Charities Update – The Companies Act 2014 And The Register Of Lobbying

Author:Mr Philip Smith and Sarah McCague
Profession:Arthur Cox
 
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  1. INTRODUCTION

    The Companies Act 2014 (the "Act") was generally commenced with elect from 1 June 2015. The Act involves an overhaul of the existing company law regime in place since the 1960's. The Act segregates companies by corporate type and applies different law to each type of Company. The Act does not apply to charities established as charitable trusts or unincorporated associations. Where charities are incorporated entities, they are generally established as companies limited by guarantee not having share capital ("Guarantee Companies"). This update sets out on overview of the impact of the Act on Guarantee Companies.

    There is an 18 month transition period (commencing on 15 June 2015) for the introduction of the Act. At the end the transitional period, all of the existing Guarantee Companies will be deemed to be "CLGs" (companies limited by guarantee without a share capital).

  2. MAIN CHANGES INTRODUCED BY THE ACT AS THEY APPLY TO CLGS

    2.1 Company Name

    From the end of the transition period, the company name must end with the words 'company limited by guarantee' or the abbreviation 'CLG' (whether capitalised or lower case and with or without punctuation marks) or the Irish equivalent.

    However, if an existing Guarantee Company has been granted a license authorising it to dispense with the use of the word 'Limited' in its name, that exemption continues to apply and it will not be necessary to end the name of the company or charity with 'company limited by guarantee' or 'CLG'.

    2.2 Members

    The minimum number of members for a CLG has been reduced from seven to one. However, the Revenue Commissioners are unlikely to grant charitable tax exemption to charitable companies having one single member. If there is only one member of a CLG the obligation to hold an annual general meeting ("AGM") can be waived.

    2.3 Directors

    CLGs must have at least two directors. However, the Revenue Commissioners are likely to continue to require that a charity have at least three independent directors for it to be granted charitable tax exemption.

    2.4 Applicable law

    Table C which currently sets out model articles of association for CLGs will no longer exist. The law that is now applicable to CLGs is set out in Parts 1 to 14 of the Act as modified by Part 18 of the Act.

    If charities do not update their Memorandum and Articles of Association ("M&A") in accordance with the Act existing M&A will continue to apply but certain provisions will be deemed...

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