Irish incorporated companies must take the relevant action to
ensure compliance with the Companies Act 2014 (the "Act")
by either (a) converting to a DAC (by the August deadline) or a LTD
(by the November deadline); or (b) changing the company name before
The new company law regime in Ireland, introduced under the Act
has been in force for just over a year, and with the transition
period commenced on 1 June 2015 coming to a close, relevant
companies that have not already done so must take immediate steps
to convert to one of the new company types established by the Act.
See our original advisory for an analysis of these company types,
LTD or DAC?
All existing private limited companies must convert during the
transition period or face being automatically converted to a LTD by
the Companies Registrations Office (the "CRO") after 1
December 2016. This default position is best avoided and companies
should be proactive in converting in the interest of ensuring that
no ambiguity arises in relation to the company's constitution
and its interaction with the legislation or the company's
ability to carry out certain activities (see below in relation to
"credit institutions"). Directors of companies that are
automatically converted to LTDs in this manner are technically in
breach of their obligations under the Act, notwithstanding that
such breach does not attract specific sanctions.
Companies converting to a DAC must do so before 31 August 2016
by passing an ordinary resolution of the shareholders, revising the
constitution and filing a Form N2 with the CRO. Conversion to a LTD
should be completed before 30 November 2016 and will involve
passing a special resolution of the shareholders, revising the
constitution (no memorandum will be required) and filing a Form N1
with the CRO.
It is worth noting that the Act prohibits a LTD from carrying on
the activity of a "credit institution". This term is
broadly defined meaning that a wide variety of companies that are
not carrying out traditional banking activities are in scope. The
consensus is that this wide-ranging definition was not intended to
encompass companies other than 'pure' credit institutions
and it is anticipated that an appropriate amendment will be
enacted. In the meantime however, the prohibition should be borne
in mind when undertaking the conversion process.
Company naming requirements that were introduced by the Act will
mean that action should be taken by certain companies to ensure
compliance. The name of a guarantee company must end with the words
"company limited by guarantee" or its Irish language
equivalent, or the abbreviated versions: "CLG",
"clg", "CTR" or "ctr". Unlimited
companies' names must end with the words "unlimited
company" (or the Irish equivalent), "UC",
"uc", "CN" or "cn". The relevant name
change may be registered with the CRO by filing a Form N3 and must
be done by the end of the transition period on 30 November
The practical consequences of name changes and conversions
should be borne in mind, as websites, registrations, stationary,
signage etc. will need to be updated.
The upcoming deadlines for compliance will likely mean that the
CRO will become back-logged with conversion and name change
filings. The CRO will not guarantee that applications received late
in the transition period will be registered by 30 November 2016 and
thus companies that still need to take action to ensure compliance
with the Act should start the relevant process as soon as
New reporting requirements introduced by the Act will take
effect in the first financial year of a company commencing after 1
June 2015. These requirements include:
Directors' Compliance Statement – for all PLCs and
private companies exceeding certain financial thresholds. These
companies will be required to make an annual compliance statement
in relation to compliance with "relevant obligations" in
the director's report, or justify why such confirmations cannot
Directors' Report – which must contain a statement
that each director has taken steps to ensure awareness of all
relevant audit information and to inform auditors of same; and
Audit Committee – all PLCs and private companies
exceeding certain financial thresholds must either appoint an audit
committee or formally decide not to do so. Where no audit committee
is appointed, the rationale for that decision must be outlined in
the director's report.
To review our original advisory setting out the key aspects of
the Act, please click here.
Should you require any further assistance or advice in relation
to the obligations outlined above or any other aspect of the Act,
please get in touch with your usual contact at Walkers or Walkers
Professional Services Ireland or any of the Key Contacts below.
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