Knowledge

Designated Activity Company (DAC)

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The Designated Activity Company (DAC) is one of the most contemporary company types in Ireland. DACs are limited companies in nature and are particularly appropriate for entities who want to set up a unique business model, built upon their specific preferences, unlike in Private Companies Limited by Shares (LTD) whereby the shareholders have unlimited powers. Such entities usually have a detailed description of a clear source of revenue for the business stipulated in their constitution, instead of giving unlimited trading authority, as is the case with most limited companies. As a result, the creed of ‘Ultra Vires’ continues to hold as true in these business entities. DACs keep their Memorandum and Articles of Association as constituent elements of the complete constitution. 
 
A pertinent feature to be aware of is that DACs formation and activities are regulated and controlled by Part 16 of the Companies Act of 2014. However, you will find that some stipulations stated in part 1 to 15 of the Act are also currently relevant in the formation of a DAC.  
 
Key features of a Designated Activity Company
We have listed the most significant elements of a Designated Activity Company in the following description:
 

  • This type of entity can either have limited liability or alternatively exist as a Company Limited by Guarantee (CLG)
  • It is requisite to have not less than two directors
  • At least one Annual General Meeting per year is required
  • DACs should keep a copy of the constitutional documentation consisting of a Memorandum and Articles of Association
  • Such a company type can apply for and potentially get an exception from undergoing audits especially the dormant audit if it meets the small company size criteria
  • A new DAC company name is obliged to possess a suffix, “Designated Activity Company” or it's corresponding equal in Irish, “Cuideachta Ghníomhaíochta Ainmnithe”
  • It is obligatory for a DAC to have objectively verified share capital

 
Companies that are likely to benefit from implementing a DAC structure:

  • Entities incorporated to satisfy a single or a specific set of roles that for legislative concerns necessitate the need to limit the company powers 
  • Limited companies currently in operation whose business activities in specific markets (e.g Financial Regulation) are monitored and controlled
  • Business entities that have published an offering document and list securities.
  • Firms that need to be certified as Limited by Guarantee, while having a notable share capital
  • Trustee Companies as well as Special Purpose Vehicle (SPV) firms
  • Entities whose majority shareholders are immensely supportive of being incorporated into a DAC. 

 
For any queries on the Designated Activity Company (DAC), or on any assistance concerning company registration processes, you can contact our invaluable experts at SIGTAX.

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