Companies Act 2014
Introduction to the Companies Act 2014
The new Companies Act 2014 commenced on 1 June 2015. The new Act consolidates information from all previous acts.
This is an overview of the main changes outlined in the new Act, in order to assist pharmacies who may be required to take action in relation to their registered company’s status. It is not intended to be a legal document or to give legal advice and we suggest that you should consult with your legal adviser or accountant on how the introduction of the Companies Act 2014 will affect your company.
There are a number of significant changes in this Act. The primary change is the introduction of new company models:
- the Private Company Limited by Shares (LTD company)
- the Designated Activity Company (DAC).
These refer to private limited companies only. Any private limited companies already registered with the Companies Registration Office (CRO) will convert to one of these two types.
The new Companies Act is split into two major parts:
- Parts 1 to 14 deal with private companies limited by shares (LTD company);and
- Parts 16 to 25 deal with the other company types (including public limited companies, external companies, guarantee companies, designated activities companies (DAC’s)
Transition Period
An eighteen month transition period is being allowed for existing private companies limited by shares (EPC) to opt for conversion to either a LTD or a DAC. If a company has failed to convert by 30 November 2016, the CRO will automatically convert the company to an LTD.
During the transition period only, all EPCs currently on the register will operate under the rules applying to DACs until they convert.
Click on the links for more information
Expand all
Collapse all
-
A private company limited by shares (LTD company) is a new company model introduced by the Companies Act 2014. Only companies that have undergone the conversion process or have been incorporated as such post introduction of the new Companies Act are LTD companies.
The main differences between an existing private company and a LTD:
- Abolition of the Object Clause
Currently, a company’s Memorandum of Association contains an Objects Clause which sets out what the company has been set up to do and the company is limited to acting within these objects. Anything purported to be done by a company which is beyond those objects would be ultra vires (beyond their legal power) and the directors could be personally liable for such acts.
Under the new Companies Act 2014, LTDs do not have to state their objects. Instead they will have full and unlimited capacity to carry on and undertake any business or activity, do any act or enter into any transaction and have full rights, powers and privileges to do so (Section 38). In effect an LTD has the same legal capacity as a natural person.
- Single Document Constitution
For a LTD company, a single document constitution replaces the memorandum and articles of association. For companies that are deemed to be a LTD at the end of the transition period, their existing memorandum and articles of association remain in place with the objects clause disregarded.
All other company types, however, have a constitution that consists of a memorandum and articles of association.
- Single Director Companies
A LTD company may choose to have only one director. The LTD must have a separate Company Secretary if it only has one director.
Other differences include the dispensing with AGMs and the power to pass majority written resolutions.
-
A DAC is defined as:
- a private company limited by shares; or
- a private company limited by guarantee which is limited to do only those acts or things set out in its constitution (memorandum of association).
An existing private company may wish to re-register to become a DAC if they wish to have or retain specific objects for which the company was incorporated.
A company wishing to convert to a DAC must re-register with the CRO and submit a new constitution before the end of a special 15 month transition period, up to 31 August 2016.
A company which has not altered its constitution or completed the conversion process to a DAC by the 30th November 2016 will be deemed to be a LTD company.
Please note:
- The constitution document of a DAC includes a memorandum and articles of association.
- A DAC is still required to have at least two directors.
- Certain companies are specifically envisaged as being DACs. Examples include charities, companies limited by guarantee and companies incorporated under Statute.
Company Name
A LTD company’s name must end in “Limited” or “Teoranta”. Most existing private companies who convert to a LTD will not be required to change the name of the company.
A DACs name must end in “Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe”. An existing private company which converts to a DAC will have to change the name of the company.
Directors
Key Changes:
- Age Requirement: Under the new Act, every director or company secretary must be aged 18 or over.
- Company Secretary: Directors are now responsible for ensuring that the company secretary is competent and has the skills necessary to fulfil the duties of a company secretary.
- Registered Person: the board of directors of a company may authorise any person without restriction to bind the company and file authorisation with the CRO.
Does the Companies Act 2014 affect my pharmacy’s PSI registration?
Changes made under the Companies Act 2014 will not affect your pharmacy’s registration however you must notify the PSI of the following changes:
a. If your Company converts to a different company type.
You will be given the opportunity to change this as part of your Continued Registration. If your Company converts between registration periods please email rpbreg@psi.ie.
b. If your Company changes name.
A name change under the Companies Act 2014 will not affect your pharmacy’s registration as long as the CRO number of the Company remains the same.
c. If the Company Secretary or Directors change.
d. If you appoint a Registered Person for your Company.
e. If a new Company Constitution is adopted
Please submit a copy of the new Constitution to the PSI. You can send this by email to rpreg@psi.ie.
Changes to the Shareholding in a Company
Changes to the shareholding in the Company do not fall under changes made under the Companies Act 2014 and may affect your pharmacy’s registration. Companies considering transferring or acquiring shares should ask their accountant and/or legal advisers to consult the Pharmacy Act 2007 (section 17) and the Changes in Ownership page of the PSI website to obtain more information about this matter before transacting their business. Alternatively, please contact the registration unit with your query and we will assist you. The registration unit can be contacted on rpbreg@psi.ie.
Quick Reference Guide
New LTD Company Model
| Designated Activity Company
|
It may have just one director (but it must have a separate secretary if it has only one director).
| It must have at least two directors.
|
| It has a one-document constitution which replaces the need for a memorandum and articles of association. | It has a constitution document which includes a memorandum and articles of association. |
| It will not have an objects clause because it has full unlimited capacity to carry on any legal business, subject to any restrictions in other legislation. | It has a memorandum in its constitution which states the objects for which the company is incorporated. |
| It has limited liability and has a share capital. | It has limited liability and has a share capital or is a private company limited by guarantee with a share capital. |
| Name must end in Limited. | Name must end in Designated Activity Company. |