Aviation Update: Aircraft Owning Entities - Unintended Consequences of Companies Act 2014
26 August 2016
The Companies Act 2014 (Ireland), which became effective on 1 June 2015, provides for incorporation of private companies limited by shares in the following two forms:
- LTD – company limited by shares; and
- DAC – a designated activity company.
For companies incorporated prior to the effective date of the 2014 Act, conversion to DAC may be required or recommended for JV entities, structured finance vehicles, companies engaged solely in lending or quasi lending activities including credit sales or finance lease and/or group treasury companies; or DAC may be chosen as the preferred company type as part of transaction structure and negotiations.
In secured asset finance transactions involving Irish companies which are now converting or will convert to DACs, we recommend a review of existing Aircraft registration requirements and the security filings in all applicable jurisdictions. The transition period for the Act 2014 is coming to an end, and the decision and resolutions to convert to DAC are required to be made prior to 31 August. One of the consequences of conversion to a DAC is that the company name will change. The unintended consequence of conversion is that it may impact on filings in registries where the registration contains the full legal name of the Irish company who acted as a borrower/lessor/owner and certain other airline obligations.
Lawyers, accountants and other service providers have circulated information on the conversion process. Click here to view our most recent Governance & Compliance Update, Companies Act 2014 – A Bit to Do. Suffice to say that the conversion involves certain amendments to the Constitution of the company and conversion becomes effective on issuance of a certificate from the Registrar of Companies in Ireland. Click here for a sample Certificate of Incorporation on Conversion to a DAC or download on the right. The certificate is issued in digital form.
Some jurisdictions may require a certified copy of the Certificate of Incorporation on Conversion and for the certificate to be legalised (notarised and apostilled) to verify the name change for the aviation authority relevant for the Aircraft registration. In some instances additional information may be required. To date, only one state of registration has requested an officer’s certificate to support and verify the change. Click here to download a sample Officers Certificate or download on the right.
If you have any queries in relation to conversion and / or require assistance to verify conversion in the Aircraft State of Registration or to record any amendments or alterations to other filings, please contact Christine O'Donovan, Head of Financial Services, or another member of our Aviation, Asset Finance & Leasing team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.