What is the difference between a LTD and DAC Company in Ireland?

designated activity company Ireland

By Shona Hastings, 12th July 2021

What is a DAC Company in Ireland? An Irish Designated Activity Company (DAC) is a type of limited company that outlines and defines its specific business activities within its constitution. A DAC company may be incorporated for a specific purpose such as a charity or a management company where the shareholders require the capacity of the company to be clearly defined.

This company type was introduced by the New Companies Act 2014, on 1st June 2015. Under this New Companies Act 2014, all private limited companies are required to register as either an LTD or DAC.

LTD vs DAC

Both LTD and DAC companies in Ireland are required to have at least 1 shareholder but can have up to 149 shareholders. Both company types are limited by shares, meaning that the shareholders have limited liability (to the amount of any unpaid share capital they hold).

Unlike a Private Company Limited by Shares (LTD) where there is limited shareholder control and loss of some functionality due to its simplistic company structure; registering a Designated Activity Company in Ireland allows the shareholder(s) full control and functionality. However, like a LTD, it is only possible for a Designated Activity Company in Ireland to change its share capital by holding a meeting with all shareholders and filing documents with the Companies Registration Office (CRO). DAC companies are unique in that they have an objects clause in the Constitution (Memorandum and Articles of Association) which underpins their area of business, this means the company can only do what is defined in its Constitution. In contrast, a LTD company is free to operate within a variety of business functions.

Key differences between a DAC and LTD Company

DAC Company Ireland  LTD Company Ireland
  • Minimum of two directors is required.
  • One director required.
  • Director can also be listed as a company secretary.
 

  • Director cannot be listed as company secretary – separate person is required.
  • Requires an object clause.
  • No objects clause required – can trade in any type of business that is legal.
  • AGM is a requirement.

 

  • AGMs are not a requirement and can be replaced by agreed and signed annual resolutions.
  • Can list debts and securities meaning credit and insurance institutions must convert to a DAC company in Ireland.
  • Cannot list debt and securities.
  • Must list ‘Designated Activity Company’ or ‘Cuideachta Ghníomhaíochta Ainmithe’ at the end of the company name unless an exemption has been authorized.
  • Name must end in ‘Limited’ or ‘Teoranta’.

Companies that are likely to apply the structure of a DAC Company in Ireland

  1. Companies Limited by Guarantee that wish to have a share capital.
  2. Companies incorporated to complete a specific or sole purpose which for legal reasons wish to have the company powers restricted (e.g., a Joint Venture)
  3. Any existing Limited Companies that fall under regulation to trade in specific markets (e.g., Financial Regulations) & companies that have published an offering document and list securities.
  4. Trustee Companies and any Special Purpose Vehicle (SPV) Companies.
  5. Any companies with shareholders who have a strong preference to be incorporated as a DAC.

Should you have any queries in relation to registering a Designated Activity Company in Ireland or a LTD Company, or any of the other company types available, please do not hesitate to contact us or call +353 1 6461625, one of our formation experts would be happy to assist you.

 

Disclaimer This article is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Company Bureau for any action taken or not taken in reliance on the information set out in this article. Professional or legal advice should be obtained before taking or refraining from any action as a result of this article. Any and all information is subject to change. 

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