Originally Published In March 2008
The duties owed by Directors to their company are many and
diverse. The overriding principle of Company Law is that a
Director's duties are owed in the first instance to the company
and not to the individual shareholders or employees. These duties
are derived from various sources including common law, case law,
legislation and the articles of association of the company
concerned. A brief summary is set out below.
It should be noted that no distinction is made in the Companies
Acts 1963- 2006 (the "Companies Acts") between Executive
and Non Executive Directors, in terms of appointment, removal or
duties and responsibilities. This is examined in more detail under
the heading Categories of Directors.
It is important that all directors understand the scope of their
role and responsibilities including their specific duties, length
of tenure (how long they can hold the appointment), and
restriction/disqualification provisions relating to Directors.
Finally, Directors should consider how to minimise the risks
involved during their tenure for example by having a letter of
appointment and ensuring the company provides Directors and
Summary of Director's Duties
Common law duties can be summarized into three
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.
Director's statutory duties are as follows:
Duties as a Company officer under the Companies Acts;
Duty to maintain proper books of account;
Duty to prepare annual accounts;
Duty to have an annual audit performed;
Duty to maintain certain registers and other documents;
Duty to file certain documents with the Registrar of
Duty of disclosure of certain personal information;
Duty to convene general meetings of the Company;
Duties regarding transactions with the Company;
Duties of Directors of companies in liquidation and Directors
of insolvent companies.
In addition to the statutory duties imposed under the Companies
Acts, Directors should also be aware of the provisions of the Irish
Market Abuse (Directive 2003/6/EC) Regulations, 2005 which contain
new insider dealing provisions and the Irish Transparency
(Directive 2004/109/EC) Regulations 2007 which contain
provisions regarding (i) reporting to the issuer and the Irish
Stock Exchange any change in specified % levels of ownership and
(ii) increased reporting obligations on issuers in terms of
frequency and content of reports to be prepared by them.
Categories of Directors
No reference is made in the Companies Acts to
"Executive" or "Non Executive" Directors and,
in fact, this distinction is one which has arisen...