Key impacts for investment companies and fund managers
The Companies Act 2014 ("the Act") came into effect on 1 June 2015. It consolidates the existing Companies Acts, simplifies Company Law and introduces some welcome reforms. The Act affects all Irish companies, including fund service providers such as administrators and depositaries, managers of both UCITS and AIFs, as well as investment companies.
All existing private companies will have to decide whether to become a company limited by shares (LTD), a designated activity company (DAC) or another type of company. Companies regulated by the Central Bank of Ireland ('CBI') however, will likely be required to re-register as a DAC.
We anticipate that the CBI will publish guidance on this matter.
Previously Ireland’s investment fund companies were PLCs with variable capital, governed by Part XIII of the Companies Act 1990. This regime has been replaced and repealed by Part 24 of the Act, which is largely a restatement of the existing law. In addition to Part 24, the following sections of the Companies Act apply to investment companies:
- Parts 1-14 which apply to limited companies, unless disapplied by either Part 24 dealing with investment companies or Part 17 which governs PLCs.
- Part 17 governs PLCs and therefore encapsulates investment companies also, save for certain exceptions such as the definition of ‘authorised minimum’ and ‘authorised share capital’.
- Certain provision of the UCITS Regulations.
- Schedule 16 provides a very brief template memorandum and articles of association which must be supplemented with operational provisions.
Any corporate fund managers currently registered as Private Limited Companies will be required to elect to become either a Company Limited by shares (“LTD” or a Designated Activity Company (“DAC” during the 18 month transition period. If no action is taken, the fund manager will at the end of the transition period automatically convert by default to LTD. The LTD is a new model company which will replace the previous private company limited by shares. Although it is largely similar to the existing vehicle, it can have one director and unlimited legal capacity. However the CBI may require regulated entities to become DACs. In this case, care will need to be taken to comply with the deadline.
The Act has beenin force since 1 June 2015, with a transitional period of 18 months for certain aspects.