Under the new Companies Act 2014 which will become law on the 1st June 2015, Directors have a duty to convert their company to one of the new company types within the 18 month transitional period.
It is important to note that you cannot avail of the new features of the new LTD (for example, a single-director company) until the company has been converted. At the end of the 18 month transitional period, all Private Limited Companies will default to the new LTD automatically. Whilst this default position is provided for, it is important to note that this lack of action could potentially cause legal problems for the company, its directors and also its shareholders. The company will be forced to adopt a default constitution that may not be suitable for its type of business.
One potential legal issue is if certain members and creditors who would prefer to see the company re-registered as a DAC (Designated Activity Company)may challenge the company’s LTD status in the courts claiming prejudice on the basis of the directors’ failure to act appropriately.
Based on this we strongly recommend that Directors take a pro-active approach themselves and convert to the suitable company type as early as possible.
Contact us now on 083-108-6692 or email firstname.lastname@example.org to ensure you have the best advice possible.