Companies Act 2014
The new Companies Act 2014 was signed into legislation recently and the majority of it commenced from 1st June 2015. This replaces all the previous Companies Acts from 1963-2014 and brings Irish company legislation up to date.
What does this mean for a small company director?
Welcome changes are the revised audit exemption limits - your company may be audit exempt if it has turnover of less than €8.8 million, has a balance sheet total of less than €4.4 million and has less than 50 employees. Previously if you exceeded one of these thresholds you were unable to avail of audit exemption, now it is much easier to qualify as provided you meet two of three your company can qualify.
Also group companies can now qualify for audit exemption under the same thresholds, as well as companies limited by guarantee. Bear in mind that charities operating as companies limited by guarantee are required by Revenue to have an audit if they have income of over €100k.
The new Act is retrospective for 2014 filings - so if you were previously unable to qualify, now you can - all financial statements approved after 1st June 2015 must be prepared using the Companies Act 2014 references.
It's now possible to have just one director in a company. However you must have a separate company secretary, who is qualified for the role. This position may be held by a company, and we can offer you this service.
Company formation is more straightforward; the memorandum and articles are not required for private limited companies as they are all included in the Act. However the company now has a minimum of a one page Constitution. We incorporate companies using a customised Constitution which includes some areas that you may require in the future.
Directors' duties and sanctions
These are now included in the Act, when you incorporate a new company you will receive a booklet outlining your duties and responsibilities as a director. There are also categories of offences which a director may be sanctioned for, from Category 1 (most severe) to Category 4. It is important to be aware of your duties, particularly when you are serving in a voluntary capacity to a local charity etc - a directorship is not to be undertaken lightly!
All existing companies have 18 months, i.e. until 30th November 2016, to convert to the new company format. Most companies will be straightforward, however special purpose companies and companies limited by guarantee will require a little thought in terms of their existing memorandum and articles, which may be quite specific. We will be writing to all of our corporate clients over the coming months to outline the conversion process.
This is just a very brief summary of a few areas of the new Act, which is very detailed and comprehensive. Please contact us for advice about your company.