DAC’)
Some of the main differences between the 2 company formats are listed below:
LTD
- Can have 1 Director
- Can dispense with AGM
- Will not require an objects clause
- No Authorised Share Capital requirement
DAC
- Minimum of 2 Directors
- Can only dispense with AGM if a single member company
- Must have an objects clause
- Authorised Share Capital requirement
The majority of Limited Company Contractors will elect to be a private limited company by shares (LTD) as it reduces the administrative burden. One of the main benefits is the sole director requirement, i.e. it will no longer be necessary to have two directors.
The LTD will have a one document constitution (rather than the Memorandum & Articles of Association) and will not require an objects clause.
There will be an 18 month transition period where companies can decide whether to become a LTD or a DAC. Should no option be made and the documents filed in the Companies Registration Office, such companies will automatically become a LTD.
Please contact us if you have any questions or would like to convert your existing Limited Company to a 2015 Act Company.