The milestone Companies Act 2014, which consolidates and updates existing company law, came into force on 1 June 2015. A significant feature of the Act is that it provides for two new forms of private company limited by shares, a “LTD” company and a “DAC” company.
A LTD company is a new simplified form of a private company limited by shares. A LTD company has a single constitutional document and unlimited legal capacity. A DAC company is similar to the type of private limited company that pre-dated the 2014 Act. A DAC company will continue to have a memorandum and articles of association, with an objects clause limiting its legal capacity.
Currently most corporate (ie company) pension trustees are constituted under the “old” form of private company limited by shares. This will cease to exist after a transitional period of 18 months from the commencement of the 2014 Act. Existing private companies limited by shares (which will include most corporate trustees) have three options:
- Convert to a LTD;
- Convert to a DAC; or
- Do nothing and be deemed to be a DAC during the transitional period and a LTD thereafter.
Corporate trustees are recommended to take action and not merely to rely on the default provision in the Act. We can help on any queries in relation to the 2014 Act. In particular, we can:
- Advise on conversion options for existing private companies limited by shares;
- Review existing memorandum and articles of association;
- Provide new constitutional documentation where required; and
- Draft the necessary shareholder resolutions to convert to a new company type and deal with Companies Registration Office filings.
Contributed by Michael Wolfe and Michael Keane