The Designated Activity Company DAC is a new company type introduced by the new Act in June 2015. Defined as a private company limited by shares with the capacity, including the power, to do only those acts or things set out in its constitution (memorandum of association) or a private company limited by guarantee and having a share capital with the capacity, including the power, to do only those acts or things set out in its constitution. So, a DAC company will have certain regulations in its constitution, detailing certain objects or articles of association unlike the template LTD company constitution.
Only companies registered under the Companies Act 2014, are Designated Activity Companies (DAC) and private guarantee companies incorporated under the previous Companies Acts are deemed to be DACs. Previous incorporated private limited by shares companies can convert under the new Act to a DAC limited by shares.
Features of a DAC company include:
- It has a constitution document which includes a memorandum and articles of association.
- A Designated Activity Company has a memorandum of association in its constitution which states the objects for which the company is incorporated.
- It has limited liability and has a share capital or is limited by guarantee.
- It must have at least two directors.
- It can have up to 149 members.
- It cannot forego the requirement to hold an Annual General Meeting where the company has two or more members.
- It can pass majority written resolutions where the constitution allows.
- It can claim eligibility for audit exemption.
“Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe” must be stated at the end of the company name unless it has been exempted through a separate process.
Certain companies are specificially envisaged as being Designated activity companies. Examples of this include charities, management companies, companies limited by guarantee and companies which are incorporated for a specific purpose for which the shareholders wish the capacity of the company to be clearly defined. Certain companies are obliged to convert to a DAC – an existing private company that has published an offering document or obtained an admission to trading on a regulated market for its debentures. (Debentures means debenture stock, bonds and any other debt instruments of a company or any forms of securitised debt, including depositary receipts in respect of such securities, whether constituting a charge on the assets of the company or not).