See details of the differences summarised below as well as other points to consider.
LTD versus DAC
Parts 1-14 of the Companies Act 2014 sets down the regulations governing the LTD. Part 16 of the Companies Act 2014 lays down the regulations governing the DAC. The DAC is also subject to the regulations laid down in Parts 1-14 except where dis-applied. Chapter 1 of Part 16 lists the provisions which have been dis-applied.
Choosing whether to opt for a LTD or a DAC will depend on the requirements of a particular business. The LTD is the new simplified private company while the DAC more closely resembles the existing private company.
Some of the Key features of each type are described in the table below;
| LTD | DAC |
| Name must end in LTD | Name must in DAC unless exempt |
| Limited Liability | Limited Liability |
| Can not have an objects clause | Must have objects clause |
| One document constitution | Two document constitution |
| Does not need to have an authorised share capital | Must have an authorised share capital |
| Can be single member | Can be single member |
| One director minimum | Two director minimum |
| Must have company secretary who cannot be the sole director | Must have company secretary who may also be one of the directors |
| Can avail of the audit exemption | Can avail of the audit exemption |
| May dispense with requirement to hold AGM | Only single member DAC may dispense with the requirement to hold AGM |
| Can utilise majority and unanimous written resolutions | Can utilise majority and unanimous written resolutions unless the Constitution states otherwise |
| Cannot be a credit institution | Can be a credit institution |
| Cannot be an insurance company | Can be an insurance company |
| Cannot list debt securities | Can list debt securities |
Key questions to consider when making the choice include:
- Whether the company has been incorporated for a specific purpose and requires its objects?
- Is the company a joint venture company with specific objects?
- If the Company has specific charitable objects and if it is a private company limited by shares then it needs to convert to a DAC.
- If the company has debt securities listed, it must convert to a DAC.
- If the company is an insurance undertaking or a credit institution and it is a private company limited by shares it must convert to a DAC (it cannot be a LTD.)