Companies Act 2014 – Frequently Asked Questions (FAQs)

1. What change is being made to the Companies Acts?

From June 1st 2015 the new Companies Act 2014 will come into effect. While parts of legislation have been rearranged, many of the procedures remain the same. A number of the processes involved in the registration and running a company have been simplified. The vast majority of companies incorporated from June 1st 2015 will be the new LTD company model. Private limited by shares companies, which were incorporated under the old Companies Acts, will have the opportunity to convert to this new company type during the transition period.

2. Are new company types being introduced under the Companies Act?

The primary change under the Act is the introduction of some new company models and types, specifically the Private Company Limited by Shares (LTD Company) and the Designated Activity Company (DAC). Private limited companies already on the register will convert to one of these two types. If at the end of the transition period (30th November 2016), a company has failed to convert, any existing Private Company Limited by Shares shall be deemed by the CRO to be a LTD company, and a new certificate of incorporation shall issue.

3. What are the different company types?

LTD     -  Private company limited by shares 
DAC    -  Designated activity company limited by shares/limited by guarantee with share capital 
PLC     -  Public limited company 
CLG     -  Company limited by guarantee 
UC       -  Unlimited company
ULC     -  Private unlimited company having a share capital 
PUC     -  Public unlimited company having a share capital 
PULC   -  Public unlimited company not having a share capital

4. What is a Private Company Limited by Shares (LTD)?

A private company limited by shares (LTD Company) is a new company model introduced by the Companies Act 2014. Only companies which have undergone the conversion process or have been incorporated as such post introduction of the new Companies Act are LTD companies.

5. What is a Designated Activity Company (DAC)?

A Designated Activity Company (DAC) is a company which has specific objects for which it is registered. A DAC is a private company either limited by shares or by guarantee. A Private Company Limited by Shares incorporated under the previous Acts can convert to a DAC during the first 15 months of the transition period, otherwise they can re-register as a DAC in accordance with the Companies Act, although a fee will now apply (unlike conversion which is free).

While technically the DAC will be a new and distinct type of private company, it will bear a close resemblance to the existing private limited company.

Key features of DACs:

  • They will have the status of a private company limited either by share or by guarantee
  • They are limited liability companies and the liability of their shareholders will be limited to either the amount unpaid on their shares or, where limited by guarantee, the amount of the guarantee
  • They can have between 1 and 149 shareholders
  • They will have a Memorandum of Articles of Association which must contain an objects clause.

 

6. What are the principal differences between LTDs and DACs:

Among the principal differences between LTDs and DACs are the following:

New Model LTD

DAC

LTDs will have a one Document Constitution (the constitution replaces the Memorandum and Articles of Association of a company)

DACs will have a two Document Constitution (consisting of its Memorandum and Articles of Association)

LTDs will have unlimited capacity to enter into any type of transaction

DACs capacity to enter into transactions will be limited to the types of transactions that are specified in its constitution

LTDs must have at least one director (secretary must be different person in a one director company)

DACs must have at least two directors

A LTD may dispense with holding an AGM

DACs with two or more shareholders may not dispense with holding an AGM

Their name must end with the words “Limited” or the abbreviation “LTD” or Irish equivalent

Their name must end with the words “designated activity company” or the abbreviation “DAC” or Irish equivalent

Who will become a LTD?

 – Companies that wish to avail of advantages under the Companies Act 2014

 – Not prohibited from becoming LTD (e.g. Banks and insurance companies)

Who will become a DAC?

 – Companies set up for a specific purpose (SPVs) or Joint Venture vehicles

 – Banks or insurance companies

 – Companies that wish to list debt securities on the Stock Exchange

 

7. Is an existing Private Company Limited by Shares automatically converted to the new model LTD with the introduction of the new Companies Act?

No. Not straight away. There is a transition period (18 months) during which the existing Private Company Limited by Shares can alter its memorandum and articles of association to comply with the new regulations. Once the transition period ends and such a company has failed to convert or make any necessary changes, the Registrar of Companies will enforce the change and convert the company to a new model LTD.

8. Is there a cost to convert company type from either (i) an existing LTD into a new model LTD and or (ii) an existing LTD into a DAC?

Conversion is free.

9. How long is the transition period?

The transition period is the 18 month period between 1 June 2015 and 30 November 2016. Should a company wish to convert to a DAC they must do so within a shorter period of 15 months, i.e. before 31st August 2016.

10. Do I need to inform my Bank that my company name has changed?

Yes. You will need to advise us of the change of name of your company, we will change the name on any accounts held with us to reflect the change in the company name. You will also need to advise us if your company holds any cheque books or credit/debit cards as these will also require to be changed and new versions issued.

11. My company is currently a limited company and is changing to a new limited company type, do I need to change the name on my banking documentation?

No, if the company name remains the same, no action is required. Unless the change under the Companies Act will change the name of your company then there is no requirement to change any of your banking documentation.

If your company is changing from limited to unlimited (or vice versa) or to the new DAC company type then this will change your company name and you will need to advise us of this change.

For instance, if your company is an existing private company limited by shares – and it will be converting to the new model private company limited by shares (an LTD), as the name of the company will continue to end with the wording “Limited” or “Ltd” - no new cheque book, credit card etc. will be required.