CRO reminds directors of new company changes

Companies Act 2014 comes into effect next month

The Companies Act is expected to provide significant benefits to companies, in particular smaller firms, by reducing red tape and making legal obligations easier to understand

The Companies Act is expected to provide significant benefits to companies, in particular smaller firms, by reducing red tape and making legal obligations easier to understand

 

The Companies Registration Office (CRO) has written to every director in the country to remind them of new changes coming into force next month.

The Companies Act 2014, which comes into effect in June, is the largest piece of legislation ever seen in Ireland and has implications for almost every business operating here.

The Act is expected to provide significant benefits to companies, in particular smaller firms, by reducing red tape and making legal obligations easier to understand.

The new Act provides for a new simplified type of private limited company with a one-page constitution, one director requirement and reduced administrative compliance obligations. It also sets out company directors’ duties for the first time and introduces a new “summary approval procedure”, that bypasses the need for High Court approval for activities such as capital reductions and solvent windings up.

Furthermore, the Act offers increased flexibility in governance structure, gives private companies the ability to merge, eases the prohibition on giving financial assistance and introduces changes in the registration of charges regime to encourage banks to lend.

Existing companies must decide, within a transition period of 18 months after commencement of the Act, whether to opt in to the new regime for private companies limited by shares (CLS) or opt out by becoming a designated activity company (DAC) or some other type of company. If, by the end of that period, a private limited company has not chosen one of these options, it will automatically become a CLS.

The CRO said conversion forms will be available for free for organisations wishing to change their structure. The new forms and full information on the forthcoming changes can be found at the CRO website.

A recent Institute of Directors (IoD) survey indicates that 48 per cent of directors of existing private companies intend to opt into the new regime with a further 36 per cent undecided on which structure to choose.