From June 1st 2015, the Companies Act of 2014 will come into effect. This new Act will replace the existing Companies act, which was in place from 1963-2013. This is the largest reform of Irish Business Law that we have seen in decades. Its purpose is to make running a business in Ireland easier. This new Act will carry on some of the features of its predecessor and will have a number of new features including:
- All company directors must be over 18.
- Existing private companies must choose their new company type: a private company limited by shares or as a Designated Activity Company (DCA).
- A new company type will be created; a private company limited by shares can be registered with the CRO (Companies Registration Office). This company can be a single director company.
- Private limited companies will be entitled to have a single director but all companies must retain the office of the company secretary.
- All company directors who are subject to a foreign disqualification must file an appropriate form with the CRO.
- There will be changes to the registration procedures, and required methods of notifying the CRO.
- External companies will no longer be able to register a place of business.
- As of June 1st 2015, all existing external companies registered as a place of business will be deleted.
- A company will no longer be required to have an annual general physical meeting, instead an annual general written meeting will now suffice.
- The existing duties of directors are translated into eight principle duties, which will apply to all directors.
- Reintroduction of the requirement that directors provide compliance statements.
- Some holding companies will be exempt from the obligation to prepare audited group financial statements where they and their subsidiaries do not exceed certain thresholds.
With all these changes in mind, what does this new legislation mean for you and your company?
The most important thing this means for you and your company is that integral changes to your business, whilst often stressful, must be made and this will be the ideal moment to begin deciding what changes can truly benefit your company.
Despite this legislation not coming into effect until June 1st, companies and their directors must now begin to prepare for these changes to come into effect. At this juncture, it would be wise to begin looking at your company structure and making decisions about what structure and accompanying rules best suit your company.
For example you may want to remove the second “silent” director from the company that never had any involvement in the running of the business.
There will be a transition period of 18 months from June 1st to allow companies to act upon the relevant changes. If a private company has not chosen their new company type during this time, it will automatically become a new private limited company with a single-document constitution. This company type does not allow for the future changing of articles contained within its constitution.
This new default will naturally not be appropriate for all companies and this is a good moment to begin doing some housekeeping within your company. Taking a closer look at your company now may make all the difference in the future and, as always, DCA Accountants are available to provide any guidance necessary during this period of transition for your company.