The new planned Companies Act will introduce name changes to a number of company types. It also sets out a “conversion” process required for all existing private companies limited by shares (EPCs) into one of two new company types. This “conversion” procedure affects approximately 85% of Irish registered companies which are currently Private Companies (Limited by Shares). The new planned Companies Act doesn’t just consolidate all the Companies Acts from 1963 to 2013, it also introduces two new company models, one of which (the LTD company) is a much simplified company type.
All companies currently registered as the “Private Limited by Shares” company type must choose to convert to one of these two new company types – LTD (Private company limited by shares), or DAC (Designated Activity Company). Guarantee companies and unlimited companies will be required to change their names under the new proposed Bill.
It is important to note that the Companies Act 2014 has not been commenced. It will commence on 1st June 2015. Companies remain subject to the Companies Acts 1963-2013 until the new Act commences. You cannot use the conversion process until then. Conversion forms cannot be submitted prior to 1st June 2015.
There are a number of changes to Irish company law and which govern the LTD Company.
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.
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 planned Companies Act, 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 and takes the form set out in Schedule 1 to the new planned Companies Act.
Most of the regulations that would previously be stated in the M&A are included in the sections of the Companies Act, removing the need for the information to be supplied in a company’s constitution. The constitution can be changed by special resolution