The company law regime in Ireland is set for a complete overhaul with the coming into force of the Companies Bill later this year.
The new legislation will consolidate the multiple pieces of legislation currently in force and endeavour to simplify this complex area of law. Company directors are advised to familiarise themselves with the new Act and the fundamental changes that it is set to introduce.
Once the legislation comes into force, all limited companies will be required to convert into a new company type and obtain a reissued certificate of incorporation.
The default company form will be a simplified new private company known as a “LTD”. It will have one constitution instead of a separate Memorandum and Articles of Association. The LTD will also not be required to have an objects clause to limit the company’s activity.
The main alternative to an LTD is a Designated Activity Company (“DAC”) which closely resembles the current private company form, with two sets of constitution documents and an objects clause.
Current companies will be able to convert to an LTD once the legislation is enacted. Companies will have a period of 18 months from this date to decide whether they wish to be converted into a LTD or apply to register as a DAC.
It a private company limited by shares does not take any action over the 18 month period then it will be deemed have become a LTD automatically and have a new deemed constitution.
It is anticipated that the vast majority of companies will convert to the new LTD regime. The benefits of the new regime include the need for only one director, the ability to dispense with an AGM, and no limiting objects clause.