Director's Duties and Responsibilities

Author:Ms Paula Kelleher
Profession:Dillon Eustace
 
FREE EXCERPT

Originally Published In March 2008IntroductionThe duties owed by Directors to their company are many anddiverse. The overriding principle of Company Law is that aDirector's duties are owed in the first instance to the companyand not to the individual shareholders or employees. These dutiesare derived from various sources including common law, case law,legislation and the articles of association of the companyconcerned. A brief summary is set out below.It should be noted that no distinction is made in the CompaniesActs 1963- 2006 (the "Companies Acts") between Executiveand Non Executive Directors, in terms of appointment, removal orduties and responsibilities. This is examined in more detail underthe heading Categories of Directors.It is important that all directors understand the scope of theirrole and responsibilities including their specific duties, lengthof tenure (how long they can hold the appointment), andrestriction/disqualification provisions relating to Directors.Finally, Directors should consider how to minimise the risksinvolved during their tenure for example by having a letter ofappointment and ensuring the company provides Directors andOfficers insurance.Summary of Director's DutiesCommon law duties can be summarized into threeprinciples: Directors must exercise their powers in good faith and in theinterests of the Company as a whole.Directors are not allowed to make an undisclosed profit fromtheir position as Directors and must account for any profit whichthey secretly derive from their position as a Director.Directors are obliged to carry out their functions with duecare, 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 ofCompanies;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 Directorsof insolvent companies.In addition to the statutory duties imposed under the CompaniesActs, Directors should also be aware of the provisions of the IrishMarket Abuse (Directive 2003/6/EC) Regulations, 2005 which containnew insider dealing provisions and the Irish Transparency(Directive 2004/109/EC) Regulations 2007 which contain...

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