Comprehensive guide to a Designated Activity Company (DAC)

Designated Activity Company – DAC

A Designated Activity Company (DAC) is determined in Part 16 of the Companies Act 2014 and defined as the following:

• 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 which are not specified in the template LTD company constitution.

Features of the DAC include:

• Designated Activity Companies have a memorandum in their constitutions that states the objects for which the company is incorporated.
• It has a constitution document that includes a memorandum and articles of association.
• It has limited liability and has a share capital or is a private company limited by guarantee.
• It must have at least two directors. All directors must be over eighteen.
• It can pass majority written resolutions but cannot dispense with the need to hold an AGM where there are 2 or more members.
• The name of the company must end in “Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe” unless exempted.
• It can claim eligibility for audit exemption and dormant company audit exemption.
• DAC limited by shares has a constitution in the format set out in Schedule 7 to the Companies Act 2014. DAC limited by guarantee has a constitution in the format set out in Schedule 8 to the Companies Act 2014.

Certain companies are specifically envisaged as being DACs. Examples 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.

All Designated activity companies’ names shall end with ‘Designated Activity Company’ or “Cuideachta Gníomhnaíochta Ainmnithe”. There is an exception to this as there is a power to dispense with DAC in the name of charitable and other companies under section 971. This exemption refers to not-for-profit companies only.

The Difference between DAC and LTD company 

LTD Company Model

• It may have just one director (but it must have a separate secretary if it has only one director).
• It can have between 1 and 149 members.
• It does not need to hold an AGM.
• It has a one-document constitution.
• It does not have an objects clause because it has unlimited capacity to carry on any legal business, subject to any restrictions in other legislation.
• It can claim eligibility for audit exemption (and dormant company audit exemption).
• It has limited liability and has a share capital.
• It can pass the majority of written resolutions (special and ordinary).
• The name must end in “Limited” or its Irish/Gaelic translation “Teoranta”
  
  

Designated Activity Company limited by shares

• It must have at least two directors.
• It can have between 1 and 149 members.
• It needs to hold an AGM with 2 or more members.
• It has a constitution document that includes a memorandum and articles of association.
• It has a memorandum in its constitution that states the objects for which the company is incorporated.
• It can claim eligibility for audit exemption and dormant company audit exemption.
• It has limited liability and has a share capital.
• It can pass majority written resolutions unless the constitution states otherwise.
• The name must end in “Designated Activity Company” or its Irish/Gaelic translation “Cuideachta Ghníomhaíochta Ainmnithe” unless exempted.
  
  

If you are interested in setting up a DAC or converting your existing company to a DAC, you can contact us using the form below.