The Companies Act in Ireland is changing, meaning its time we gave our previous guide to starting a company in Ireland a makeover to go with it.
Its time enough that things changed the last overhaul of Irelands Company Law was way back in 1963. This new update has 1,448 sections and 17 schedules the largest piece of legislation Ireland has ever seen, according to the Irish Times, and at a briefing at the law firm Byrne Wallace this week it was noted that some of the changes included in the new Act have needed addressing since the Victorian era.
Its about codifying and cleaning up old rules, to make starting and running a company in Ireland that much simpler.
The type of company most affected by these changes is private companies limited by shares (a ‘Private Company’), the most common form of company in Ireland. If you run one of these, take note of the following. Dont worry it sounds complicated, but the point of these changes is to make things much easier for you.
The one BIG change:
Private companies must now become one of two typesan LTD company, or a DAC (Designated Acting Company). 70% of Irish private companies are LTDs already, and the aim with this new Act is to convert even more to LTD.
How to opt in:
Get your conversion forms from the CRO website, here. Beginning June 1st, 2015, there will be an 18-month transition period: you can either opt in as an LTD, as a DAC, or you can take no action and your company will automatically treated as an LTD. Byrne Wallace advise registering formally in order to avoid being given a default constitution: if yours is an LTD with bespoke articles, this will preserve your negotiated position.
The key features of an LTD company:
- You have no objects clause, i.e. theres an unlimited capacity to engage in different activities
- You only need to fill out a single constitution document no more Memorandum and Articles.
- You can have only one director if you like (but you also need a secretary with the necessary skills)
- You dont need to have an AGM
- You dont have to list debentures on stock exchange
- Your company name wont change, and you can still use the suffix ‘Ltd’ or ‘Teoranta/Teo’
- You can have 149 up to members (PLCs can only have 99)
The key features of a DAC:
- You still need an objects clause
- You need two directors and a company secretary
- You still need to hold AGMs
- You need to change the company name to include the suffix ‘DAC’ or ‘Designated Activity Company’
Other types of companies:
These include Unlimited Companies, Public Limited Companies and Investment Companies. Unlimited Companies must change their company name to include the corresponding suffix, must have at least two directors, and must continue to hold AGMs. PLCs must continue to have an objects clause, but the new Act removes the doctrine of ultra vires (‘beyond the legal powers’). They must also continue to have two directors or more, and hold AGMs.
‘Place of Business’ is no more
The new law uses the EU term ‘branch’ instead.
There are lots more changes to do with corporate governance, capacity and corporate authority, insolvency and law offences to take note of. Click over to this FAQ on the topic for a comprehensive overview.
*Pictured: Future CEO