Thank you Tom and Walter for your help! I understand much better now.
My initial aim was to apply a CC Bend it Effect on the layer. The effect had a problem: it cropped some of the layer, especially if it was on the canvas edge. And no matter how I positioned the Bend start and end points it would still crop the image. I needed this to remain as a regular layer and not a comp. One of the suggestions I saw, was to increase the layer’s bounding box. I tried it now with the AI file and it seems to work well with the Bend effect. Are there any disadvantages to keeping the layer as an AI file and not converting it to a local shape? i.e AI would be heavier, or won’t accept certain properties.
Thanks again I really appreciate it!