A new Companies Act expected to cut red tape for businesses in Ireland comes into effect today.
The Small Firms Association (SFA) welcomed the Act, which simplifies and modernises company law.
The "single rulebook" will replace a "mosaic" of legislation which has proliferated since the original 1963 Companies Act, said SFA director Patricia Callan.
“It has the potential to reduce red tape and make it easier to operate a business in Ireland, with potential benefits for current and aspiring owner managers and for our economy and society as a whole,” Ms Callan said.
‘Simpler construct’
The SFA is particularly pleased by the creation of a new type of private limited company, which it says will be a “much simpler construct” than has existed up to now.
“The new Companies Act puts smaller firms at the heart of the regime for the first time – but businesses need to understand the changes and take a number of actions if they are to reap the full benefits.”
The new simplified type of private limited company ushered in by the Act will have a one-page constitution, a requirement for just a single director and reduced administrative compliance obligations.
The Act sets out company directors' duties for the first time and introduces a new "summary approval procedure", that bypasses the need for High Court approval for activities such as capital reductions and solvent windings up.
New regime
Existing companies must decide, within 18 months, whether to opt in to the new regime for private companies limited by shares (CLS) or opt out by becoming a designated activity company (DAC) or some other type of company.
If, by the end of that period, a private limited company has not chosen one of these options, it will automatically become a CLS.
Businesses that do convert should make the switch as early as possible, Ms Callan added, urging them to “think about what is right” for the future of their company.
Small companies should also check if they qualify for an audit exemption and clarify if their financial statements should be filed under the new or the old legislation, she said.
The Companies Registration Office wrote to every director last month to remind them of changes coming into force.
The Companies Act 2014 is the largest piece of legislation ever seen in Ireland and has implications for almost every business operating here.
