Clarity Around Charity

Article by Salvador Nash

The Christmas break gave me a chance to have another look at an aspect of the Companies Act 2014 that I find intriguing as I'm finding it hard to understand the thinking behind it.

The Act provides that a Designated Activity Company (DAC) and a Company Limited by Guarantee (CLG) can be exempt from the requirement to include the company type in its name. This exemption to both DACs and CLGs is available where the activities are in connection with the promotion of commerce, art, science, education, religion or charity and there are restrictions on the distribution of their profits.

These are referred to as charitable activities. So if the Revenue Commissioners agree that a company is carrying on charitable activities the Companies Act 2014 provides clarity on the types of (charitable) companies that can be exempt from both the requirement to include the company type in their name and to their obligation under Section 49 of the Act that relates to its name, etc.

All other companies, with a possible exemption for an unlimited company, must include the company type in its name. So this made me wonder why, in respect to your 'ordinary' unlimited companies, that the Minister for Jobs, Enterprises and Innovation would provide an exemption to an unlimited company from the requirement to include the company type in its name?

One of the principles behind the Act was to provide clarity on company types. If a company is going to be involved in charitable activities, the most common form of company used is a CLG, not least because it was a requirement of the Revenue Commissioners. So should a CLG or a...