We finally have clarity on what the definition of a designated unlimited company and what private unlimited companies (“ULC”) will have to file financial statements with the Companies Registration Office. The new definition is bad news for many unlimited companies that were previously exempt from filing financial statements.
The new definition applies to financial years commencing on or after 1st January 2017. The extended exemption to 1st of January 2022 only applies to an ULC holding company that has an undertaking that is limited (Sec 78 (2)).
The definition of a designated unlimited company makes it more difficult for a ULC to avoid filing financial statements and all unlimited companies should examine the definition and determine whether the company will now have to file financial statements with the CRO.
Many ULC’s have been exempt from filing financial statements up to now and the new requirement to file may have a significant impact on the company and what financial information is made publicly available. Companies should act quickly as most companies will have to file next year and appropriate accounting, tax and company law advice should be obtained.
How Can CLS Help
If you are considering converting to an unlimited company we can assist in advising on the conversion process and the filing requirements for the unlimited company and for more information contact one of our Co Sec Team on 059 9186776 or cosec@clscs.ie
Definition
Sec 78 of the Companies (Accounting) Act 2017 expands the definition of a designated unlimited company as set out in Sec 1274 of Companies Act 2014:-
“1274.(1)Other than in the case of a designated ULC, sections 347 and 348 (which require documents to be annexed to annual returns) shall not apply to an ULC.
(2) In this section ‘designated ULC’ means—
(a) an ULC that at any time during the relevant financial year—
(i) has been a subsidiary undertaking of an undertaking which was at that time limited,
(ii) has had rights exercisable in respect of it by or on behalf of 2 or more undertakings which were at that time limited, being rights which if exercisable by one of the undertakings would have made the ULC a subsidiary undertaking of it, or
(iii) has been a holding company of an undertaking which was at that time limited,
(b) an ULC which is a credit institution or an insurance undertaking or the holding company of a credit institution or an insurance undertaking,
(c) an ULC, all of the members of which are—
(i) companies limited by shares or by guarantee,
(ii) unlimited companies, each of whose members is a limited company,
(iii) partnerships which are not limited partnerships, each of whose members is a limited company,
(iv) limited partnerships, each of whose general partners (within the meaning of the Limited Partnerships Act 1907) is a limited company, or
(v) any combination of the types of bodies referred to in the preceding subparagraphs of this paragraph and paragraph (a),
or
(d) an ULC, the direct or indirect members of which comprise any combination of ULCs and bodies referred to in paragraph (c) such that the ultimate beneficial owners enjoy the protection of limited liability.
(3) References in subsection (2) to a limited company, an unlimited company, a partnership or a limited partnership shall include references to a body which is not governed by the law of the State but which is comparable to such a limited company, an unlimited company, a partnership or a limited partnership, as may be appropriate.
(4) References in subsection (2)(a) to an undertaking being limited at a particular time are references to an undertaking (under whatever law established), the liability of whose members at that time is limited.
(5) In this section—
‘general partner’ has the same meaning as it has in the Limited Partnerships Act 1907;
‘limited partnership’ means a partnership to which the Limited
Partnerships Act 1907 applies;
‘partnership’ has the same meaning as it has in the Partnership Act 1890.”.
(2) Subsection (1), in so far as it relates to subsection (2)(a)(iii) of section 1274 of the Principal Act, shall come into operation on 1 January 2022 for any financial year which commences on or after that date.
Please Note:
Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.
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