The Companies Act, 2014 (the “Act”), which came into effect in Ireland on 1st June 2015, has impacted all Irish companies, notably private limited companies.
Under the Act, the existing private company limited by shares may be replaced with one of two new company types – the new model private company limited by shares (“LTD”) or the designated activity company (“DAC”). Companies must decide whether to re-register as an LTD or as a DAC (or some other type) and this change must be made within 18 months of 1st June 2015 (the “Transition Period”).
LTDs – Points to note
The Act makes a number of changes to the law governing private companies limited by shares. The key features of a LTD are:
- the LTD will not have an objects clause, the LTD need not have an authorised share capital and the stationery etc. of an LTD will not be required to be changed;
- the LTD may undertake and complete the business of the Annual General Meeting (“AGM”) by written resolution of members, dispensing with the requirement to hold an AGM by way of meeting, even if it is a multi-member company. A DAC may only undertake and complete the business of the AGM by written resolution if it is a single member company;
- the LTD can have one director;
- the name of a LTD must end in “Limited” (or an abbreviation, or the Irish equivalent); and
- the LTD will not be permitted to act as a credit institution or insurance undertaking, or to have debt securities listed on a stock exchange.
DACs – Points to note
As prescribed by the Act, any Company having listed debt will be obliged to convert to a DAC.
The key features of a DAC are:
- the DAC will have an objects clause, stating the purpose and range of activities for which the company is incorporated, outlined in its constitution;
- the DAC is required to hold an Annual General Meeting (“AGM”) where it has two or more members. However, it may undertake and complete the business of the AGM by written resolution if it is a single member company;
- the DAC must have at least two directors;
- the name of a DAC must end in “Designated Activity Company” (or an abbreviation, or the Irish equivalent); and
- the DAC will be permitted to act as a credit institution or insurance undertaking, or to have debt securities listed on a stock exchange.
Please click here to see a tabulated comparison between the LTD and DAC company types.
Time for Action
Companies re-registering as an LTD or as a DAC, must initiate the conversion procedure in advance of 31st August 2016 and we would advise acting promptly.
The above guidance sets out a high-level summary of some key initial considerations in respect of this obligation. If you would like any additional information or require assistance with a Company conversion, please contact Mairead Lyons, the Head of Legal and Compliance of Cafico International, on +353 1 905 8579 or at .
Rodney shares insights from his 20 years’ experience working in the legal and accounting industries with both Irish and international companies. As Managing Director at Cafico International, Rodney regularly works with international companies in the technology, pharma, aviation and insurance industries that are seeking to establish operations in Ireland, assisting them with the management of their projects, and compliance with their fiscal and legal responsibilities.
To learn how Cafico International can help your business expand to Ireland, get in touch with Rodney today.