Companies Act, 2014
The new Companies Act, 2014 (2014 Act) which consolidates the Companies Acts, 1963-2013, as well as introducing significant changes to Irish company law, came into effect on the 1st of June 2015. For a private limited company a decision is required as to whether the company will re-register as a company limited by shares (an LTD) or convert to a Designated Activity Company (DAC). Some advantages to selecting the LTD option include full capacity (no requirement for an objects clause in the memorandum of association of the company), the ability to have only one director and one shareholder, no requirement to have an authorised share capital if so desired and no requirement to change the name of the company. However it is recommended that all companies review their individual business requirements in advance of selecting their preferred company type.
The Act also codifies directors duties for the first time and these are set out as eight separate principles namely:
- act in good faith in what the directors consider to be the company’s interests;
- act honestly and responsibly in the company’s affairs;
- act in accordance with the constitution of the company and exercise powers only for lawful purposes;
- not use company property for own or others’ use unless approved by the members or the constitution;
- not to fetter discretion unless permitted by constitution or entered into in the company’s interests;
- avoid conflicts of interest unless released by members (under the constitution or by resolution);
- exercise care, skill and diligence; and/or
- have regard to the interests of members and employees.Directors will also be required to confirm that all relevant audit information of which they are aware, having made reasonable enquiries, has been conveyed to the auditors. There is also a duty placed on directors to ensure that the company secretary has the necessary skills and resources to discharge his statutory duties. The above is a brief sample of the changes brought in by the 2014 Act.
