May, 2015
Entity Governance & Compliance
Choose your company type
Companies Act 2014
It’s finally here, welcome to
our new governing legislation,
Companies Act 2014 (‘the Act’).
The long awaited new
legislation is now upon us and
now it’s time for each of us to
review, discuss and decide on
the actions required under the
new legislation.
This bulletin will look at the types of
company under the new legislation, the
characteristics of the more popular types
and the choices available to you under the
new legislation.
LTD
Types of Company:
Company Limited
by Shares
DAC
Designated Activity
Company
UC
CLG
Private Unlimited
Company
Company Limited
by Guarantee
PLC
Public Limited
Company
Key Features of the new
entities:
Private Company Limited by
Shares (LTD):
Designated Activity Company
(DAC):
• A simple single document
constitution
• Ultra Vires no longer applies
• A DAC will still have a Memorandum
& Articles of Association referred to
as a constitution
• Will not have a main objects clause
• It will have an objects clause
• Can have a minimum of one director
• Must have a minimum of two
directors
• Must have a Company Secretary
who has the requisite skills or access
to same
• If the Company only has one
director then he/she cannot act as
secretary also
• May dispense with AGMs
• No name change, name will end in
Limited or Irish equivalent
• No need to have an authorised share
capital
• Written resolutions may be passed
by the relevant majority
• Cannot offer shares to the public or
list debt securities.
• Must have a Company Secretary,
who can be one of the directors, if
they have the requisite skills or
access to same
• Must state its authorised share
capital
• Written resolutions may be passed
by the relevant majority
• Name change required, the name
must end with Designated Activity
Company or DAC or Irish equivalent
• May dispense with AGMs if it is a
single member. Multi member
companies will continue to hold
AGMs
• Cannot issue shares to the public but
will be able to list debt securities.
Unlimited Company (UC):
Public Limited Company (Plc):
Company Limited by Guarantee
(CLG):
• A UC will have a Memorandum &
Articles of Association referred to as
a constitution
• A Plc will have a Memorandum &
Articles of Association referred to as
a constitution
• A CLG will have a Memorandum &
Articles of Association referred to as
a constitution
• It will have a main objects clause
• It will have a main objects clause
• It will have a main objects clause
• It may opt to have just one member
• It may opt to have just one member
• It may opt to have just one member
• It must have at least two directors
• It must have at least two directors
• It must have at least two directors
• Must have a Company Secretary,
who can be one of the directors, if
they have the requisite skills or
access to same
• Must have a Company Secretary,
who can be one of the directors, if
they have the requisite skills or
access to same
• Must have a Company Secretary,
who can be one of the directors, if
they have the requisite skills or
access to same
• Name change required, the name
must end with Unlimited Company
or UC or Irish equivalent.
• There is no name change
• Name change required, the name
must end with Company Limited by
Guarantee or CLG or Irish equivalent
• Minimum share capital requirement
will continue
• It is the only type of company that is
permitted to have shares listed on
the stock exchange.
Choices available for the existing Private Limited Company
Here we take a look at the options available to the Private Limited Company, being the most popular and most registered entity in Ireland
accounting for over 85% of registered companies.
Private Limited Company
Option 1
Do Nothing
Should you decide to do nothing then you will be treated as a
DAC during the transition period (although you will not be
required to change the company name). Following the transition
period you will automatically become a LTD and you will have a
deemed constitution (not matching public records). Doing
nothing is not recommended and directors will be in breach of
their obligations under the Act. It may also cause stakeholders
confusion as the Company will be a DAC for a period and will
have a deemed constitution.
Not Recommended
Option 2
Action
Re-Register as a LTD
Prepare new constitution
We anticipate that most companies will take this route. This will
be the simplest form of Irish Limited Company.
Prepare Members/Directors Resolution
File Form N1 together with new constitution at
Companies Registration Office.
Option 3
Re-Register as a DAC
Action
If you wish to RETAIN your main objects clause, if you have listed
debt , if you are a credit institution or an insurance company then
you will be required to re-register as a DAC. Shareholders may
also request that a Company re-register as a DAC to which the
directors should conform.
Prepare new constitution
Prepare Members/Directors Resolution
File Form N2 together with new constitution at
Companies Registration Office.
18 months - ending 30th November, 2016
Type of
entity:
DAC
Is name change
required:
Is a new Constitution
required:
Yes
Yes
15 months - ending 31st August, 2016
Timeline:
Must register within 15 months to become a DAC. Last chance to
voluntarily register and file updated Constitution at CRO.
Mths to complete:
LTD
No
Yes
UC
Yes
Yes
Afterwards, post 30th
November, 2016:
15
mths
Last period to voluntarily re-register as an Ltd and file an updated
constitution at CRO.
18
Mths to complete: mths
Aggrieved members or creditors
may apply for Court Approval to
compulsory register as a DAC
An existing Limited Company
will automatically become a new
type of LTD company with a
deemed constitution
Agree to change of name, adopt & file new constitution
18
Mths to complete: mths
Name change enforced if no
action was taken
Adopt & file new constitution
PLC
No
Yes
18
Mths to complete: mths
N/A
Agree to change of name, as UC above
CLG
Yes
Yes
18
Mths to complete: mths
Name change enforced if no
action taken
Private Limited Companies will have a
transition period of 18 months (15
months to convert to a DAC) from the
commencement of the Act to take action.
If a company takes no action in that time
then they will be deemed an LTD and
will have a deemed constitution as set
out in the Act.
Note: The Public Limited Company. The Unlimited Company and Company
Limited by Guarantee must file the relevant forms to change their name and
should also file their new constitution with the CRO.
If you re-register as an LTD then the name will “NOT” change.
• Items (non-exhaustive) to be addressed if the company name changes
include company stationery, website, company seal and third party
notifications.
A few Highlights on Accounting Implications that Companies need to consider!
• 18 months is the maximum period for a set of financial statements
• Financial year end date can rotate +/- one week, typically in retail sector
• Other than the above exception the financial year end can only be changed once every 5 years and
this change must now be notified to the CRO on Form B78A
• If your financial statements are not finalised by the commencement date, the Companies Act 2014
format and references will need to be used
• Directors do not have to disclose any interests in shares less than 1% and no disclosure required in
the financial statements
• Audit exemption extended to dormant companies, small groups and CLGs
• Increase in Medium Company threshold and audit exemption criteria changes.
While the Act does introduce new types of
company and a variety of new provisions,
ensuring that you are prepared when the
legislation is commenced need not be a huge
chore.
help you decide on the most suitable company
type for you. We can also assist with the
resolutions to convert and draft a new
constitution for you.
Let’s make it simple.
Any of the team would be delighted to call out to
you and discuss the impact of the legislation and
Contacts
Alan Bigley
Partner
+353 1 792 6403
[email protected]
Ruairí Cosgrove
Director
+353 1 792 6070
[email protected]
Fiona Barry
Senior Manager
+353 1 792 6720
[email protected]
Trudy Kealy
Senior Manager
+353 1 792 6881
[email protected]
Edel Dooley
Manager
+353 1 792 6466
[email protected]
www.pwc.ie/egc
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This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 05368