FCS Services is aware that there has been much talk in the last 18 months as to whether private limited companies which were in existence on June 1, 2015, should proactively convert to the new limited (LTD ) or avail of the default conversion.
As we approach the end of the period in which companies can proactively convert (November 30, 2016 ) the following consequences of not converting should be considered.
LTDs will not have a physical constitution (previously Memorandum and Articles of Association ) unless they proactively convert.
Lack of a constitution could lead to missed opportunities, for example, the inability to provide documents required for financing discussions, investor negotiations, and submitting tenders.
Confusion may arise as to what directors have the authority to do as they will have no clear regulations.
Under the Act, directors have a duty to prepare a constitution and deliver it to the Companies Registration Office and its members within the transition period; not doing so will result in directors being in breach of a statutory duty.
The CRO has said it cannot guarantee that conversion applications received towards the end of the transition period will be processed before November 30, and is encouraging companies to file their applications by the end of October, 2016. Company owners/directors must, therefore, consider conversion as soon as possible or run the risk of having no constitutional documents on December 1, 2016.
FCS Services provides a full project managed conversion service. If you would like assistance with your conversion contact (091 ) 704818.