27 Feb Companies Act 2014
The Companies Act 2014 commenced on 1 June, 2015, and introduced the most comprehensive overhaul seen in Irish company law in more than 50 years. It also provided a much needed consolidation and updating of 11 pieces of primary legislation and related regulations.
The main emphasis in the Act, which consists of 1448 sections in 25 parts, is on private limited companies. These are now divided into private companies limited by shares (LTD) and designated activity companies (DAC). All private limited companies in existence on the introduction of the Act will need to carefully consider their conversion options for either LTD or DAC status, the main features of which are:
PRIVATE COMPANY LIMITED BY SHARES (LTD)
- It has the full legal capacity of a natural person so does not require an objects clause.
- It has a simplified constitution instead of a memorandum & articles of association.
- It may dispense with the need to hold an AGM.
- It can have a single director.
- Not required to have an authorised share capital.
- Restricted from being either a credit institution or insurance undertaking.
DESIGNATED ACTIVITY COMPANY (DAC)
- It will carry on business for a specific purpose, such as a JV, and will require an objects clause.
- The constitution of a DAC will be a full text of memorandum & articles of association.
- It must hold an AGM if it has more than one member.
- It must have, at least, two directors.
- An authorised share capital is required.
- It may carry on regulated activities such as banking or insurance.
Other notable features of the new Act include:
- A new summary approval procedure to streamline actions such as the giving of financial assistance for the purchase of own shares and the reduction of share capital;
- The need for the company secretary to have skills relevant to their position, or to have access to those skills, so they can fully comply with their statutory and other duties.
- The ability to pass ordinary and special resolutions by written majority rather than unanimously as applied under the old rules.
- The codification of directors duties under eight headings.
- The tightening of provisions in relation to directors loans.
- A substantial upgrading of the penalties for failing to meet compliance requirements.
- The ability of a small group of companies to claim audit exemption.
For advice or assistance on any aspects of the Act, please feel free to contact us.