Small firms urged to comply with conditions of Companies Act

Small company owners and company secretaries are being urged to undertake their own reviews as the new Companies Act heralds major changes to Irish company structures.

John O’Callaghan, partner at Moore Stephens Nathans Chartered Accountants, said companies will have to take on board the changes in the 2014 Companies Act with immediate effect, including making key decisions on new designations for their long-existing companies.

The vast majority of the measures under the act started to come into force from last week, with the aim of reforming company law and bringing together all company law into the single piece of legislation.

The act introduces two new company types. One is the straightforward LTD or private limited company, with a single document constitution. The LTD company, however, can no longer have both a single director and secretary carrying out the same role, which may lead to outsourcing the role of company secretary, Mr O’Callaghan said. LTD companies need no longer convene annual general meetings.

The new DAC type — the designated activity company — meanwhile, has a constitution across two documents, including a memorandum and articles similar to the old articles of association.

The transition period for companies to institute the changes started last week and runs through to the end of November 2016.

“We strongly recommend from a good corporate governance viewpoint that directors of companies make an early decision during the transition period as to whether their company should convert to a LTD or a DAC,” said Mr O’Callaghan.

Mr O’Callaghan and Conor Lupton, partner of Comyn Kelleher Tobin Solicitors, will speak at a breakfast seminar tomorrow in Cork on the Companies Act.