The document provides an overview of key changes and requirements introduced in the Companies Act 2014, which was signed into law on 23 December 2014 and will commence on 1 June 2015. It discusses new types of private companies (LTD and DAC), changes to memorandum and articles of association, directors' fiduciary duties, the role of the company secretary, audit exemption criteria, financial statements size criteria, and the new summary approval procedure. The Companies Act 2014 consolidates previous company law and aims to make operating a company in Ireland easier by reducing red tape and clarifying legal obligations.

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Audit | Tax | AdvisoryAudit | Tax | Advisory
The Companies Act 2014:
Tax Presentation
29 April 2015

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Background to the Companies Act 2014
The Companies Bill was published on 21 December 2012 by the Minister for Jobs, Enterprise
and Innovation.
It also introduces a number of reforms, which are designed to make it easier to operate a
company in Ireland.
Set out across 25 Parts its aim is to ease accessibility of the law for each different company
type
Consolidates the 16 Companies Acts as well as the many statutory instruments and court
judgements
 The aim is to make it easier for companies to know and understand their legal obligations.
 It will also implement a series of major reforms to reduce red tape and make it easier and
cheaper to run a company in Ireland
The Companies Act 2014 was signed into law on 23 December 2014 and will commence on 1
June 2015.
Companies continue to operate under The Companies Act 1963-2013 until commencement
The Companies Act 2014 is available for download at http://www.oireachtas.ie

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New Company Types
The vast majority of companies currently registered in Ireland are private companies limited
by shares (EPCs- Existing Private Limited Companies).
The Act proposes two new forms of private company to replace all existing private companies
limited by shares.
LTD-Private Company Limited by Shares DAC-Designated Activity Company
A new form of simplified
company limited by
shares with unlimited
legal capacity with a
single constitutional
document.
Similar to existing form
of private limited
company. Will continue
to have a M&A, with
an objects clause
limiting its legal
capacity.

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New Company Types
LTD Private Limited by Shares DAC- Designated Activity Company
It may have just one director but it must have a separate secretary if
it has only one director.
It must have at least 2 directors
It can have between 1 and 149 members It can have between 1 and 49 members
Both single and multi member companies can dispense with the
need to hold an AGM
Multi member companies are required to hold AGMs
It has a one-document constitution which replaces the need for a
memorandum and articles of association.
It has a constitution document which includes a memorandum and
articles of association.
It will not have an objects clause because it has full unlimited
capacity to carry on any legal business, subject to any restrictions in
other legislation.
It has stated objects for which the company was incorporated.
It has limited liability and has a share capital. It is a Private company
It is a Private company and has limited liability. It has a share capital
or is a private company limited by guarantee with a share capital.
It can pass majority written resolutions (special and ordinary).
It can pass majority written resolutions
Name must end in “Limited” or “Teoranta”
Name must end in “Designated Activity Company” or “Cuideachta
Ghníomhaíochta Ainmnithe” unless qualified for an exemption

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New Company Types
PLC- Public Limited
Companies
Guarantee Companies Unlimited Companies
Will retain objects clause Will retain objects clause Will retain objects clause
No name change required Name change may be
required (if no exemption is in
place)
Name change may be
required (if no exemption is in
place)
Can have a single member Can now have a single
member
Can now have a single
member
Minimum of two directors Minimum of two directors Minimum of two directors
Can offer shares to the public Can now avail of audit
exemption is the criteria is
met

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Memorandum and Articles of Association
Memorandum and Articles of Association
In accordance with 1176 (6) the memorandum and articles of association will continue in
force save to the extent that they are inconsistent with a mandatory provision.
Review of the companies memorandum and articles of association highly recommended to
ensure that they comply with all mandatory provisions of the Act. M&As that are in
contravention of the Act will lead to confusion as their terms will be misleading.
Doing nothing is not recommended as the conversion process offers a company the
opportunity to discuss with its advisers, directors and members the steps to be taken to
ensure that the company has the required regulations incorporated into its new constitution.
Taking no action means the company will not have had an opportunity to review its current
articles of association to see if any of those provisions are contrary to mandatory provisions.

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Memorandum and Articles of Association
Course of
Action for
ARTICLES OF
ASSOCIATION
Full review of the articles,
modifying where
necessary and adopting
any new favourable
provisions arising out of the
Companies Act 2014
Maintain existing Articles
as constitution modifying
only where necessary
Maintain existing Articles
as the Constitution.
Mandatory provisions will
prevail and company will
not necessarily have
availed of any favourable
provisions

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Directors’ Fiduciary Duties
8 Fiduciary
Directors
Duties
Codified under
Section 228
To act honestly
and
responsibly
Act in
accordance
with
Company’s
Constitution
A Director will not use
the Company's
property, information
or opportunities for
their own interest
To exercise
care, skill and
diligence
Avoid Conflicts
of Interest
Have regard to
the interests of
Members
To act in good
faith for the
best interests
of Company
Not to restrict
power of
Director’s
independent
judgement

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It is duty of each director of a company to ensure that the Companies Act 2014 is complied
with (section 223(1)).
Directors will also be obliged to acknowledge their duties and obligations when consenting to
act (section 223(3)).
“I acknowledge that, as a director, I have legal duties and obligations imposed by the
Companies Act, other statutes and at common law.”
Directors to have regard to interests of employees (section 224).
Duty of director to disclose his or her interest in contracts made by company (section 231).
Other Important Duties to Consider

