Designated Activity Company Conditions
The Companies Act, 2014 converts companies limited by guarantee with a share capital into Designated Activity Companies (DACs) by default. Their existing memorandum and articles continue, with adjustments to comply with the new Act. DACs can alter their regulations in line with legal provisions. During the transitional period, name changes follow specific guidelines, and after December 1, 2016, new naming provisions apply.
DACs cannot offer shares to the public or trade their securities on markets, but debentures may be traded under certain conditions. Alterations to class rights require shareholder approval, and provisions for variation must be respected. Dissenting shareholders can seek court intervention if class rights are unfairly prejudiced.
DAC directors must adhere to object clause limitations and require a minimum of two directors. Restrictions exist on one person serving as a director for multiple DACs. DACs must hold annual general meetings and file accounts unless exempted for specific reasons like charitable purposes.
Winding up procedures entail member liability for debts, with distinctions based on shareholding or guarantee arrangements. Insurance policies protecting members’ liabilities are upheld in winding-up scenarios.
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