Responsibilities of Directors in an Irish Company

Responsibilities of Directors in an Irish Company

September 3, 2019

What is a Company Director?

The Companies Act 2014 (the “Act”) provides that an Irish Limited (“LTD”) type company should have at least one [1] company director1*, who is a natural person, i.e. individual, who is a resident within an EEA state2*. An individual under the age of 18 may not be a director. Corporate directors are not permitted3*.

Company directors are usually appointed by a company’s existing board of directors or its shareholders (members) in general meeting.

The term “Director” is defined in the Act, as including “any person occupying the position of director by whatever name called”4*.

The main legislative provisions regarding Company Directors are set out under Part 4 in sections 128 to 167 and under Part 5 in sections 219 to 255 of the Act.

Qualifications Required to Become a Company Director

There is no formal qualification required to become a Company Director. The Act requires that the LTD type company is to have at least one director. However, all other company types are legally required to have at least two directors. In most instances, a director is not required to be a shareholder/member of the company unless the Corporate Constitution requires it.

business meeting


A company must ensure that all new Directors are eligible to hold the position of Director. Certain parties and persons are ineligible to hold office as a Company Director, such as:

  • a body corporate or an unincorporated body of persons; i.e another company
  • a person who is under 18 years old
  • an undischarged bankrupt
  • the statutory auditor of the company
  • any person disqualified from acting as a Director by the Courts
  • any person already holding 25 other directorships (group companies will combined, only count as 1 directorship)

What are Company Directors’ Duties and Obligations?

Company Directors’ responsibilities are wide and diverse. Their duties arise primarily from two sources: Statute (Acts of the Oireachtas and other legislation e.g. EU Regulations) and common law.

When an individual is appointed as a Director of an Irish company, they will sign a statement to the effect that “I acknowledge that, as a director, I have legal duties and obligations imposed by the Companies Act, other statutes and at common law”. It is the duty of each Director of a company to ensure that the Companies Act is complied with by the company.

As the vast majority of Irish companies are private companies, there are a significant number of companies of which the Directors and shareholders are the same people. In these cases, the distinction between the company’s property and the Director/shareholder’s own property can be a matter of confusion with the result that the directors treat company property as though it was their own.

A Company Director has a “fiduciary position” with the company of which they are an officer. The Director is known as a “fiduciary”. A fiduciary is required to act in a manner which is legally becoming of their office and which places the interests of the company ahead of their own. Director’s duties are usually owed in the first instance to the company and not to the shareholders, creditors or employees of the company.

Fiduciary Duties of a Director

The Act provides5* that a company director should:

1. act in good faith in what the Director considers to be in the [best] interest(s) of the company;
2. act honestly and responsibly in relation to the conduct of the affairs of the company;
3. act in accordance with the company’s constitution and exercise his or her powers only for the purposes allowed by law;
4. not benefit from or use the company’s property, information or opportunities for his or her own or anyone else’s benefit unless the company’s constitution permits it or a suitably worded members resolution is passed in a general meeting;
5. not agree to restrict the Director’s power to exercise an independent judgment unless this is expressly permitted by the company’s constitution or a resolution is passed in a general meeting;
6. avoid any conflict between the Director’s duties to the company and the Director’s other interests unless the Director is released from his or her duty to the company in relation to the matter concerned;
7. exercise the care, skill and diligence which would be reasonably expected of a person in the same position with similar knowledge and experience as a Director; and
8. have regard to the interests of the members.

Business woman signing contract document

A Company Director who acts in breach of his or her fiduciary duties and benefits or profits from the company’s property, information or opportunities for his or her own or anyone else’s benefit will be liable to account to the company for any gain and/or indemnify the company for any loss or damage resulting from that breach.

The fiduciary duties of a Director are based on certain common law rules and equitable principles as they apply in relation to a Director and can be enforced through the courts.

Directors’ common law duties can be summarised into three principles:

These are that:

• Directors must exercise their powers in good faith and in the interests of the company as a whole;
• Directors are not allowed to make an undisclosed profit from their position as directors and must account for any profit which they secretly derive from their position as a director;
• Directors are obliged to carry out their functions with due care, skill and diligence.

Directors’ Statutory Duties

Directors’ statutory duties arise from the Act and related legislation, for example, EU Regulations etc. The principal duties imposed by the Act are to:

• ensure that the Companies Act is complied with by the company (S223);
• keep Adequate Accounting Records (S281);
• prepare Financial Statements (S290-295);
• have the Statutory Financial Statements audited (where applicable) (S333);
• maintain certain Registers and other documents;
• file certain documents with the Registrar of Companies;
• disclose certain information such as interest in shares (S261-264);
• convene an Annual General Meeting (as applicable) (S175).

If you would like further information in relation to the role and responsibilities of a Director within a company, please contact our team who will be in a position to advise you further.

Richard Windrum
Corporate Compliance Director

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1Section 128 of the Act
2“EEA state” means a state, including the State, which is a contracting party to the
EEA Agreement, being the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;
3Section 130 of the Act
4Section 2 of the Act
5Section 228 of the Act

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