Under the Companies Acts, a Company is obliged to have two Directors. While the Company is owned by the Shareholders, the Directors are appointed by the members to oversee the corporate governance. Every Company is required to have a minimum of two, and certain types of companies are required to have more. The term “Directors” is defined in the Companies Act as “including any person occupying the position of Director, by whatever name called.” The 1990 Act introduced the concept of Shadow Directors, which are people who act as Directors, although not formally appointed as such.
The Articles of Association usually provide that the members powers of management are delegated to the Board of Directors or to individual Directors and their functions are set out in that document. It is a requirement of the Companies Acts that every person appointed as a Director become familiar with their legal responsibilities and obligations and act in accordance with those.
There are no formal requirements to become a Company Director other than being over the age of eighteen.
The Directors must exercise their powers in good faith and in the interests of the company as a whole and must not abuse their powers. They cannot favour one particular group of members. They must carry out their functions with due skill, care and diligence, and they can be liable for any loss resulting from their negligence. They are not allowed to make an undisclosed profit from their position as Directors and must account for any profit they do make.
A Director may delegate duties to other officials but he must oversee that the works done on behalf of the company are carried out properly.
The Director has a number of statutory duties under the Acts. In particular there is a duty to maintain proper books of account, which should enable the financial position of the company to be determined. They should also correctly record and explain the transactions of the Company. They should also allow the Accounts to be readily audited. The Company must also prepare annual returns and it is very important to have a good Accountant retained to assist in this function. They also must maintain various registers, including a Register of Members, a Register of Directors and Secretaries, a Register of Directors and Secretaries interests, Minute Books, Register of Debenture Holders, Contracts of Service for the Directors, Contracts to purchase shares and a Register of Interests of Persons in its shares (for Public Companies).
The Directors are also obliged pursuant to the Companies Acts to make sure that certain documents are signed with the Registrar of Companies. These include the Annual Return, the Registered Office, any changes of Directors or Secretary, and so forth.
The Companies Acts also provide for criminal penalties to be imposed and these for summary matters heard in the District Court can incur a fine of €1,900 and/or 12 months in prison and for more serious offences heard in the Circuit Court, €12,700 fine and/or 5 years in prison. Certain offences such as fraudulent trading carry significantly higher fines of €63,000 and/or 7 years in prison and Insider Dealing holds a fine of €254,000 and 10 years in prison. Directors who misbehave can also be disqualified from acting, restricted from acting and in certain cases be made personally responsible for the debts of the Company.
Expert advice should be taken in relation to ones duties as a Company Director as ignorance of the Law is not a defence!