Companies Act 2014 'won't cost business' - not true

Yesterday morning’s national newspapers carry an ad from the Companies Registration Office (CRO) announcing the commencement of the new Companies Act 2014 from the 1st June 2015.

The ad states that it will ‘simplify company law’, ’ensure good governance’ and ‘reduce administrative burden on business’. While this is the case in general for the day to day running of a Company under the new Act the conversion from Companies Acts 1963- 2013 to the new Acts will be burdensome and costly to Companies.

ICSA welcomes the Act as it does consolidate and simplify company law, but for existing companies it should be pointed out that there will be a cost when the Act is commenced. Companies Limited by Guarantee and Unlimited Companies will be obliged to adopt a name change as will private limited companies which convert to a DAC. This will trigger a requirement to complete the following:

• A company will have to prepare and file a new constitution with the CRO – specialist advice may need to be sourced to complete – a cost.
• A company will have to amend all company stationery and website – a cost.
• A company will have to advise third parties (bank, creditors, Revenue, etc.) – a time cost
• A company will have to order new company seal – a cost
• Most charities in Ireland are companies limited by guarantee so the obligation to change their name – a cost

Because of the costs associated with re-registering as an LTD, many SMEs may opt for the default position and convert to an LTD after the end of the transition period. This will result in the publicly filed constitution not matching the company’s actual constitution.

ICSA would also suggest that the Act in its own right cannot ‘ensure good governance’ and that, ethical behaviour, enforcement and the oversight by, amongst others, company secretaries will help achieve that.