What will the new Companies Act mean for my business?

All businesses need to understand the implications of the Act and be prepared.  Here are the top 10 things you should know.

1.The Act provides for the creation of two types of private limited company:

• a company limited by shares - these companies are expected to be the most widely utilised corporate vehicles; and
• a designated activity company - these most closely resemble current private limited companies

During an 18 month transition period starting from the commencement of the Act, existing private limited companies will have to decide whether to convert into a company limited by shares or a designated activity company.

2. Private limited companies will be entitled to have a single director but all companies must retain the office of the company secretary.

3. Private limited companies will have a single document constitution to replace the existing memorandum and articles of association and will be deemed to have full and unlimited capacity in the same manner as human persons.  All other companies, including designated activity companies, will have to retain a two document constitution similar to their existing two document memorandum and articles of association.

4. Provisions relating to shareholder meetings have been greatly simplified with the requirement to hold an annual general meeting being optional, in most cases and the delivery of notice of general meeting by electronic means being permitted.

5. The existing common law duties of directors are codified into eight principle duties which will apply to all directors including shadow directors and de facto directors.

6. The Act reintroduces the requirement that directors provide directors compliance statements.  This obligation will apply to most PLCs, Company Limited by Shares (LTD), Designated Activity Company (DAC) and a Company Limited by Guarantee (CLG) which meet certain balance sheet and turnover thresholds.

7. The Act introduces a single summary approval procedure that may be followed in order to permit companies to partake in certain transactions which might otherwise be restricted or prohibited.

8. Certain holding companies will be exempted from the obligation to prepare group financial statements where they and their subsidiaries do not exceed certain thresholds.  The audit exemption has been extended to holding companies and their subsidiaries where together they are treated as small companies and in respect of dormant companies.

9. The Act confirms mechanisms whereby mergers and divisions of Irish companies may take place.

10. The Act categorises and classifies the various offences for breach of the provisions of the Act.

RDA Accountants can assist you in converting your company to a LTD or a DAC or some other type of company and we can advise you on the options for, and your obligations, concerning conversion.  We have an experienced team with in depth knowledge of the implications of conversion and would welcome hearing from you

If you would like more information, please call Kevin O’ Donnell at 053 9170507 or email: kevin@rda.ie