Directors’ Duties in the Republic of Ireland

>> Powers and Duties in the Republic of Ireland

You must act within the powers imposed by the Companies Act and the company’s Articles of Association. As a company director you are required to act in good faith, with due managerial care, and with loyalty.

Duties – skill and care

In exercising directors’ powers, you are required to exhibit due managerial care, ie act with due loyalty and with necessary knowledge and diligence.

Duties – general

Directors are obliged to exercise their office with due managerial care, with the term being defined as acting with:

  • loyalty to the company
  • caution
  • the required knowledge

In cases where a director knows or should have known that they lack the necessary expertise, the director is obliged to arrange for the advice of an expert. This means that while directors are not required to be experts, they have to be able to recognise situations where expert knowledge is required.

In addition, and more specifically, directors are expected to:

  • maintain the list of shareholders and inform shareholders about the company’s affairs upon their request
  • follow the guidance and general instructions approved by the general meeting (if any)
  • appoint one (1) director responsible for human resource matters (only in case of a collective statutory body)
  • convene the general meeting at least once a year (or in case of threatened insolvency or any other important reasons)
  • ensure that dividend distribution, as well as any other distributions, are compliant with the law and do not cause the company to become insolvent
  • file the relevant bankruptcy petition if the company has become insolvent pursuant to the Bankruptcy Act

Duties – other

There are many other areas of law that impose responsibilities and obligations on directors and senior managers. Matters likely to be of particular relevance, depending upon the nature of the entity and its activities, are set out below.

Anti-bribery corruption law

Like all employees, you must comply with AntiBribery and Corruption legislation, including the UK Bribery Act and the US Foreign Corrupt Practices Act, and must understand, follow and promote the company’s internal policies and procedures.

A person who has either a suspicion or documentary proof that corrupt practices are taking place in international business transactions should, in the first instance, report the matter to the Garda Bureau of Fraud Investigation.

It is best practice for the Company to implement anti-corruption policies and practices, including anti-corruption guidelines, training, internal audit procedures and reporting requirements. Some specific measures the Company could implement include:

  • establishing an anti-corruption policy
  • ensuring all employees are familiar with the relevant bribery and corruption laws, their roles in the business, their responsibilities and the appropriate response to any suspicion of corrupt activity
  • ensuring that agents and partners, who are representing or purporting to represent your business, have adequate and valid credentials for the activities being undertaken
  • establishing monitoring and reporting requirements for agents and partners representing your business
  • establishing a clear and accessible system for the reporting of any suspicious behaviour

Health, safety and environmental law

Any serious accidental injury and investigations and environmental breaches if applicable must be reported in accordance with company policy.

Directors can be held personally liable for pollution and environmental damage. Directors can also be jointly liable with the company for criminal offences where an offence is proven to have been committed by the company with the consent, connivance or is attributable to any neglect by the director.

Directors can be held liable for various offences under Section 80 of the Safety, Health and Welfare at Work Act 2005, where the director authorised or consented to the acts that constituted the offence or if the act was attributable to connivance or neglect by the director.

Competition law

You must comply with all competition law and regulations both EU and domestic. Company directors can be held personally liable for breaches of competition law, even where the company has not been prosecuted, provided that the director authorised or consented to the breaches.

The Competition (Amendment) Act 2012 has also increased the potential penalties for individuals to include fines of up to EUR5,000,000 and imprisonment for up to ten years as well as potential disqualification from acting as a director.

Tax law

You must comply will all areas of tax law and regulations. Failure to do so could leave you liable. Examples include Section 1078 of the Taxes Consolidation Act 1997, which deals with revenue offences.

Where an offence has been committed by a corporate body, the legislation provides for the possibility that a director or other officer of the company may be personally guilty of the offence where it was committed with the ”consent or connivance of or is attributable to any recklessness on the part of “that person. Penalties can include fines and/or imprisonment.

Data protection law

Directors can be held liable for offences under the Data Protection Acts 1988 and 2003 where a company commits an offence with his consent or connivance, or the offence is attributable to the director’s negligence.

As individuals, directors can also face liability for the unlawful use of a computer or the unauthorised access of data under the Criminal Justice (Theft and Fraud Offences) Act 2001 and the Criminal Damage Act 1991, respectively.

Requirements under anti-money laundering legislation

If the Company fails to (i) comply with its Customer Due Diligence obligations; (ii) report suspicious transactions by relevant customers to the Irish Police and Revenue Commissioners; (iii) refrain from informing a relevant customer that such a suspicious transactions report has been or will be made in relation to that customer; or (iv) implement the internal policies and procedures, training and record keeping procedures, it will commit an offence and could be liable:

  • on summary conviction, to a fine not exceeding EUR5,000 or to imprisonment for a term not exceeding 12 months (or both); or
  • on conviction on indictment, to a fine or imprisonment for a term not exceeding 5 years (or both)

There are strong penalties in place under the Prevention of Corruption (Amendment) Act, 2001, of up to 10 years imprisonment and an unlimited fine, for those found guilty of offences under the Act, including convictions of bribery of foreign public officials by Irish nationals and companies.

The Criminal Assets Bureau has power to seize a suspected bribe under section 23 of the Proceeds of Crime Act 2005, and that Act also contains provisions relating to forfeiture of the bribe.

Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations upon you being able to continue in your role.

Latest version updated 6th April 2018

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