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The DAC and the LTD Companies - Key Facts

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The DAC and the LTD CompaniesOur Blog on Irish Corporate Entities provided an overview of the different types of Companies that can be incorporated in Ireland under the Companies Act 2014 ("The Act").

The Act created two new types of private company limited by shares, the Designated Activity Company and Private Company Limited by Shares.

Designated Activity Company (“DAC”)

The DAC bears a significant resemblance to the private company limited by shares which existed under the Companies Acts 1963-2013. The DAC is a private company limited by shares, or a private company limited by guarantee and having a share capital.  

In contrast to the LTD, the DAC is unable to take advantage of much of the simplified company law introduced by the Companies Act 2014.

The constitution of a DAC comprises of a memorandum and articles of association and it has an objects clause in its memorandum of association which limits its activity.

Some types of companies, such as a licensed bank or a company that has debt securities listed or admitted to trading on a market, are unable to register as the LTD company type and must register as a DAC.

In addition, a company which is incorporated for a specific purpose and wishes to restrict the capacity of its venture, may opt for the DAC.

Private Company Limited By Shares (“LTD”)

The new LTD company type is more commonly adopted by companies in Ireland.

The LTD benefits from most of the innovations introduced by the Act intended to simplify their administration.

The LTD company is governed by a single, simplified constitutional document without an objects clause, which eliminates the restrictive nature of company objects.

Although the LTD can have an authorised share capital, it is not a necessary requirement and it may choose to have no authorised share capital.

A “LTD” company can have a minimum of one Director.

The DAC and the LTD Companies Differences

  Designated Activity Company

  Company Limited by Shares

Must end in the suffix Designated Activity Company or Cuideachta Ghníomhaíochta Ainmnithe which can be abbreviated to DAC or CGA.

Must end in the suffix Limited or Teoranta which can be abbreviated to LTD or TEO.

Minimum of 2 directors.

Minimum of 1 director.

Capacity limited to the objects clause in the Memorandum.

No objects clause – full and unlimited capacity.

Secretary may be one of the directors.

Company Secretary cannot be the sole director.

Cannot dispense with holding the AGM, unless a single member company.

May dispense with holding the AGM provided the shareholders sign a written resolution each year resolving all such matters that would have taken place at the AGM.

Must have an authorised share capital.

No requirement for an authorised share capital.

Can list debts & securities.

Cannot list debts or securities.

Can be a credit institution or an insurance undertaking.

Cannot be a credit institution or an insurance undertaking.

It is important to choose the most appropriate company type for your business.

You may benefit from a consultation with a professional services firm specialising in corporate administration.

If you wish to avail of a consultation or have any further questions on how you can enhance the corporate administration of your new company, please do not hesitate to contact us.

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