Companies Act 2014 Catherine Sweeney - 10th June 2015
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Companies Act 2014
Catherine Sweeney
10th June 2015Companies
p Act 2014
> Th
The CCompanies
i AActt 2014 (2014 A
Act)
t)
was signed into law on the 23
D
December
b 2014 withith commencementt
on the 1st of June 2015.
> The 2014 Act consolidates the
existing Acts from 1963 to 2013 and
approximately 15 Statutory
Instruments, into one Act and it
introduces a number of reforms.Contents of Companies
p Act 2014
Part 1 ‐ Part 10 ‐ Part 11 ‐ Winding Part 20 ‐ Re‐ Part 21 – External
Preliminary and Examinerships Up registration Companies
General
Part 2 ‐ Part 9 – Part 19 ‐
Part 12 ‐ Strike Off Part 22 ‐ Unregistered
Reorganisations,
Incorporation and Acquisitions,
Unlimited Companies and Joint
and Restoration Stock Companies
Registration Mergers & Divisions Companies
Part 3 ‐ Share Part 18 ‐ Part 23 ‐ Public Offers
Part 13 ‐ of Securities,
Capital and Part 8 ‐ Receivers Guarantee Financial Reporting of
Investigations
Shares Companies Traded Companies etc
Part 14 ‐ Part 17 ‐ Public Part 24 ‐
Part 4 ‐ Corporate Part 7 ‐ Charges
Compliance and Limited Investment
Governance and Debentures
Enforcement Companies Companies
Part 6 ‐ Financial Part 15 – Functions of Part 16 ‐
Part 5 ‐ Duties of
Statements, Registrar and of Designated Part 25 ‐
Directors and Regulatory and
Annual Return Activity Miscellaneous
Other Officers Advisory Bodies
andd Audit
A di C
CompaniesiCompanies
p Act 2014 – Today’s
y Agenda
g
> Introduction of new options in relation
to company
p y type
yp for existing
gpprivate
companies limited by shares.
> Directors’ duties and obligations
have been formalised and brought
together in an inclusive code
code.
> Establishment of a Summary Approval
Procedure to streamline various
restricted transactions.Company
p y Types
yp
> Under the 2014 Act there are five main types of company:-
company:
Private Company Limited by Shares (LTD)
Designated Activity Company (DAC)
Company
p y Limited by
y Guarantee ((CLG))
Public Limited Company (PLC)
Unlimited Company (ULC)
> Options
p for existing
g companies
p registered
g with the
Companies Registration Office as Private Companies
Limited byy Shares.Keyy Conversion Questions > Does the company want to limit its activities going forward? > Is the company in a joint venture arrangement? > Is the company regulated by the Financial Regulator? > Does the company have listed debt/is the company applying to have debt securities listed or traded on any market?
Keyy Differences
Conversion Process
> Existing private companies limited by shares have an
eighteen month period from the date of commencement
to convert to a LTD
Hold a Directors meeting to propose a members’ special
resolution adopting a new constitution
> An existing private company limited by shares wishing to
become a DAC must convert within fifteen months of the
date of commencement.
Hold a Directors meeting to propose a members’ ordinary
resolution adopting a new constitutionAutomatic Conversion
> If no action is taken an existing private company limited
by shares will automatically converted into a LTD.
Why wait to avail of the benefits of the new regime if your
company is
i to
t convertt to
t a LTD.
LTD
If your company does not intend to become a LTD you must
actively opt out by converting to a DAC.
Your existing Memorandum & Articles of Association will
become difficult to read and interpret.Directors Duties
> The 2014 Act provides long g awaited clarification on the roles
and responsibilities of Directors
> The fiduciary duties of Directors are set out in section 228 of
the 2014 Act:-
1. Act in good faith
2. Act honestly and responsibly
3
3. Act within powers
4. Use of company property
5. Independent judgement
6. Avoid conflicting interests
7. Use due care, skill and diligence
8. Have regard to shareholders
shareholders’ interestsDirectors Duties – Compliance
p Statements
> The obligation
g to p
prepare
p a Directors Compliance
p Statement.
> Applies to:
allll PLCs
PLC
all DACs, LTDs and CLGs which have:-
a turnover in excess of €25m
a balance sheet total in excess of €12.5m
> Directors’ must include a statement in their annual report
acknowledging their responsibility for securing compliance
with the company’s relevant obligations.Directors Duties – Audit Committees
> Certain larger
g Companies
p to establish Audit Committees:-
Turnover in excess of €50m
Balance sheet total in excess of €25m
> The Audit Committee is a committee of Directors, including
one non-executive Director
Director, appointed by the board to oversee
financial reporting and related matters.
> Comply
C l or explain
l i approach
hhhas b
been ttaken
k iin th
the 2014 A
Act,
tSummaryy Approval
pp Procedure
> The 2014 Act pprovides for a Summaryy Approval
pp Procedure
to be used by LTDs, DACs, CLGs, ULCs to authorise
various restricted transactions including:-
g
financial assistance for the acquisition of shares
reduction in company capital
prohibition
hibiti ini distributing
di t ib ti pre-acquisition
i iti profits
fit
prohibition of loans etc to Directors and connected persons
members voluntary winding upSummaryy Approval
pp Procedure
> A declaration in writing made by a majority of the
Directors is to be made no more than 30 days in
advance of a meeting of the members.
> The restricted activity must be approved by a majority
of the members of the company by way of a special
resolution
> A copy of the declaration must be filed
with the Companies Registration Office
within 21 days of the commencement of
the restricted activity.Other Changes
g
1. Audit exemption expanded to include group companies
and guarantee companies meeting two out of three
thresholds;
Turnover less than €8.8m
Balance sheet less than €4.4m
€4 4m
Number of employees less than 50
2. Changes to the requirements surrounding directors’ loans
– encouraging properly documented loans.Other Changes
g
3. Directors must appoint a Company Secretary with
the requisite skills or resources necessary to
discharge his or her statutory and other duties.
4. Companies may only change their financial year end
once every five years.
5. Companies must apply to the courts to have late
filing penalties waived.Other Changes
g
6. The voluntary strike off process has been formalised
g
in the new legislation.
7. Companies Limited by Guarantee without a share
capital will be required to change their names to
include the words Company Limited by Guarantee.
8. Unlimited Companies will be required to change
their name to include the words Unlimited Company.In Conclusion
> Th
The 2014 Act
A t has
h wide
id ranging
i i li ti
implications f Directors
for Di t
and now is the time to engage with your advisors to look at
your company’s needs and consider the best way forward.
forward
> You have until September 2016 to make the relevant
submissions to convert yyour company
p y to a DAC.
> You have until December 2016 to make the relevant
submissions to convert your company to a LTD.Thank You
Catherine Sweeney
Russell Brennan Keane
Tel: (01) 644 0100 / (090) 6480600
Email: csweeney@rbk.ie
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