Company Law Changes 2015 That WILL Affect You!

A brand spanking new Companies Act was signed into law in Ireland just before Christmas. The Companies Act 2014 threatens to Irish company law on its head.

The old companies acts (spanning 1963 to 2013) laid out the requirements for a large listed company then, for small private companies (the most common company type in Ireland) it gave numerous exemptions.

Now different company types are set out in their own right making it much easier from a compliance perspective.

Main changes

1. Single director companies

This has been a long time coming and will be welcomed given the headaches caused by the current 2 director requirement. Unfortunately, though, a single director company still requires a secretary and the secretary can’t be the sole director.

2. New company types

The existing private company limited by shares is effectively being split in to 2 types:

LTD – a simplified version which allows for single directors; no restriction on activities it can undertake; a one page constitution replaces the memorandum and articles; can dispense with the need to hold an AGM

DAC – designated activity company. This is effectively the same as the existing private company. It must have at least 2 directors; its activities are defined by its memorandum and articles of association; must hold an AGM where there are 2 or more shareholders.

3. Audit exemption for small groups of companies

Up to now small groups of companies were required to have an annual statutory audit regardless of size. Following commencement of the 2014 act small groups that are collectively within the audit exemption thresholds can avail of audit exemption. This increases the corporate structure options to small business.

What action do you need to take?

There’s no need to panic just yet. The new laws don’t come in to effect until June 2015. After that there will be a transition period of 18 months. During the transition period all existing private limited companies will be deemed to be DACs. However, they can opt to become a LTD by passing a resolution and submitting it to the Companies Office.

Just to complicate things, a company that hasn’t opted to become either a DAC or LTD by the end of the transition period will be automatically converted to a LTD.

So, it’s advisable to act during the transition period: decide what company type suits best and convert to that type.

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