Convert to That New Companies Act 2014? Why

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Here at barryaccountants.ie I would remind you that your company has an obligation to convert to one of the new company types that was created with the commencement of the Companies Act 2014 (CA2014) on 1st June 2015.

December 1st next you don’t have a choice

An 18-month transitional period is currently in effect that ends on December 1st 2016. However as a professional advisor we recommend that you take action as soon as possible and convert.

Whilst there is a default option available at the end of the 18 month transitional period, I do not believe that this is the most prudent approach for you for the following reasons:

1. The Memorandum & Articles of Association references old and now defunct legislation (Companies Act 1963-2013). The default option does not include updating the provisions in your existing Memorandum & Articles of Association to the new corresponding provisions in CA2014. This could potentially cause legal issues for your company if you end up in a row.

2. Another potential legal issue will exist if you have a Private Limited Company (EPC) and certain members and creditors who would prefer to see the company re-registered as a Designated Activity Company (DAC) may challenge the company’s LTD status in the courts claiming prejudice on the basis of the directors’ failure to act appropriately. (That’s all you need)

3. If you have an existing Private Limited Company (EPC), the new LTD Company which you will default to, may not be the most suitable company type for you. For example, if you wish to offer securities for sale, are regulated by the Central Bank, or if you wish to restrict the activities of the company in a joint venture situation. (This will be an issue for only a few people though)

4. Converting to your company and taking the pro-active approach shows you in a positive light to everyone. (You are ahead of the game)

5. Whilst there is no offence or penalty, it is a breach of your duties as a company director not to convert under section 60 of the Companies Act 2014.

If you want to know more, fill out the contact form below

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