O’Connell & AssociatesO’Connell & AssociatesExperts in Accountancy and TaxationSpecialists in Financial Planning &

Management

Kieran O’Connell FCCA

6 The Courtyard, Fonthill Business Park, Fonthill Road, Dublin 22

Tel: 01 533 0814 Mobile: 087 987 3628 Email: info@oconnellandassociates.ie

www.oconnellandassociates.ie

The Companies Bill 2012The Companies Bill 2012 New CRO A1 form will not require a New CRO A1 form will not require a

statutory declaration, now an unsworn statutory declaration, now an unsworn declarationdeclaration

Only Only One One Director requiredDirector required

Single Document Model ConstitutionSingle Document Model Constitution

Application can be completed entirely Application can be completed entirely onlineonline

Audit Exemption:Audit Exemption:GroupsGroups

Audit Exemption has now been extended to a group situation so that in order to avail of the audit exemption, the company must :

be a small company or be a group of companies that, taken together, fall below the

threshold requirement for a small company

Dormant Companies, Dormant Companies, Special Audit ExemptionSpecial Audit Exemption

Section 366 introduces a new audit exemption for dormant companies that are members of a group.

It provides that in order to be regarded as a dormant company, it must have no significant accounting transactions and its assets and liabilities must comprise only permitted assets and liabilities.

Dormant CompaniesDormant Companies

“Permitted Assets and Liabilities” are investments in shares of and amounts due to or from other group undertakings.

“Significant Accounting Transaction” means a transaction that is required by Sections 282 and 283 to be entered into the company’s accounting records.

Guarantee CompaniesGuarantee Companies

Charities / Not-for-Profit CompaniesCharities / Not-for-Profit Companies Property / Apartment Management CompaniesProperty / Apartment Management Companies

Audit ExemptionAudit Exemption For the first time, Part 18 extends the availability of the For the first time, Part 18 extends the availability of the

audit exemption to guarantee companies on the same audit exemption to guarantee companies on the same basis as this is available to the CLS. basis as this is available to the CLS.

However, members holding more than 10% of the total However, members holding more than 10% of the total voting rights can object to the audit exemption being voting rights can object to the audit exemption being availed of and in the circumstances the company will be availed of and in the circumstances the company will be required to proceed with an audit.required to proceed with an audit.

Company TypesCompany Types

CLS: Company Limited by Shares (part 1-14) DAC: Designated Activity Company (part 16) PLC: Public Limited Company (Part 17) CLG: Company Limited by Guarantee (Part 18) ULC: Unlimited Company with a share capital (Part

19) PUC: Public Unlimited Company with a share capital

(Part 19) PULC: Public Unlimited Company without a share

capital (Part 19) External Companies, Part 21 Unregistered Companies and Joint Stock Companies,

Part 22

What Types of Companies will be What Types of Companies will be Affected by the New LegislationAffected by the New Legislation

Over 160,000 Private companies are expected to become a CLS after a certain date

15,000 plus charities, voluntary organisations and typical apartment management companies must change their name to include “Company Limited by Guarantee”

4,000 plus unlimited companies must change their name to include “Unlimited Company”

Private Companies Private Companies 11stst July 2014 July 2014

Assuming a commencement date of 1st July 2014, this will be the start of the transition Period, 18 months, all existing private companies limited by shares will be treated as DACs unless they file an application to convert to a CLS.

31st December 2015 will be the end of the transition period

Designated Activity CompaniesDesignated Activity Companies

Dealt with in Part 16 of the Bill Can be Limited by Shares or by Guarantee Must end in “Designed Activity Company” or “Cuideachta

Ghiomhaiochta Ainmnithe” Can be abbreviated to DAC or d.a.c, or CGA or c.g.a.

(lower or higher cases)

A DAC : must have both a Memorandum and Articles of Association must have a minimum of two directors must hold an AGM unless it is a single member company Is not entitled to audit exemption where it or a subsidiary

undertaking falls within a certain category of the Bill

Why Become a Why Become a Simplified Private Company (CLS)Simplified Private Company (CLS)

Unlimited Objects – no ultra vires Legal capacity of a natural person Codified director and secretary duties Written AGMs and majority written resolutions,

unless constitution specifies otherwise Members’ liability limited by shares only, not

limited by guarantee May have up to 149 members – may have only

one director and a separate secretary

Private Company Private Company Conversion OptionsConversion Options

Pass an ordinary resolution to become a DAC not les than three months before the end of the 18 month transition period (30th September 2015).

