ARE YOU READY? The Companies Act 2014 will come into force on the 1 June 2015. Here are 5 frequently asked questions:

1. What steps do I need to take to prepare my Company for the changes under the Companies Act?

At this stage you should be reviewing your existing company or group structure to identify which companies are public, private or unlimited, because different rules will apply to these once the legislation takes effect.  In particular, you should consider whether a private company should become a DAC or LTD,

2. What are the new Company types for Private Companies?

The Act provides for two new forms of Private Limited Company.

- A Private Company Limited by shares ("LTD"). The LTD will be a new form of simplified private company limited by shares and will have a single constitutional document.

- A Designated Activity Company ("DAC"). The DAC will more closely resemble the existing form of private limited company and will continue to have a Memorandum and Articles of Association.

3. Should I convert to a LTD or DAC?

The decision to register as a LTD or DAC will depend on what is best suited for your company and the purpose for which it is incorporated. Some companies such as banks, insurers and companies with debt securities listed on an exchange, which wish to continue as private limited companies  must  convert to a DAC.  In most other cases it is a decision as to which type will best suit your needs.

4. What is the transition period?

The transition period is an eighteen month period that applies to private companies that exist at the date the Act comes into force.  During this period companies will need to decide whether to convert to a LTD or DAC or some other type of company. The decision should be taken no later than three months before the end of the transition period.

5. How will the Companies Act impact on annual compliance requirements?

The Act, in the main, restates the existing requirements in relation to filing an annual return and audited accounts.  However a new imposition for certain companies under the Act will be the requirement to prepare a Directors Compliance Statement.  This obligation will apply to a PLC (other than an investment company) and a LTD, a DAC and a Company Limited by Guarantee (CLG) which meet certain Balance Sheet and turnover thresholds.  Unlimited Companies (ULC) are not subject to this requirement.  The statement must set out the company's policies on its compliance and obligations under the Act and under tax Laws.

If you would like more information, please call me at 053 9170507 or emailkevin@rda.ie