The Act give’s existing private limited liability companies the option to convert under the Act to a company limited by shares (LTD) or a designated activity company (DAC).
The Central Bank of Ireland (“CBI”) has confirmed it does not require UCITS management companies, Alternative Investment Fund (“AIF”) managers, AIF management companies, fund administrators, depositaries and investment firms to convert to designated activity companies (“DACs”).
It is the Central Bank of Ireland’s view that the corporate structure chosen is a matter for each individual entity. It also makes the point that regulated financial firms must always comply with all regulatory requirements applicable to them no matter which corporate structure they are.
The deadline for converting to a DAC was the 1st of September 2016.
Approaching deadline to convert to a LTD is 30th of November 2016.
Why become an LTD?
The decision will be based on whether the company wants to avail of the provisions in the Act which apply if a company is an LTD. It’s important to note that there are certain circumstances where an existing private limited company cannot be an LTD and must convert to a DAC (see below*).
The features of an LTD are:
Action to be taken to become an LTD
During the 18 month transition, the period from the June 2015 to November 2016, a company can choose to become an LTD by:
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Option 1 is a better course of action, as Option 2 limits the changes that can be made to the constitution by the directors.
After Conversion
The CRO will issue a new Certificate which reflects that the company is a company limited by shares and the name will end with the word Limited or Ltd or its Irish equivalent.
What happens when no action is taken by an existing Private Limited Company limited by shares (LTD) before the end of the transition period in November 2016?
During the transition period if a company does not opt in and take action, the law which applies to a DAC will be the applicable law.
If the directors, after the transition period, have not acted the company will be automatically deemed to be a limited company with restricted M&A after 1 December 2016.
Consequences
The company will have a constitution comprising of its existing Memorandum & Articles of Association (excluding its objects clause and any clause prohibiting alteration to its M&A).
*NOTE: Under the Act certain entities must convert to a DAC: licensed bank, credit institution, insurance company, companies that have listed debt securities, special purpose vehicles who have listed debt securities, or intend to apply to list debt securities or where a company is requested to convert by its members or funding institution. An LTD cannot list debt or equity securities. It is important to note that if a special purpose vehicle with listed debt securities is automatically converted to an LTD on 30 November 2016, it will be in breach of the Act.
Fund Documentation
If fund documentation is required to be updated as a result of the conversion to a LTD they should be filed with the Central Bank of Ireland.
Question: What about an Irish UCTIS and AIF established as a variable capital company ("VVC") or as an ICAV ?