The time has come for Irish companies to prepare for transition into the new regime, the Companies Bill 2012. Our Company Law team have put together answers to a number of Frequently Asked Questions in relation to the Bill.
What is the Companies Bill 2012?
The Companies Bill 2012 (the "Bill"), when enacted, will contain all Irish laws relating to the formation, management, share capital, insolvency and investigation of companies.
I own a private company, how do I know if I need to prepare for these changes?
Every Irish private limited company must prepare for these changes by deciding to register as either a designated activity company ("DAC") or company limited by shares ("CLS") during the transition period.
What is a company limited by shares?
The CLS is a simplified new-form private company limited by shares to which a range of streamlined governance reforms under the Bill will apply, such as the one-document constitution, the ability to have a single director and the power to dispense with the holding of AGMs.
What is a designated activity company?
The DAC is a more familiar corporate form for a private company limited by shares. Its activities are limited by its objects clause, and its constitution comprises a memorandum and articles of association. Not all of the streamlined governance reforms will apply to the DAC.
Should I register my company as a CLS or a DAC?
A company's decision on whether to register as a CLS or DAC will depend on whether or not it is suitable for the provisions and procedures that apply only to the CLS. For example, it will not be possible for certain types of company, such as a licensed bank or a company that has debt securities listed or admitted to trading on a market, to register as a CLS.
The primary difference between a CLS and a DAC is that a DAC remains governed by its objects clause. However, a majority of companies adopt "catch-all" objects in their memorandum so this difference may amount to very little in practice.
For a more detailed explanation, please download this pdf entitled 'Companies Bill 2012: Preparing Private Companies for Transition'.
When is the transition period to re-register my company?
The transition period is a period of 18 months1, which can be extended by the Minister for a further 12 months2, from commencement. During this period the directors and members of an existing private company must elect either to register as a DAC or to register, or be deemed to register, as a...