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Company Directors – Duties and Responsibilities

A Summary of Private[1] Company Directors’ Duties

All directors of companies incorporated in the Republic of Ireland have duties and responsibilities imposed on them by the common law (i.e. the general law relating to companies as interpreted by the courts), by way of statute (i.e. by way of specific requirements of the Companies Acts) and through the memorandum and articles of association of the company.

1. Directors’ common law duties can be summarised as follows:

  • Duties of good faith and honesty.
  • Duty to act in the best interests of the company as a whole.
  • Duties to discharge their function with due diligence, skill and care.
  • Duty not to enter into an arrangement with the company where the director has a conflicting interest unless he has shareholder authority to do so.
  • Duty of being liable to account to the company for any profit he makes as a result of his office.
  • Duty of personal performance – unless specifically provided otherwise, directors may not delegate their duties and responsibilities to a third party

2. Directors’ statutory duties[2]can be summarised as follows:

  • Duty to comply with his or her obligations under the Companies Acts and to ensure that the requirements of the Companies Acts are complied with by the company. A director is presumed to have permitted a default by the company unless the director can establish the he or she took all reasonable steps to prevent it or, due to circumstances beyond their control, was unable to do so.
  • Duty to maintain proper books of accounts on a continuous and consistent basis.
  • Duty to prepare annual accounts which give a ‘true and fair’ view of the company’s affairs.
  • Duty to have an annual audit performed at least once a year by an independent auditor unless certain audit exemption criteria is met.
  • Duty to maintain the statutory registers and ensure they are made available to the appropriate parties. These registers include the register of members, directors & secretaries & their interests and minute books.
  • Duty to make prescribed filings with the registrar of companies.
  • Duty to disclose certain personal information such as name, address, date of birth, nationality, occupation, other directorships, interest in shares of the company or a related company, details of services contract with the company and details of an interest in a contract or proposed contract with the company.
  • Duty to convene Annual General Meetings and Extraordinary General Meetings of the company as set out in the Companies Acts.
  • Duty to disclose details regarding transactions between the company or holding company and the directors or persons connected to the directors of the company or holding company. Directors of insolvent companies and companies in liquidation have additional duties as outlined in the Companies Acts.

 

[1] There are additional requirements and considerations for directors of public companies. These requirements are found in the Irish Stock Exchange’s “Sourcebook of Rules and Guidance” (the “Listing Rules”).

[2] There are a great many specific duties and responsibilities imposed on directors by the Companies Acts. Many are only relevant when the company is engaged in particular types of transactions. Only those duties and responsibilities which must be complied with on a regular basis by directors are set out above.