Existing private companies must reregister as a DAC before the end of the transition period if they offer securities to the public

There is an option for the company to re-register as a CLS by passing a special resolution before the expiry of the Transition Period

Note: If no re-registration application has been filed with CRO by the end of the Transition

Period, the company will be deemed by law to be a CLS and to have a constitution comprising the provisions of its existing memorandum, bar the objects and of its existing articles with the CRO being obliged to give effect to this.

A new certificate of incorporation will issue from the CRO to all converted companies to provide legal certainty.

Sample Scenarios after Sample Scenarios after Transition Period Commences Transition Period Commences

(1 July 2014)(1 July 2014)

All Existing Private limited companies (EPCs) are All Existing Private limited companies (EPCs) are treated as Designated Activity Companies for the treated as Designated Activity Companies for the duration of the transition period only unless:duration of the transition period only unless:

Eligible EPCs convert to CLS company type using Eligible EPCs convert to CLS company type using CRO Form CRO Form N1N1; or; or Convert to Designated Activity Company status during TP Convert to Designated Activity Company status during TP using using CRO Form N2CRO Form N2..

Public Guarantee/unlimited companies can submit Public Guarantee/unlimited companies can submit CRO Form N3CRO Form N3 to address new name requirements. to address new name requirements.

30 September 30 September 20152015

All Existing Private limited All Existing Private limited companies (EPCs) that seek to companies (EPCs) that seek to become become Designated Activity Designated Activity CompaniesCompanies must have initiated must have initiated that conversion process by this that conversion process by this date.date.

Submit Submit CRO Form N2CRO Form N2 Sections: 57/64Sections: 57/64

An Ordinary Resolution must be An Ordinary Resolution must be passed by this datepassed by this date

31 December 31 December 2015 2015

All non-converted Existing Private All non-converted Existing Private Limited Companies become : Limited Companies become : Private Companies Limited by Private Companies Limited by Shares i.e. Shares i.e. CLSCLS companies, companies, pursuant to Section 62.pursuant to Section 62.

If the company has not converted If the company has not converted to a DAC by this date, it is deemed to a DAC by this date, it is deemed a CLS company.a CLS company.

All Public Guaranteed and all All Public Guaranteed and all Unlimited Companies are obliged Unlimited Companies are obliged to have changed their company to have changed their company name to include their company name to include their company type at the end of their name. At type at the end of their name. At this date, the Registrar of this date, the Registrar of Companies will enforce the name Companies will enforce the name change it if has not been arranged change it if has not been arranged by the submission of Form N3 for by the submission of Form N3 for name/change constitution change.name/change constitution change.

New CRO Conversion Forms, New CRO Conversion Forms, the N Seriesthe N Series

Form N1 Form N1 – Used during Transitional Period, TP, to convert company to CLS – Used during Transitional Period, TP, to convert company to CLS company. Pursuant to Section 60 or 61. Will be accompanied by constitution company. Pursuant to Section 60 or 61. Will be accompanied by constitution and/or special resolution.and/or special resolution.

Form N2Form N2 – Used during TP to change to DAC company. Pursuant Section 64. – Used during TP to change to DAC company. Pursuant Section 64. Accompanied by ordinary resolution to convert passed within first 15 months of TP Accompanied by ordinary resolution to convert passed within first 15 months of TP and constitution. Possible G5 to be filed with form.and constitution. Possible G5 to be filed with form.

Form N3 – Form N3 – Used to file name change where company type requires name change to Used to file name change where company type requires name change to add “Unlimited Company” or “Company Limited by Guarantee” to name. Similar to add “Unlimited Company” or “Company Limited by Guarantee” to name. Similar to g1Q: will include special resolution and new constitution.g1Q: will include special resolution and new constitution.

