Companies Act 2014 - The Key Changes

The Companies Act 2014 came into law on 23rd December 2014 with the commencement date likely to be in June 2015

The following are the main changes under the Act:

1.   New types of entities to be introduced under the Companies Act 2014

-          Private Company Limited by Shares (LTD) – this is intended to replace the existing private limited company

-          No name change will be required for a company changing to the new model company limited by shares

 The main changes are:

Existing Private Company Limited by Shares

LTD (New model private company limited by shares)

Minimum of two directors

Minimum of one director

Two document constitution required in the form of Memorandum and Articles

Single document constitution

Only single member companies may dispense with AGM

May dispense with AGM

Written resolutions must be passed by all members

Relevant majority may pass written resolutions

Capacity limited by powers in Memorandum of Association- Ultra Vires

Ultra Vires doesn’t apply

No requirement to register

Option to register those entitled to bind the company

No requisite skills required for Secretary

Company Secretary must have the requisite skills or access thereto

-          Designated Activity Company (DAC)

           Creation of a Designated Activity Company

           Certain companies will be required to register as a DAC e.g. regulated financial institutions.

- These companies will have a two document constitution

- Are required to have two directors

- A name change will required for existing companies changing to a DAC  

Existing private limited companies will have to make a decision on which new entity type they wish to become.

2.  Other changes to existing entities

 Guarantee Companies (CLGs) 

-          It will continue to require a Memorandum and Articles of Association

-          It may though opt to have only one member as opposed to currently requiring at least seven members

-          It will now be able to avail of audit exemption

-          Name changes to include words Company Limited by Guarantee or CLG at the end of its name

-          It must still have two directors

 Unlimited Companies (UC’s)

-          It will continue to require a Memorandum and Articles of Association 

-          It will still have an objects clause 

-          It can opt to have only one member, as opposed to the current requirement of two 

-          Name changes to include words “Unlimited Company” or “UC”  at the end of its name

-          It must still have two directors

Other provisions in the Act

-          Audit exemption to be expanded to include group companies and guarantee companies and thresholds to be increased

-          The company secretary must now have the requisite skills or resources necessary for the role or access to same.

-          Changes to the requirements relating to directors loans encouraging loans to directors to be properly recorded and documented

Finally the new act now clearly defines the duties and responsibilities of the directors. It sets out the eight fiduciary duties which will apply to directors, shadow directors and de facto directors.

A transitions period of 18 months will begin once the Act is commenced.

You will need to understand your options to make the right decision for your company

Deirdre McDermott is Audit Director in OSK. Contact OSK for all your tax and accounting services on 01 439 4200.

 

 

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