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Company Secretary Role
 All Companies required to have a Company Secretary (section 129(1))
 Duty placed on the Director to appoint a Company Secretary who has the:
 “skills or resources necessary to discharge his or her statutory and other duties.” (section 129(4))
 To comply with new requirement Directors may seek to:
 appoint a Company Secretary who has the necessary skills.
 obtain Company Secretarial Services.
 Single Director Companies will require that Company Secretary to be a different person (section 129(6)).
 Some other key duties:
 Duties delegated by the Board of Directors without deviating from the secretary’s statutory and other legal duties
(section 226(4)).
 the skills necessary so as to enable him or her maintain (or procure the maintenance of) the records (other than
accounting records) (section 226(2)).
 Secretaries will also be obliged to acknowledge their duties and obligations

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Audit Exemption
The provisions contained in Volume 1 Part 6 Financial Statements, Annual Return and Audit.
The directors of a company are required to arrange for audit unless the company is entitled to
and chooses to avail itself of the audit exemption. (Sec 333)
Members may requisition an audit
For dormant company audit exemption, the Act does state the directors must be of the
opinion that the company will satisfy the conditions and hold the board meeting in the
financial year.
One significant change to the old legislation is if the company files the first annual
return late it cannot avail of audit exemption for the first financial year.
Companies that can avail
 Company Limited by Shares (LTD) that is a small company
 Designated Activity Company
 Company Limited By Guarantee
 Small Groups
 Dormant companies that have no significant accounting transactions or permitted assets & liabilities
 Non-designated Private Unlimited Company (ULC)

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Financial Statements- Size Criteria Companies Act 2014
Small Medium Large Group
Balance sheet total not exceeding
€4.4m
Balance sheet total not exceeding
€10m
Balance sheet total exceeding
€10m
the balance sheet total of the group
exceeds €10m
Turnover not exceeding
€8.8m
Turnover not exceeding
€20m
Turnover exceeding
€20m
the amount of the turnover of the group
exceeds
€20m
Employees not exceeding
50
Employees not exceeding
250
Employees exceeding
250
the average number of persons
employed the group exceeds 250

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Summary Approval Procedure
 The Summary Approval Procedure is covered in Chapter 7 of Part 4 of the Companies Act 2014.
 It is a new procedure and it covers several different areas of the Act and the procedure permits certain
restricted activities that would otherwise be prohibited.
 It is a means by which companies can engage in restricted activities by ensuring that the persons those
restrictions are designed to protect, consent to the action.
 The summary approval procedure requires that the members pass a special resolution (and in the case
of mergers, a unanimous resolution) approving the transaction and a director’s declaration in relation to
the post-completion solvency of the company.
 New summary approval procedure will provide a general validation process for overcoming the following
restricted types of transaction:
 the financial assistance for the acquisition of shares (section 82),
 reduction in company capital (section 84),
 variation of company capital on re-organisations (section 91),
 prohibition on pre-acquisition profits or losses being treated in holding company’s financial statements as profits
available for distribution (section 118),
 prohibition of loans to directors and connected persons (section 239),
 domestic merger (section 464),
 members voluntary winding up (section 579).
 Charges: New two tier process introduced for registering a charge where notice of a lender’s intent to
create a charge may be provided to the CRO. This would allow the lender the opportunity to secure
priority (up to 21 days in advance) before the charge is created.

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Companies Act 2014- Summary
Company Capital
A company’s capital will now be made up of the following elements:
 The aggregate value of the consideration received by the company in respect of shares allotted by the
company – expressed as a currency amount; and
 Un-denominated capital which includes the share premium account, the capital conversion reserve fund
and the capital redemption reserve fund.
 A company will be entitled to vary its capital in advance of reorganisations where it is disposing of one or
more assets, an undertaking/part of an undertaking, or a combination of assets and liabilities to a body
corporate where the consideration meets certain criteria.
 Such reorganisation must have been approved using the Summary Approval Procedure.
 Where the criteria has been met, the company may, by ordinary resolution, vary the structure of its
capital by reducing the reserves and company capital by an amount equal to the book value of the
transferred assets and undertakings.
 It is expected that this will make reorganisations much simpler and will facilitate the completion of
reorganisations by companies that would have been prohibited from doing so in the past by virtue of
having negative or low reserves.

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Companies Act 2014- Summary
Directors Loans
 Must now be properly documented and approved in writing.
Mergers of Private Companies
 In the past, private companies could only merge with companies in other EU jurisdictions under the EU Cross Border
Merger Regulations. This has been amended by the new Act and private companies may choose to merge with another
company using either the Summary Approvals Procedure or through the Courts.
Persons binding the company
 There is an option to register the names of individuals who are authorised to bind the company with the CRO.
Recording of Residential address
 In cases where the personal safety or security of a director or secretary is in question, an exemption to recording the
usual residential address of that officer in the register of directors and secretaries may be allowed
Redeemable Shares
 It will no longer be necessary to maintain a non-redeemable portion of the issued share capital (there was a 10%
threshold previously).
Share notifications
 Any disclosure of interest in shares and share options below 1% of the nominal issued share capital is no longer
required.
Winding-up
 It will be possible to approve a members’ winding-up using the new Summary Approval Procedure. In general the Act
has made the legislation in relation to the different methods that may be employed to wind up a company more
intelligible and logical

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Ireland
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Contact us
For further details on Companies Act 2014 ,SORP, or any other financial or advisory services:
Sharon Gallen, Audit Partner sharon.gallen@crowehorwath.ie | 01 488 2200
Roseanna O’Hanlon, Audit Partner roseanna.ohanlon@crowehorwath.ie | 01 488 2200
Shane McQuillan, Advisory Partner shane.mcquillan@crowehorwath.ie | 01 488 2200
John Byrne, Tax Partner john.byrne@crowehorwath.ie | 01 488 2200
Grainne Howard, Company Secretarial Manager grainne.howard@crowehorwath.ie | 01 488 2200