What is a Designated Activity Company?

By: Patrick
21 Jul, 2022

All that You Need to Know About Designated Activity Company

A Designated Activity Company (DAC) is a new type of private company introduced by the Companies Act, 2014 and the provisions came into effect on June 1, 2015. In essence, its structure closely resembles the private companies limited by shares (LTD) but with a main distinction that its constitution details certain objectives, unlike the template constitution of an LTD. So, in contrast to an LTD company which has the freedom to carry out different business activities, a DAC has powers to operate in accordance with the stated objectives only.

Lets Have a Look at the Features of a Designated Activity Company

DAC structure of company suits the business entities that are either private companies limited by shares or a private company limited by guarantee and having a share capital. There are not many companies limited by guarantee registered in Ireland so it is expected that most of the companies falling under the DAC type will be the companies limited by shares.

Here we detail some key features of a Designated Activity Company:

  • The constitution of a DAC includes the memorandum and articles of association and states the specific objectives for which the company has been formed;
  • It must have at least two directors and up to 149 shareholders;
  • It can avail the power to pass majority and unanimous resolutions of the shareholders instead of holding a physical meeting. However, it must hold an Annual General Meeting where the company has two or more shareholders;
  • The name of the company should end with the words ‘Designated Activity Company’;
  • It has the advantage of availing exemption from having the accounts audited.

So Which Companies Are Expected to Adopt a DAC Structure?

  • Companies that are formed as a company limited by guarantee but wish to have a share capital;
  • All the companies that were registered as private companies limited by shares at the time of introduction of the law relating to DAC, unless they have re-registered as another type of company;
  • The companies generally expected to fall under this category include charities, companies limited by guarantee, management companies, companies formed for a particular purpose and the members want to define its capacity clearly;
  • Limited company that has the permission to trade securities and debts in a regulated market, such as a credit institution or insurance undertaking, has to register as a DAC.

Filing Obligations for a DAC

The requirements of the law relating to financial statements, annual return and audit are not applicable to the DAC that is a credit or insurance company. Also, where a DAC has been established for a charitable purpose, it is not required to file financial statements with the annual return.

Have any questions about whether the provisions for DAC apply to your company? Seek relevant expert advice from our team of professionals at Fusion Formations. We are happy to assist you with forming a DAC or convert your existing company to one, give us a call today.

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