As most company directors are by now aware the new Companies Act 2014 came into force on 1 June 2015.
Companies have to change status under the new legislation and undergo a conversion process generally to a Private Company Limited by Shares (LTD) or a Designated Activity Company (DAC).
It is estimated that over 96% of companies will be taking the LTD option.
The main advantages to becoming an LTD are:
- The company need only have one Director. However the Company Secretary cannot be the sole Director.
- The company will no longer have to operate within its Objects Clause. It will have full and unlimited capacity. Ultra vires is history!
- The company may dispense with holding Annual General Meetings.
- The company can have between 1 to 149 shareholders.
- Audit exemption is extended to group structures, companies limited by guarantee and unlimited companies.
One key change to audit exemption under the Act is that S.360 provides that once a company avails of the audit exemption it does not have to do anything unless and until the company is no longer entitled to avail of the exemption or the members or directors decide otherwise and take the appropriate steps to have an audit carried out.
However keep in mind that if Annual Returns are late filed audit exemption is lost!
Once the conversion documents are prepared, including a Constitution to replace the Memorandum and Articles of Association, and signed off by the directors they are then filed with the Companies Registration Office.
At present the CRO are returning hundreds of conversion documents as they have been improperly completed.
The CRO will issue the new Certificate of Incorporation for the company when all documents have been approved by them.
If you require assistance please call me or email me at mariaf@parfreymurphy.ie.