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Ireland
Companies
Act 2014
June 2015
Impacting all
Irish companies
Commencement of the long
awaited Companies Act, 2014 is, in
the most part, on 1 June 2015. This
is the largest piece of legislation
lreland has ever seen, comprising a
total of 25 Parts (over 1440
sections) and 17 Schedules. The Act
consolidates and reforms Irish
Company Law and every Company,
director and shareholder will be
affected and will have choices to
make.
In this bulletin we aim to give an
overview of the Act, which will assist
you to understand, in simple terms,
how the Act will affect companies.
We look at the options available to
companies in order to comply with
the Act, in a practical and cost
effective manner.
New types of entity under the
Companies Act 2014
Private Company Limited
by Shares (LTD)
Designated Activity Company
(DAC)
Creation of a new Model Company –
Private Company Limited by Shares
(LTD) – this is intended to replace the
existing private limited company with
a more simplified format allowing for
a simple constitution, no requirement
for an AGM and only one director
required. No name change required.
Creation of a new Designated Activity
Company (DAC) – certain companies will be
required to register as a DAC, e.g. regulated
financial institutions. Others will need to
choose if a DAC vehicle will suit their current or
desired structure. These companies will have a
two document constitution and must have two
directors. A name change will be required.
Existing private limited companies will
have to make a decision on which of the
new entity types they wish to become.
They can opt in and become a new private
company limited by shares, opt out and
become a designated activity company or
do nothing and be deemed a designated
activity company for the transition and a
private company limited by shares
thereafter. Please see our other bulletins in
which we deal with the options for
companies in more detail.
Some of the main differences between the new model private
company limited by shares (LTD) and the existing private company
limited by shares (EPC’s) are set out below:
EPC (existing private company
limited by shares)
LTD (new model private company
limited by shares)
Minimum of two directors
Minimum of one director
No requisite skills requirement for
secretary
Company secretary must have the
requisite skills or access thereto.
Two document Memorandum & Articles
Single document constitution
Capacity limited by powers in
Memorandum – ultra vires
Ultra vires does not apply
No requirement to register
Option to register those entitled to bind
the company
Only single member companies may
dispense with AGM
May dispense with the AGM
Written resolutions must be passed by all
members
May pass written resolutions by the
relevant majority
Other types of entity - key features
Unlimited Companies
(UCs)
Public Limited
Companies (PLCs)
• An unlimited company will
continue to have a
Memorandum and Articles of
Association
• The only company type permitted to
have shares listed on the stock
exchange
• It will still have an objects clause
• It may opt to have just one
member (currently must have at
least two)
• It will continue to have a
Memorandum and Articles of
Association
Guarantee Companies (CLGs)
• This will be the most common form of entity
used by charities, sports and social clubs and
management companies
• It will continue to have a Memorandum and
Articles of Association with a main objects clause
• It may opt to have just one member (currently
must have at least seven)
• It will continue to have a main object
clause
• It will be able to avail of the audit exemption (not
currently available)
• Name changes to include
words “Unlimited Company” or
“UC” at the end of its name
• It may opt to have just one member
(currently must have at least seven)
• No name change
• Name changes to include words “Company
Limited by Guarantee” or “CLG” at the end of
its name
• It must have two directors
• It must have two directors
• It must have two directors
Other key provisions of the Act
• The Act sets out in one place the
provisions relating to the keeping of
accounting records, the preparation of
financial statements and the audit of
financial statements providing additional
clarity for directors and companies. In
addition this part sets out a clear
definition of the financial year end.
• Changes to the requirements relating to
directors’ loans – encouraging loans to
directors to be properly documented.
• The disclosure of interests in shares and
share options has been amended so that
de minimis interests of less than 1% are
no longer required to be notified.
• The Company Secretary must now have
the requisite skills or resources
necessary for this role, or access thereto.
• Summary Approval Procedure
introduced to simplify the procedure for
certain restricted activities such as
transactions with directors, financial
assistance, capital reductions and solvent
windings up.
• Mergers and Divisions Regime –
procedures being introduced to allow to
private companies to merge or divide
without court approval under the
summary approvals procedure resulting
in savings, in both time and money, for
companies.
Codification of Directors Duties
• Audit exemption expanded to include
group companies and guarantee
companies and thresholds expanded.
• Persons Authorised to Bind the
Company – options to register
individuals authorised to bind the
company with the Companies
Registration Office.
• Charges and Registration of Charges
– priority of registration of charges and a
two stage procedure for registration of
particulars of charges.
• Formalising the voluntary strike off
process and therefore differentiating
between voluntary and involuntary
strike off.
• Company Law Offences categorised 1 to
4 (1 being the most serious and carrying
a maximum fine of EUR500,000 and/or
up to a maximum of 10 years in prison).
• Law relating to the winding up of a
company updated and now provides
more consistency between members
voluntary, creditors voluntary and
official windings up.
• Directors Compliance Statement – the
directors of certain large private limited
companies and all public limited
companies will be required to produce a
compliance statement to be included in
the director’s report on the financial
statements.*
*W
ill apply in respect of
financial years commencing
on or after 01 June 2015.
In the past determining the duties and responsibilities of the
directors has not been clear, now the codification of directors
duties in the Act gives clarity for directors. These are set out in
eight fiduciary duties which will
• act in good faith
apply to directors, shadow
• act honestly and responsibly
directors and de facto directors
• act in accordance with the company’s constitution and to exercise
as follows:
those powers only for lawful purposes
• not to use company property unless approved by the members or the
company constitution
• not to fetter discretion unless permitted by the constitution or unless
it’s in the company’s interest
• to avoid conflicts of interest
• to exercise care, skill and diligence and
• to have regard for the interests of members as well as employees
A transition period of 18 months begins on the
commencement of the Act. If a company fails to
act during the transition period it will be deemed
to be a private company limited by shares (post
transition) with a one document constitution
consisting of the existing Memorandum and
Articles minus the objects clause and any
provision which prohibits the alteration of the
Memorandum and Articles. What this means in
practice is that the publicly filed constitution will
not match the actual constitution.
Now is an opportune time for organisations
with a large number of companies to review
their group structure. Group simplification
should be considered to make the transition
process easier.
We are happy to help, just give us a call, no
question is ever too simple. You need to
understand your choices to make the right
decision for your company.
Companies Act timeline
Enactment:
23 December 2014.
Commencement:
1 June 2015.
Transition Period:
This will run for an 18 month period from 1 June 2015.
15 months after
commencement:
Final date for those companies wishing to become a DAC
under the conversion process.
18 months after
commencement:
End of transition period.
Key contacts
Alan Bigley
Partner
+353 (1) 792 6403
[email protected]
Trudy Kealy
Senior Manager
+353 (1) 792 6881
[email protected]
Ruairí Cosgrove
Director
+353 (1) 792 6070
[email protected]
Edel Dooley
Manager
+353 (1) 792 6466
[email protected]
Fiona Barry
Senior Manager
+353 (1) 792 6720
[email protected]
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
© 2014 PricewaterhouseCoopers. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
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