Change or Update your Company Constitution


The Conversion Deadline Has Passed…. So what now?
 

The Companies Act 2014 was introduced on 1st June 2015 and it replaced the Companies Acts 1963-2013. As well as consolidating the previous legislation it also sought to simplify procedures and introduced changes in practices.

With the transition period now well and truly behind us, if you did not convert your company it will have been automatically converted. However this automatic conversion will not update the companies’ existing Memorandum & Articles of Association or issue the company with a new constitution so it may be worth considering updating to a new constitution which is in accordance with the Companies Act 2014 

Approximately 26% of private limited companies chose to either convert to an LTD or DAC and the rest took a "wait and see" approach (or didn’t really care!).

Post Companies Act Conversion:

Digital Certificates

All companies that were automatically converted to LTD have been issued with a new digital certificate of incorporation to any email addresses held for the company by the CRO.

Digital certificates of incorporation on the change of name for CLG’s and Unlimited companies have also been issued to the email addresses held by the CRO.

If you have not received these digital certificates check your junk mail or contact CRO.

So what is the Impact for Companies that did nothing?

There are no more conversions as all companies have either converted by choice or have been automatically converted.  No more filing N1, N2 or N3 forms!

Companies that automatically converted or had the company name automatically changed were not issued a new constitution . Their existing Memorandum and Articles of Association continue to exist.

LTD Companies

  • Continue with the old Memorandum and Articles of Association
  • The company may pass a special resolution to adopt a new constitution in accordance with the Companies Act 2014

Designated Activity Company

  • Companies may re-register as a Designated Activity Company by passing a special resolution in accordance with Part 20 of the Act

Companies Limited By Guarantee

  • The suffix of the company is now “Company Limited By Guarantee”. This can be shortened to “CLG” but the official name is the full spelling
  • Companies that were exempt from the use of a suffix will continue to be exempt and any companies wishing to be exempt must apply to the CRO on a G5 form.
  • All headed paper and company seals should be updated to reflect this new name
  • The company may pass a special resolution to adopt a new constitution in accordance with the Companies Act 2014
  • Charity companies, companies with the sporting body exemption or property management companies applying the MUD Act should adopt a new constitution to comply with the various provisions that are required

Unlimited Companies

  • The suffix of the company is now “Unlimited Company”. This can be shortened to “UC” but the official name is the full spelling
  • All headed paper and company seals should be updated to reflect this new name
  • The company may pass a special resolution to adopt a new constitution in accordance with the Companies Act 2014

Do we have to Adopt a new Constitution?

No! However if the existing Memo & Arts conflicts with a mandatory provision in the Companies Act 2014 then the Act will overrule your Memo & Arts.

If you are considering adopting the sample 1 page constitution in the Act or on the CRO website, please be aware that it might not give you all the required provisions that a standard company may require. For Example: the authority to allot shares is not granted to directors. In some cases it may be better to retain the existing Memo & Arts!

 

Some of the reasons for choosing to adopt a new constitution now:

  • Banks,
  • Due diligence being performed,
  • Shareholders want the company to be brought up to date,
  • The company requires the power of a new provision in the Companies Act 2014 which is not in your existing constitution.

Add this to your 2017 To Do List !!

Most companies are reactive so they will wait until they are required to do so but the correct advice is to adopt a new constitution now and not continue with a Memo & Arts that applies the old Companies Acts 1963 – 2013 as this may not be fit for purpose.

For more information from the CRO Click Here 

If you require assistance in drafting a new constitution, please feel free to contact Conor or Amy  and we will be delighted to help.