The Companies Act 2014 will commence on 1 June 2015. It heralds the introduction of two new private company types, the Designated Activity Company (“DAC”) and the Private Company Limited by Shares (“LTD”). Existing private limited companies, which account for over 90% of companies on the Irish register, must choose to become either a DAC or LTD company.

Although a default position exists, deferring the decision to become either a DAC or LTD company is not recommended. This article advises of the benefits to be gained from proactively making a decision in early course.

The main features of the new forms of companies are:

Company Name

Company Limited by Shares

Designated Activity Company

Documentation & Capacity

One-document constitution provides full capacity

Constitution document includes a memorandum & articles of association which establishes objects and capacity


Majority written resolutions

Majority written resolutions


Sole Director possible

Minimum of 2 Directors

Option to dispense with AGMs                      


No, unless it is a single member company

Number of Members

Between 1 – 149

Between 1 – 149

Capital & Liability

Shares only; Limited Liability

Shares and Guarantee; Limited Liability


‘Limited’ or ‘Teoranta’

‘Designated Activity Company’ or ‘“Cuideachta Ghníomhaíochta Ainmnithe’



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Dangers Of Not Making A Decision

An eighteen month window for conversion has been provided, commencing on 1 June 2015, during which existing private limited companies can elect to become either a DAC or a new form LTD. On the expiration of this period, companies which have not taken steps to convert will be automatically  converted to a LTD form company.

This would clearly be an unfavourable result for a company which would be better suited to a DAC form and such inactivity could leave the company vulnerable to litigation by creditors and members.

In addition, where the intention is for the company to become a LTD, the directors are obliged pursuant to section 60 of the Companies Act 2014 to prepare and submit new constitutional documents to the shareholders and registrar. This must be completed prior to the expiration of the transition period and failure to do so is a breach of the Act.

Advantages Of Making A Decision

The new type LTD company has a number of beneficial characteristics and capacities. The sooner a company converts to a LTD, the sooner it may take advantage of these innovations intended to simplify its administration.

Chief amongst these benefits is the abolition of the doctrine of ultra vires. Previously, the Memorandum and Articles of Association determined the purpose of the company. Anything outside those stated purposes was not within the capacity of the company, complicating commercial contracts and corporate borrowing. Under the new Companies Act, a LTD will have full and unlimited capacity to carry on and undertake any business. This innovation is expected to simplify corporate borrowing as banks will require less investigation into the capacity of the company to borrow money and provide security.

Existing companies must have at least two directors but with the new Act comes the possibility of a sole Director for a LTD. According to s.129 (6) of the Companies Act 2014, where there is a sole director, the role of Company Secretary must be held by a different person.

Annual General Meetings of a LTD can also be dispensed with, considerably easing the compliance and administrative burden. All of the above beneficial changes are enjoyed by the LTD form of company only. For the duration of the 18 month transitional period, or until a company opts to convert to LTD form, it will be governed by the law applying to DACs.

Early Decision-Makers

Many businesses will convert as soon as possible in order to avail of the new, streamlined legislation. Companies should seek the advice of recognised company secretarial advisors such as Corplaw to ensure they make the right decision for their particular business.



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