The Companies Act 2014

22nd June 2015

Posted In: The Topic
Deirdre-Ann Barr

Making it easier to start up and do business through Irish companies.

Fifteen years in the making, the Companies Act 2014 came into force on June 1st 2015. The Act consolidates and modernises Irish company law and will make it easier to start up and do business through Irish companies.

Words: Deirdre-Ann Barr

The Act applies to every Irish company whether public, private, limited or unlimited.  The level of action required by existing companies to ensure compliance with the Act will vary, depending on the type of company concerned.

Conversion options for private limited companies

The Act provides for two new types of private company and recognises the continued existence of other company types. All company types may now be incorporated with a single member.

For existing private companies, the primary decision is whether to “opt in” to the LTD regime or “opt out” by converting to a DAC (see below). Different considerations will apply in deciding which route to take and your legal adviser can help guide you down the right track.

The LTD is the standard limited liability company with new positive features such as a streamlined one-document constitution, no restrictions on what it can do and the ability to have a sole director.  It also has the advantage of not requiring any name change after conversion. The majority of existing private limited companies are expected to convert to an LTD.

The Designated Activity Company is the alternative private limited company and is similar to the private limited company established under the old Companies Acts. Many, but not all, of the reforms applicable to the LTD apply to the DAC.  However, a DAC:

– must have an objects clause and hence is limited in what it can do;

– must have at least two directors;

– must have the words “designated activity company” at the end of its name.  This may be abbreviated in subsequent usage to “DAC”. This will mean changes to company stationery, registrations, website etc.

The DAC may be appropriate for joint ventures and is the required vehicle for certain companies, for example, a private company listing debt.

Where no action is taken to convert by 30 November 2016, existing private limited companies will automatically convert to LTDs.  Automatic or default conversion is not recommended and existing private companies should consult their legal adviser about the most appropriate company type, and form of constitution, for their business. Until 30 November 2016 (or the earlier conversion to one of the new company types), all existing private limited companies will be subject to DAC law.


Other company types

Unlimited companies, public limited companies and companies limited by guarantee must now include the company type in their name (unless they can avail of an exemption, for example in the case of charities).

Some of the changes introduced by the Act are:


Directors’ duties which were previously derived from case-law have been drawn together and are set out clearly in the Act, making it easier for directors to understand their obligations.  Fiduciary duties exist alongside the many statutory duties of directors (contained in the Act and elsewhere), which still apply.

New obligations arise for directors of plcs and large private companies to prepare an annual compliance statement in relation to company and tax law and to review compliance measures annually.

New statutory presumptions have been introduced in relation to loans between directors and companies, which mean that any such arrangements should now be properly documented and unambiguous.

Audit Exemption

The audit exemption is now available to dormant companies, guarantee companies and to certain qualifying group companies.  An LTD and a DAC may avail of an audit exemption where two of three prescribed conditions are met.

Company Secretary

The directors must ensure that the company secretary has either the skills or the resources necessary to discharge his or her statutory and other legal duties.

Meetings and Resolutions

AGMs are optional for all LTDs and other company types with a single member as they will be entitled to adopt written procedures instead. This involves shareholders signing a written resolution acknowledging receipt of financial statements, resolving all matters as would be required to be resolved at the AGM and confirming that there is no change to the auditor. The Act retains the current unanimous written resolution procedure and facilitates the use of majority written resolutions in certain situations.


Deirdre-Ann Barr is a partner at Matheson and is a member of the Company Law Review Group, the statutory advisory expert body charged with advising the Minister for Jobs, Enterprise and Innovation on the review and development of company law in Ireland.