by David Phelan , Sabrina Burke March-22-2017 in Commercial & Business

With the introduction of the new Companies Act 2014 on 1st June 2015, all existing private companies limited by shares were obliged to convert to either a private company limited by shares (LTD) or to a designated activity company (DAC) - before 30 November 2016.

If your company did not take steps to convert to a LTD or DAC by that date (or re-register as another company type), your company automatically converted by law to a LTD on 1 December 2016.

The automatic conversion to a LTD has implications for your company’s constitution as follows:

  • your company will now be deemed to have a single document constitution consisting of the existing clauses of its memorandum and articles of association but without the clauses which set out the company’s various objects and powers;

  • any existing regulation in the company’s articles that contravenes the mandatory provisions of the new Companies Act is void;

  • the legislative citations in the company’s constitution will refer to old company law provisions which have been repealed under the new Act;

  • ambiguity could arise as to whether certain provisions of the new Act do or do not apply to your company.

All of the above means that your company’s constitution as currently filed in the CRO will not match the constitution that your company is deemed to have under company law – which could cause confusion for the company’s directors, shareholders or businesses interacting with the company (e.g. banks providing finance). If your company falls into this category, we recommend that you take steps to update your company’s constitution to bring it into line with the requirements for a LTD under the new Act and make it easier to interpret going forward.

Alternatively, it is still possible to re-register to become a DAC, or indeed, another company type altogether, such as an unlimited company. If you are still considering which form of private company is most suitable for your business and/or any of the above issues are affecting your business, we would be happy to assist you with these issues and prepare the necessary documentation and CRO filings.

For further information, please contact David Phelan, Sabrina Burke or your usual contact in the commercial team at Hayes Solicitors. 

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About the Authors

David Phelan
David Phelan

David is Head of the Commercial & Business team at Hayes solicitors and advises a number of the firm’s major corporate clients. He advises on a wide range of corporate and commercial law issues. He has expertise in advising on general corporate and commercial matters, particularly in the manufacturing, retail, aviation, sports and motor sectors, and also frequently advises clients who operate in regulated areas.

Sabrina Burke
Sabrina Burke

Sabrina is a senior associate solicitor in the Commercial & Business team at Hayes solicitors. Sabrina's main area of work is mergers and acquisitions, where she acts for buyers and sellers across various industry sectors. She also advises on corporate reorganisations, shareholder agreements and other commercial arrangements and contracts including agency/franchise/distribution agreements.