A reminder for all that today – 31 August 2016 – is the deadline for designated activity company (“DAC”) conversions.
All private companies limited by shares which were incorporated prior to the commencement (on 01 June 2015) of the Companies Act 2014 (the “Act”) and wishing to convert to a DAC using the “conversion procedure” contained within Part 2 of the Act must (if they have not already done so) pass an ordinary resolution today, resolving that the company be converted to a DAC.
Should they fail to do so, they will (in order to become a DAC) be required to go through the re-registration procedure contained within Part 20 of the Act, which involves the passing of a special resolution and the incurring of filing fees, or alternatively, a court may order re-registration as a DAC pursuant to Section 57 of the Act.
For any companies wishing to become a DAC they should be aware that should they fail to convert or re-register as such before 30 November 2016, they will automatically default to a “LTD” on 01 December 2016.
The LTD comprises the new simplified form of company structure created under the Act, with such companies requiring only one director; having unlimited capacity in terms of their activities; and having the ability to avoid holding physical AGM’s.
The DAC, albeit a new name, largely replicates the structure of the private company limited by shares which existed prior to the commencement of the Act i.e. it has a two document constitution comprising a memorandum and articles of association; it is restricted in terms of its activities to those objects specified in its memorandum of association; it requires a minimum of two directors; and it must hold a physical AGM if it has more than one member.