Only companies registered under the new Companies Act are Private Companies Limited by Shares (LTD company), a new simplified model of the Private limited company and are registered under Part 2 of the Companies Act 2014.
Companies which were incorporated under the previous Companies Acts, existing Private Limited by Shares companies (EPCs) can convert under the Companies Act 2014. Unless they are converted to a LTD company, they cannot act as a LTD company. EPCs will operate under the Designated Activity Company legislation until conversion is made. Many of the sections of this new Act are unique to the LTD company model, companies that are registered as private limited companies under the previous Companies Acts and which have not converted, cannot use certain areas of the Act - such as having only one director, not holding an AGM etc. These are unique to the LTD company.
There are a number of changes to Irish company law and which govern the LTD company.
Please see Leaflet no. 31 on conversions
Features of the LTD company include:
• It has the contractual capacity of a natural person - the ultra vires rule does not apply.
• It has a constitution document which replaces the need for a memorandum and articles of association.
• It has limited liability and has a share capital.
• It has a limit of a maximum of 149 members.
• It can have a single director.
• It can pass majority written resolutions (special and ordinary).
• It can claim eligibility for audit exemption.
The postal address for submissions for conversions is: The Companies Registration Office, O'Brien Road, Carlow R93 E920.
Documents to accompany Conversion Applications:
G1 Special Resolution form
(has no objects)
A LTD company can have only one director
If the company is a private company limited by shares (LTD company), it is allowed to have only one director, if desired under section 128. This does not apply to EPCs which have not yet converted to LTD company type. Also it does not apply to other company types, Designated Activities Companies, Plc’s, guarantee companies etc. Only after conversion to a LTD company can a company have only one director.
A company still needs to have a secretary and the secretary cannot be same person as the director, if the company has only one director.
There is a minimum age for directors
It should be noted that all directors must be over the age of eighteen. Section 131 applies. Body corporates cannot be a director of a company. If an individual, rather than a body corporate, is a secretary, then they must be over eighteen also.
A LTD company has a constitution instead of a Memo & Arts
A company private limited by shares (LTD) has a constitution. Under the new Companies Act 2014, a constitution now replaces the Memorandum and Articles of Association for a LTD company. Companies do not state objects if they are registered as a LTD company. This Act removes the requirement to state what objects the company has been set up to do.
The constitution states the name of the company, the fact that the company is a private company limited by shares, any additional regulations the company may wish to specify, the share capital information (the most up-to-date authorised share capital should be stated (where required)) and takes the form set out in Schedule 1 to the Companies Act 2014.
Most of the regulations that would previously be stated in the M&A are included in the sections of the Companies Act 2014, removing the need for the information to be supplied in a company’s constitution. The constitution can be changed by special resolution.
There are specific dates set for the conversion process. Until a company converts to a LTD company type, an existing private company limited by shares is deemed to operate as a Designated Activity Company (DAC) throughout the transition period. One reason is that the constitution has not been amended. The current memorandum and articles of association under which the company operates is still in effect until conversion has been effected. (However, please note that an EPC does not have to change its name during the Transition Period - only changing its name if it is converting to a DAC).
A LTD company does not need to hold an AGM
A LTD company, under the new Companies Act 2014, may dispense with the requirement to hold an Annual General Meeting. A LTD company can avoid holding an AGM where all the members entitled to attend and vote at such general meeting sign, a written resolution, acknowledging receipt of the financial statements, resolve that all such matters as would have been resolved at the AGM and confirm no change in the appointment of the Auditors (if any appointed). See section 175(3). A Designated Activity Company (DAC) must hold an AGM where it has 2 or more members.
There a number of methods for conversion to an LTD company. This applies to private limited companies which were incorporated prior to the new Companies Act, which are limited by shares (EPCs). Companies incorporating after Commencement Date - 1st June 2015 can register as a LTD company or a DAC.
From Commencement Date, 1st June 2015 to End of the Transition Period 18 months later, 30th November 2016, EPCs can convert to the LTD company type. For the duration of the transition period only, EPCs are deemed to operate as Designated Activity Companies, unless conversion is made to LTD company status. There are three different sections of the Act whereby a company can be converted to a LTD company, Private Company Limited by Shares.
Section 59 new Companies Act
Under Section 59 of the new Companies Act, during the transition period, a company can submit a special resolution together with its new model constitution together with form N1. Please include a copy of the original list of subscribers as submitted to the CRO at the incorporation of the Company, (NOT the current list of shareholders). The registrar of companies will upon registration of the documents issue a new certificate of incorporation. There are no filing fees involved in the submission of the form N1 and associated documents.
Section 60 new Companies Act
Under Section 60 of the new Companies Act, during the transition period, a company's directors can submit Form N1 together with its new model constitution as drafted by the directors. Please include a copy of the original list of subscribers as submitted to the CRO at the incorporation of the Company, (NOT the current list of shareholders). The directors should have prior to this sent a copy of the constitution to each member of the company. The registrar of companies will upon registration of the documents issue a new certificate of incorporation.
In fulfilling these duties, the directors must ensure that the constitution does not alter the rights and obligations of the members of the existing private company and without prejudice to the generality of the foregoing, must ensure that the constitution does not alter the rights and obligations of members of the company as set out in its memorandum and articles of association.
The new constitution should basically consist the provisions of its existing articles and also the provision of its existing memorandum other than provisions that contain its objects or which provide for, or prohibit, the alteration of all or any of the provisions of its memorandum and articles.
Now, if it is the case that the company does not have articles but relies instead on the regulations of Table A from the 1963 Act, then the new constitution should state that the articles comprise those regulations.
Despite the repeal of the previous companies acts, the regulations of Table A will continue in force where the company has a constitution under section 60.
Section 61 new Companies Act
Under Section 61 of the new Companies Act, if the private company has failed to convert by End of Transition Period, 30th November 2016, the Registrar of Companies will apply the deeming provisions and the company becomes a LTD company, a private company limited by shares. The Registrar will then issue a new certificate of incorporation to the company. The memorandum and articles of association of the company will then exist as a constitution and the constitution will comprise the existing memorandum, other than the provisions that contains its objects or provide for, or prohibit, the alteration of all or any the provisions of its memorandum or articles and the provisions of its existing articles.
Registration of Documents
Once the N1 form and associated documents are registered, a new certificate of incorporation will be issued by the Registrar of Companies. The company becomes the new company type only on the issue of this certificate.
A private company should consider the other options and consider converting without waiting for the registrars intervention.
• Certain companies are required to convert to a DAC.
• If a company wishes to retain its objects it should convert to a DAC.
• Converting would allow a company to use the areas of the Act that are limited to a LTD company, such as having only one director.
• Otherwise during the transition period, the laws referring to a DAC, Designated Activity Company, apply to a private company which is limited by shares.
Copyright 2016 Public Office Address: Companies Registration Office, Parnell House, 14 Parnell Square, Dublin 1, Eircode: D01 E6W8. DX Number: 145001. Phone: +(353 1) 8045200
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