Duties of Company Directors

The intent of this bulletin is to give an overview of the subjects rather than in-depth analysis. Directors are advised to obtain professional advice before proceeding.

Availing of an Audit Exemption click here.

Introduction 

• Every company must have at least two directors.
• The main purpose of the directors is to manage the affairs of the company.
• No formal qualifications are required to become a company director. However certain persons are ineligible to act as company directors, for example auditors of the company, undischarged bankrupts and persons disqualified by a Court from acting as a company director.
• There is no legal distinction between an executive and non-executive director, and their legal responsibilities are the same.
• Directors are usually appointed by members of the company in a general meeting.
• Issues to be considered prior becoming a director
• An individual appointed as a company director should become familiar with the following:
• Director’s statutory duties and obligations
• Director’s common law duties
• Director’s powers
• Penalties for criminal offences
• Penalties for civil offences
• Appointment and removal of directors
• Restriction and disqualification of company directors
  

Duties of Director

• Maintain proper books and records
• Proper books and records must be maintained by all companies. These should:
• Record and explain the transactions of the company.
• Enable the financial position of the company to be determined with reasonable accuracy at any time.
• Enable the company’s directors to ensure that the balance sheet and the profit and loss account comply with the Companies Acts.
• Enable the accounts to be readily and properly audited.
• Prepare annual financial statements

All Companies must prepare annual financial statement which comply with the requirements of the Companies Acts and generally accepted accounting principles. The accounting must show a “true and fair view” of the company’s affairs.
These financial statements generally consist of the following:

• Directors report
• Auditor’s report (unless audit exemption availed of)
• Profit and loss account 
• Balance sheet
• Accounting policies
• Notes to the financial statements
• A cashflow statement may also be required
• The directors are generally required to have these statements audited. This is an independent examination of the accounts and must be conducted by a registered auditor. The annual financial statements may be unaudited where the company is eligible to, and has decided to, avail of the small company audit exemption.
  Maintain certain registers
  Directors must ensure the following are maintained:
• Register of Allotments
• Register of Members
• Register of Transfers
• Register of Directors
• Register of Mortgages and Debentures
• Register of Director’s and Secretarial Holdings
• Register of Directors and Secretarial Interests in Securities
  The registers must be maintained, for inspection, and the company’s registered office.
• Make return to the Companies Registration Office

Certain annual returns- together with the company’s financial statements- must be filed with the Companies Registration Office.
Other returns must be filed where circumstances change within the company- for example a change in registered office, change of director or director’s details etc.
Failure to file on time will lead to fines. The Companies Registration Office can strike a company off the Register of Companies for failure to file its annual return.

• Behave properly

Directors must exercise their powers in good faith and in the interests fo the company as a whole.
Penalties
The Companies Acts provides for penalties for a number of offences.

• Summary offence: €1,900 and/or 12 months imprisonment.
• Indictable offence: €12,700 and/or five years imprisonment.
• Other sanctions are also provided for. A company director can be disqualified or restricted in certain circumstances.

Director’s Compliance Statements
The duties outlined in this bulletin do not cover the proposed Directors Compliance Statements regime.

Source: Institute of Certified Public Accountants in Ireland (CPA), www.cpaireland.ie

• Back to Index