Cayman Islands: Companies Act 2014: Approaching Conversion Deadlines

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 December.

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, here.

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.

Name Change

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 2016.

Practical Considerations

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 possible.

Accounting Requirements

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 be given;
  • 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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