As part of the New Companies Act 2014, which came into force on the 1st June 2015, a new company type, the Designated Activity Company (DAC) has been created. This limited company type is applicable to those companies who wish to outline and define a specific type of business in their Constitution, rather than have unlimited powers as per the LTD company type. Consequently, the doctrine of ‘Ultra Vires’ still applies. DAC ‘s retain Memorandum & Articles of Association as part of an overall Constitution document.
It is important to note that Part 16 of the Companies Act 2014 governs Designated Activity Companies, however, most of parts 1 to 15 of the Act also apply with certain provisions disapplied, modified or supplemented by part 16.
Key aspects of a DAC
The principal points applicable to this company type which make it different from the LTD company are as follows:
- This company can be Limited Liability with a Share Capital or a Company Limited by Guarantee.
- Must have a minimum of two directors.
- Unlike the New Limited Company Type, it cannot dispense with the requirements to hold an AGM unless it only has one shareholder/member
- Retains a constitution document that contains a Memorandum & Articles of Association.
- Can file and obtain audit exemption and dormant company audit exemption
- Each new and converted DAC type company must have ‘Designated Activity Company’ or the Irish equivalent ‘Cuideachta Ghníomhaíochta Ainmnithe’ to replace what would currently be limited at the end of the company name.
- Must have an Authorised Share Capital
Companies that are likely to avail of the DAC format:
- Companies Incorporated to complete a specific or sole purpose that for legal reasons wish to have the company powers restrictions (e.g. a Joint Venture)
- Existing Limited Companies that fall under the regulation to trade in specified markets (e.g Financial Regulation) & Companies that have published an offering document and list securities.
- Companies that wish to be Limited by Guarantee whilst having a share capital
- Utilised by certain trustee companies and Special Purpose Vehicle (SPV) Companies
- Companies with shareholders that have a strong preference to be incorporated as a DAC
Should you have questions about the requirements of a Designated Activity Company (DAC), or any of the other company types available, please don’t hesitate to contact the experts at Company Bureau on +353 1 6461625 or email formations firstname.lastname@example.org.