Under the Companies Act 2014 (CA14), the directors of all private limited companies registered in Ireland are obliged to effect conversion of such companies to one of two new private company types –a private company limited by shares (LTD) or a designated activity company (DAC)* – on or before 30 November 2016 (Conversion Deadline). The Conversion Deadline is now fast approaching.
*Only companies which passed a members’ resolution approving conversion to DAC by 31 August 2016 are permitted to convert to DAC between 1 Sept and 30 Nov 2016. This doesn’t apply to LTD conversions.
For directors to ensure compliance with their statutory obligation to convert such companies before the Conversion Deadline, retain control of the decision and avoid the legal uncertainty of not having an up-to-date written CA14-compliant constitution and the other potential knock-on effects of missing the conversion deadline, conversion applications would need to be submitted to CRO as soon as possible.
A company which hasn’t pro-actively converted to LTD or DAC by the Conversion Deadline will be automatically converted to LTD on 1 Dec 2016. Such companies won't have an up-to-date written Constitution reflecting current company law until they amend their pre-conversion memorandum and articles of association (known as Constitution under CA14) and, until then, will have the uncertainty of a partially unwritten deemed constitution. If the company is of a type required under CA14 to be a DAC, it will be in breach of CA14 once converted to LTD. CA14 contains remedies for members/creditors affected by failure by a company's directors to convert (or convert to a specific company type) in certain circumstances.