Action Needed By Directors

Under The 2014 Companies Act, all existing private companies limited by shares have the option of converting to one of the new company types.

Below we have listed some of the essential information in relation to the new company types:

•    The two types of private company are a LTD or a DAC. 

•    There is a transition period of up to 18 months to the 30th November 2016 for this conversion to take place.

•    Companies wishing to be converted to a DAC, must under The Act, pass an ordinary resolution to convert by 31st August 2016. 

•    Companies wishing to be converted to a LTD have up to the 30th November 2016 to do this conversion but giving the scale of the exercise we would recommend early adoption well in advance of the 30th November deadline. 

•    Companies that do not apply to be converted to either a DAC or a LTD during this transition period will be automatically converted to a LTD by the CRO after 1st December 2016. While some directors may choose this route we would recommend that all directors should seek the necessary professional advice in advance to ensure that by taking this route no issues will arise on conversion that could impact your company operations or banking arrangements for example from a Company Law perspective.

Below are some of the main differences between the two company types:


LTD    
Name must end in LTD    
Limited Liability    
No objects clause    
One document constitution    
Does not need to have an authorised share capital    
Can be a single member     
One director minimum    
Must have company secretary who cannot be the sole director    
May dispense with the requirement to hold an AGM    
Cannot be a credit institution    
Cannot be an insurance company     
Cannot list debt securities    


DAC
Name must end in DAC unless exempt
Limited Liability
Must have objects clause
Two document constitution 
Must have an authorised share capital
Can be a single member
Two directors minimum
Must have company secretary who may also be one of the directors
A single member DAC may dispense with the requirement to hold an AGM 
Can be a credit institution
Can be an insurance company
Can list debt securities

We recommend that you contact your lead contact in Moore Stephens who will be happy to discuss the various options available and most suited to your company and individual requirements as directors. 

We look forward to engaging with you on this Company Law matter and indeed any other area where we can be of assistance to your business.