The Companies Act 2014: What Actions Do You Need To Take?

The Irish Minister for Jobs, Enterprise and Innovation, Mr Richard Bruton signed the commencement order providing that the Companies Act 2014 (the "Act") (subject to certain exceptions) will commence with effect from 1 June 2015. This means that from 1 June 2015, company law in Ireland will be consolidated and modernised and as a result business in Ireland will be made easier for companies. Companies should consider what impact the Act will have on them and what actions (if any) need to be taken.

To help you understand what actions you may need to take after 1 June 2015 we highlight below:

actions to be taken by private companies limited by shares; actions to be taken by public limited companies ("PLCs"), companies limited by guarantee ("CLGs") and unlimited companies ("UCs"); and other key changes under the Act which may require action by you. 1. ACTIONS TO BE TAKEN BY PRIVATE COMPANIES LIMITED BY SHARES

The main changes under the Act are in connection with the private company limited by shares. There will be two new forms of private company, (1) a private company limited by shares ("LTD"); and (2) a designated activity company ("DAC"). Existing private limited companies will have to decide on which new entity type they wish to become. There is an 18 month transition period which ends on 30 November 2016 during which companies will have time to re-register as the most suitable company type for them.

What company type should you choose?

The LTD is a simplified new-form company limited by shares to which a range of streamlined governance reforms will apply. We have set out in the table below notable and distinguishing features between a LTD and a DAC. All companies will be treated as DACs during the 18 month transition period and will not be able to enjoy the benefits of being a LTD unless they choose to re-register as a LTD before the end of the transition period.

What should you do from 1 June 2015?

You are not legally obliged to do anything immediately. If, however, you do not take particular steps within the transition period certain adverse consequences may arise.

What happens if I do not take any action?

Where existing private companies do not take any action to either re-register as a DAC or re-register as a LTD within the transition period they will automatically be converted to a LTD by the Companies Registration Office ("CRO") when the 18 month deadline has passed on 30 November 2016. Whilst this may sound preferable, there are disadvantages to being re-registered in this way, such as:

the LTD may not be a suitable company type for each company and as such directors of such companies could be deemed to be in breach of their duties to ensure the legislation has been complied with by the relevant company; and shareholders could also seek redress through the courts under the Act where they consider...