Directors’ Duties in Ireland: What the ODCE Guide Says

Directors of Irish companies carry personal legal duties, whether or not they have any formal training in company law. This guide summarises the Office of the Director of Corporate Enforcement (ODCE) quick guide to directors’ duties and powers. The guide in the version we read carries no date or edition number, so check the ODCE website for the current edition. It is general information and not legal advice. For related training for finance teams, see our guide to CPD for accountants in Ireland.

Who counts as a director

The guide says a director is usually appointed by the company’s members to manage and run the company. Almost anyone aged 18 or over can be a director, and no particular qualifications are required. It recognises five types: executive, non-executive, alternate, de facto and shadow directors, all of which have the same legal duties under the Companies Act. Private limited companies must have at least one director, and other companies at least two. Undischarged bankrupts, disqualified persons and restricted persons cannot act as directors.

The main duties

The guide splits duties into two groups. The common law duties include acting in good faith and in the company’s interest, acting honestly and responsibly, following the constitution and the law, avoiding personal gain at the company’s expense and acting with due care, skill and diligence. The statutory duties include disclosing personal interests in company contracts, keeping financial records, preparing financial statements, arranging audits, reporting to members, holding annual general meetings with notice sent at least 21 days ahead, keeping meeting minutes and registers, and filing required documents with the Companies Registration Office.

Why the type of director does not change the duties

A point worth stressing for boards is that the guide treats all five types of director alike. A non-executive director who attends only quarterly board meetings has the same legal duties as an executive director who runs the company day to day. A de facto or shadow director, who may never have been formally appointed, is also covered. The practical lesson is that nobody who acts as a director can safely assume the duties belong to someone else.

Books, records and registers

• Adequate accounting records must be kept, showing payments and accurately identifying assets and liabilities.
• Financial statements must give a true and fair view of the company’s affairs.
• Minutes must be kept of general meetings, board meetings and sub-committee meetings.
• Registers must be kept up to date, including the register of members, the register of directors and company secretary, and the register of directors’ and secretary’s interests.

Disqualification and restriction

A court may disqualify a person from acting as a director for a set period after a finding of fraud or serious misconduct. A restricted person cannot act as a director of a company unless the members have invested a significant amount of capital in it. A court may also disqualify directors of a company struck off for failing to file annual returns where a large debt was left unaddressed.

Personal liability themes

The guide says directors can be penalised for breaching the Companies Act and may be made personally liable for company debts in some cases. Directors may be ordered to pay company debts if they helped create a debt knowing the company could not pay it, which the guide calls reckless trading. Loans of 10% or more of relevant assets to directors or connected persons require a directors’ declaration of solvency, and directors may be personally liable if there was no good reason for that belief. In an insolvent liquidation, directors must prepare a statement of assets and liabilities and cooperate with the liquidator.

Our suggestions

These are our own practical suggestions, not ODCE guidance. Give new directors a short induction on the duties above and a list of the registers the company must keep. Calendar the AGM notice date. Make sure the board minutes record how decisions on loans and major contracts were reached. Encourage directors to take independent professional advice where they are unsure, as the guide itself recommends.

A short annual check can help. The board can ask itself whether the accounting records are up to date, whether all registers have been reviewed, whether the filings due at the Companies Registration Office have been made, and whether any director has a personal interest in a contract that has not been disclosed. A written record of the answers, kept with the minutes, shows that the board considered these points.

What the sources do not say

The guide does not give a date or edition, does not name the Companies Act 2014 in the text we read, and does not describe a compliance statement or a list of responsible persons. It describes itself as a basic guide, not a legal interpretation. We have not read the Act itself line by line.

Frequently asked questions

Who can be a director in Ireland?

Almost anyone aged 18 or over, according to the ODCE guide, with exceptions such as undischarged bankrupts, disqualified persons and restricted persons.

Do all types of director have the same duties?

Yes. The guide says executive, non-executive, alternate, de facto and shadow directors all have the same legal duties.

What is reckless trading?

The guide describes it as helping to create a debt knowing the company could not pay it, which can lead to a court order to pay company debts.

Where should directors get advice?

The guide recommends independent professional advice where directors are unsure of their obligations.

How many directors must a company have?

The guide says private limited companies must have at least one director and other companies at least two.

Next steps

Learnsignal’s offices are off Baggot Street in Dublin, and we offer in-person training from there. For current details, see our CPD pages.