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15 April 2015

Companies Act 2014 – Time to Choose Your Company Type

Posted By: AIB Business

The Companies Act 2014 will come into effect on 1st June 2015. It will have an impact on all company types and directors in Ireland but in particular Private Limited Companies. There are 166,000 private limited companies that will have to make a decision on what company type they wish to operate as, writes Conor Sweeney from CLS Chartered Secretaries.


How Does the Act Affect Your Company?

All existing Private Limited Companies will have to make a decision from 1st June 2015 about what company type they wish to operate as. They will have 18 months to make this decision. The main options available are:

  • “Opt in” to a Company Limited by Shares (“LTD”)
  • “Opt out” to a Designated Activity Company (“DAC”)
  • Wait until the transition period has passed and be automatically converted into a Company Limited by Shares on 1st December 2016.

Most companies will opt to become a Company Limited by Shares as this type of company has simple compliance requirements, full capacity to carry out any activity, and may have only one director.

Existing Private Limited Companies that wish to stay as they currently are with two directors and an objects clause should “opt out” and become a Designated Activity Company. Also, companies that are set up for a specific purpose or list debts and securities must also convert to a DAC.

The main differences between the two company types are:

Company Limited by Shares (“Limited”)

Designated Activity Company (“DAC”)

Must end in the suffix Limited or LTD

Must end in the suffix Designated Activity Company or DAC

Minimum of 1 director

Minimum of 2 directors

No objects clause – full and unlimited capacity

Capacity limited to the objects clause in the Memorandum

Company Secretary cannot be the sole director

Secretary may be one of the directors

May dispense with holding the AGM

Cannot dispense with holding the AGM

No requirement for an authorised share capital

May have an authorised share capital

Cannot list debts or securities

May list debts and securities

Cannot be a credit institution or an insurance undertaking

May be a credit institution or an insurance undertaking



Other Company Types

PLCs, Companies Limited by Guarantee and Unlimited Companies will automatically convert over and they have the choice of amending their name to have the appropriate suffix or wait until the transition period has elapsed, and a new certificate of incorporation will then be issued with the new suffix. These companies will have to update their headed paper and company seal.


Questions to Consider Before 1st June 2015

  • What company type best suits your company?
  • Do you only want the power to carry out a specific activity, or are you funded for a specific activity?
  • How quick do you want a one director company?
  • Are there specific provisions in your Memorandum and Articles of Association or a shareholders agreement?
  • Can your group avail of audit exemption?

Now is the time to consult with your company secretary, legal advisor or accountant and to examine your company to determine which company type best suits and whether you wish to convert, or are required to convert, in the transition period.

CLS Chartered Secretaries would encourage all private limited companies to convert into the appropriate company type in the transition period and adopt a new constitution that reflects the simpler provisions in the Companies Act 2014.


Written by: Conor Sweeney, Managing Director of CLS Chartered Secretaries*, a company secretarial advisory firm specialising in advising on all aspects of company law and company secretarial practice.


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