The role of the Company Director and Secretary will be much more The role of the Company Director and Secretary will be much more important in 2014 than ever before.important in 2014 than ever before. Why? Because Company Law in Ireland is Why? Because Company Law in Ireland is about to change and that will affect every private and public company.about to change and that will affect every private and public company.

It’s the law, every company is required to appoint a Company Secretary.It’s the law, every company is required to appoint a Company Secretary.

The Company Secretary must be fully aware of their duties and responsibilities. The Company Secretary must be fully aware of their duties and responsibilities. Over 180,000 companies will at least needOver 180,000 companies will at least need “One Good Company Secretary” “One Good Company Secretary” in in 2014.2014.

New Company Secretary New Company Secretary “Qualification Test” S.126“Qualification Test” S.126

Directors will be obliged to ensure that the person Directors will be obliged to ensure that the person appointed Secretary is suitable.appointed Secretary is suitable.

Secretaries will have to consent and acknowledge their Secretaries will have to consent and acknowledge their legal duties.legal duties.

Over 18s: Notwithstanding such requirements for Over 18s: Notwithstanding such requirements for ordinary company directors to be quasi lawyers, infants ordinary company directors to be quasi lawyers, infants and children can and are appointed today as company and children can and are appointed today as company directors. There is no age limit. However, the new directors. There is no age limit. However, the new prohibition on under 18’s to be introduced here in 2014.prohibition on under 18’s to be introduced here in 2014.

DirectorsDirectors

Minimum Number of Directors: Minimum Number of Directors: A minimum of A minimum of two Directors is required to register a private two Directors is required to register a private company; this will be reduced to one in 2014.company; this will be reduced to one in 2014.

Who is a Director: Who is a Director: Section 2(1) defines a Section 2(1) defines a ‘Director” as including ‘Director” as including “any person occupying the “any person occupying the position of Director by whatever name called”.position of Director by whatever name called”.

May be called Trustees or Committee or May be called Trustees or Committee or Management Management

The Company SecretaryThe Company Secretary

The Company Secretary has a very important role to The Company Secretary has a very important role to ensure that the Board and Senior Management are aware ensure that the Board and Senior Management are aware of the 97 “of the 97 “Arrestable OffencesArrestable Offences” and that proper ” and that proper procedures are put in place if a Section 19 report is procedures are put in place if a Section 19 report is required to be made to ensure that senior officers and required to be made to ensure that senior officers and directors never see the inside of a Garda Station.directors never see the inside of a Garda Station.

Reporting Obligations: Reporting Obligations: These reporting obligations are These reporting obligations are supplementary to mandatory reports that may have to be supplementary to mandatory reports that may have to be submitted to the ODCE and apply right across the board submitted to the ODCE and apply right across the board from the Janitor to the Company Chairman and are from the Janitor to the Company Chairman and are required to be submitted to the National Bureau of Fraud required to be submitted to the National Bureau of Fraud Investigation in Harcourt Square, Dublin 2.Investigation in Harcourt Square, Dublin 2.

Mandatory Electronic Mandatory Electronic FilingFiling

Over 380,000 forms were filed at the CRO Over 380,000 forms were filed at the CRO last year.last year.

It now looks very likely that the CRO will It now looks very likely that the CRO will introduce mandatory electronic filing of introduce mandatory electronic filing of forms (eg. B10, B2, Business Names etc).forms (eg. B10, B2, Business Names etc).

Late Filing Fees up €1.5 million: Late Filing Fees up €1.5 million: Notwithstanding the serious consequences Notwithstanding the serious consequences for private companies that are late with CRO for private companies that are late with CRO filings, the take from late filing penalties in filings, the take from late filing penalties in 2011 was €12.9 million.2011 was €12.9 million.

The CRO now accept credit card payments The CRO now accept credit card payments for filing fees and late penalties and have for filing fees and late penalties and have installed credit card terminals at public installed credit card terminals at public counters at Parnell Square.counters at Parnell Square.

The Criminal Justice The Criminal Justice Act 2011Act 2011

Includes many relevant offences Includes many relevant offences under the Companies Acts such as under the Companies Acts such as possible breaches of Section 202, possible breaches of Section 202, not keeping proper books and not keeping proper books and records.records.