IMPORTANT DEADLINES APPROACHING
The Companies Act 2014
The Companies Act 2014 (the “Act”) came into force on the 1 June 2015 and during the transition period from 1 June 2015 to 30 November 2016, all private limited companies must choose to convert to one of two new types of companies – the LTD or DAC (designated activity company). There are some important dates coming up that all private companies should be aware of, which we have set out below.
DECISION TIME – BEFORE 31 AUGUST 2016 – LTD or DAC
Differences between a LTD and a DAC
While some companies will be obliged to convert to a DAC, it is expected that for most the benefit of the simplified corporate governance requirements for LTDs will be appealing and most private companies will convert to LTDs.
A Private Company which lists or trades debt securities cannot re-register as an LTD and must re-register as a DAC. Similarly, a Private Company which holds a banking or insurance license will be required to re-register as a DAC.
What if you do nothing?
If a company fails to make a decision to re-register as a LTD or DAC by 30November 2016, an existing private company will be deemed to be a LTD with a one document constitution consisting of the existing provisions of its Memorandum and Articles (excluding its objects clause and any clause prohibiting alteration of the M&A).So it is important, that a company that was incorporated under the previous Companies Acts which wishes to be a DAC undertakes the conversion process.
Furthermore, by doing nothing, the directors could be in breach of their duty to ensure that they have complied with the Act and there may be a challenge by shareholders or creditors who could seek remedies, including payment of compensation.
ACTION REQUIRED
Register as DAC – Before 31 August 2016 OR Register as LTD – Before 30 November 2016
Other Companies
The Act provides that all unlimited companies must end with the words “Unlimited Company”, U.C. or UC.
Companies limited by guarantee must end with the words “Company Limited by Guarantee”, C.L.G. or CLG.
ACTION REQUIRED
File a Form N3 Before 30 November 2016, registering the new suffix.
How Can We Help?
PKF O’Connor Leddy & Holmes Limited can assist you in converting your company to a LTD or a DAC or some other type of company and we can advise you on the options for, and your obligations, concerning conversion.