The Companies Act 2014 (the "Act") was signed in law in December 2014 and will modernise company law in this jurisdiction. The Act, due to take effect from 1 June 2015, introduces new rules in relation to how companies are formed and how they are administered after incorporation and will impact all Irish Companies, their shareholders and their directors.
NEW FORM OF CONSTITUTION
One of the most immediate and practical implications of the new Act will be the creation of a new form constitution for all existing and new companies. This will mean the end of the existing memorandum and articles of association which has, to date, largely been the "go to" document when determining what a company can and cannot do.
In the case of an LTD, a company's constitution will take the form of a single-document. In the case of a DAC, plc, unlimited company and company limited by guarantee, the constitution will continue to require a two-document constitution to accommodate the requirement for an objects clause to be included. In either case, it is anticipated that the new form constitution will be shorter in length than most company's current memorandum and articles of association.
| ACTION REQUIRED: | Failure to take steps to adequately plan, draft and adopt a suitable constitution will lead to a company being governed by the default provisions contained in the Act. It is strongly advisable that all companies avoid such a scenario insofar as possible, as it will lead to high levels of uncertainty. Many companies may also find that the default provisions included in the Act are not suitable in order to meet their specific corporate governance needs and to achieve their particular commercial objectives. |
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