Share Capital & Corporate Governance

Part 16 – Designated Activity Companies

There are six sections that relate to DACs and share capital. The main things to note are:

1. An existing guarantee company that has a share capital will continue in existence and be deemed to be a DAC limited by shares from the commencement of the Act (Section 979).

2. The limitation on offers of securities to the public, which is set out in Section 68 of the Act, also applies to DACs (Section 981).

3. Section 982 deals with when rights attaching to special classes of shares in a DAC can be varied.

4. The provisions set out in Section 114 of the Act, which relate to the acquisition and holding by a subsidiary of shares in its holding company, also apply to DACs which are limited by guarantee (Section 983).

The Act sets out five corporate governance provisions for DACs:

1. A DAC must have at least two directors.

2. A person should not be a director of more than 25 DACs (but see Section 142 for qualifications).

3. Only a person whose name is on the register of members will be deemed to be a member of a DAC.

4. DACs must hold AGMs. The provisions in the Act – see Section 175(3) and (4) – do not apply to DACs.

5. DACs can use the unanimous written resolution procedure set out in Section 193. They can also use the majority written resolution procedure set out in Section 194.