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Welcome to the FMB Chartered Accountants Blog. We answer all of your financial and accountancy questions, as well as keep you up-to-date with the latest news from FMB.

Who Can Become A Director?

David McArdle - Friday, July 25, 2014

As there are no specific qualifications required by law, almost any individual person can become a Director of a private limited company in Ireland.


There are of course some exceptions to this rule and the most common examples are listed below:

  • Undischarged bankrupts are prohibited from becoming directors

  • A corporate body is not permitted to be a director

  • The company auditor is prohibited from also acting as a director of that company

  • Those who have a disqualification or restriction order against them (interestingly, a person disqualified in another jurisdiction is permitted to act as a Director of an Irish company provided notification of this is given to the CRO prior to appointment).




Other common restrictions relate to age (minimum and maximum) and whether a Director must also be a Shareholder of the company. It is also important to note that whilst Directors of Irish companies need not necessarily be resident in the country, at least one of the Directors must be

resident in the EEA (European Economic Area).


DUTIES & RESPONSIBILITIES OF DIRECTORS

The Directors are appointed by the owners of the company (the members or shareholders) and their primary function is to manage the company on behalf of the members. Under present legislation every company must have a minimum of two Directors at all times, however proposed changes in the Companies Bill 2012, do allow for a new single-Director company for the standard private limited company type. Although it should be further noted that in such cases a separate company secretary will also be required.


Directors have both statutory and common law duties that they must fulfil, and the legal onus on them should not be underestimated.


DUTIES OF A DIRECTOR

3 categories of duty - ordinary, fiduciary & statutory

Power to allot shares

Power to declare dividends/carry forward profits

Power to borrow money

Power to appoint a Managing Director


Directors can also find themselves subject to prosecution in a personal capacity, most commonly by the ODCE for contraventions of Section 202 (failure to keep proper books of account). In the event of a successful prosecution, where fines are levied they can run into thousands of Euro. Directors of companies who persistently file their annual returns late, or not at all, can also find themselves personally prosecuted by the CRO.


In summary, if Directors keep proper books and records, file their returns on time and do not take unauthorised money they will meet most of their obligations.


APPOINTMENT OF DIRECTORS

New Directors can be appointed to a company in a number of ways:

  • By an ordinary resolution of the shareholders at a general meeting

  • By co-option by the existing board of Directors. Directors so appointed are usually required to retire and stand for re-election at the next Annual General Meeting

  • By any special procedure provided in the Articles of Association e.g. the Articles of a subsidiary company may empower the parent company to appoint or remove a director by way of notice sent in writing to the registered office of the company.


Whichever mechanism is used, all appointments of directors must be notified to the Companies Registration Office within 14 days, through the filing of a B10 form. The Register of Directors and

Directors’ interests must also be updated, as a B10 on its’ own, whilst indicative, is not conclusive proof of who is an officer of the company.


CAN I BE A DIRECTOR OF MORE THAN ONE COMPANY?

A person can hold up to 25 Irish directorships at any one time. In the calculation of this threshold, certain directorships can be excluded such as those relating to public limited companies or groups of companies.


CAN I BE APPOINTED A DIRECTOR WITHOUT MY CONSENT?

Both the notice of the appointment of first Directors (CRO form A1) and the notice of appointment of all subsequent Directors (CRO form B10), must contain the signature of the appointee signifying their consent to the appointment. Therefore, appointments cannot be made effective without your consent.


Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.


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