Designated Activity Companies
Overview
A Designated Activity Company (DAC) is a specific corporate structure under Ireland’s Companies Act 2014. Unlike private limited companies (LTDs), which have unrestricted purposes, DACs include an “objects clause,” setting limitations on the activities they may undertake. This structure closely resembles the private limited company type that existed before the Act.
DACs are suitable for situations requiring limited operational scope, such as joint ventures and special purpose vehicles. Banks, insurance companies, and similar institutions must be DACs if they are not PLCs. The name of a DAC must end with “Designated Activity Company,” “DAC,” or their Irish equivalents.
Key Differences with LTDs
While DACs share many regulations with LTDs under the Companies Act, there are distinctions. DACs require an authorized share capital, a Memorandum, and Articles of Association. They must also appoint at least two directors and hold annual general meetings (unless they are a single-member DAC). Additionally, DACs can issue debt securities, unlike LTDs.
Formation and Structure
A DAC may be formed by re-registering a pre-existing company, merging, or dividing companies. It may be limited by shares or by guarantee, with liability extending only to unpaid shares or a member’s guarantee. Membership is capped at 149, excluding employees and former employees.
The DAC constitution consists of a memorandum and articles that detail the company’s name, purpose, share structure (if applicable), and member liability. Amendments to the constitution require a special resolution, with specific provisions for protecting members and debenture holders from unwanted alterations.
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