Under the new Companies Act 2014, commenced on 1st June 2015, there a number of requirements imposed on company directors and there is a statement of some of the duties that directors have stated in Part 5 of the new Act.
Qualification for appointment as a director
Under the Companies Act 2014, an age requirement has been introduced for the appointment either as director of a company.
Under the Companies Act 2014, a director of a company:
*There are exemptions to the 25 company limit. Exempted companies, for the purpose of the 25 company rule, include:
Form B74 is required to be completed by any person being appointed as director of an Irish registered company (Form A1), where that person is currently disqualified in a foreign jurisdiction from acting as a director or secretary of a body corporate or an undertaking. The B74 sets out the jurisdiction in which the individual is so disqualified, the date on which he/she became so disqualified and the period for which he/she is so disqualified.
If a person whose appointment as director is notified to the CRO on form B10 is currently disqualified abroad, that person is required to ensure that the B10 is accompanied by a properly completed B74 signed by him/her on its delivery to the CRO.
Form B74a is required to be completed where a person already appointed as a director of an Irish registered company becomes disqualified in a foreign jurisdiction after the notice of appointment. This notice should be filed within 15 days of the disqualification. Under the new Act however, this also applies to all Irish companies on the register and a director who currently stands appointed and who has become disqualified since their appointment, should notify the CRO within 3 months of the date of commencement - 1st June 2015.
Link to Forms Page.
Part 5 of the Companies Act 2014 sets out the duties of directors and other officers and apply to every company on the register. Directors Duties have been codified and placed into the Act to provide transparency as to the role of company officers. The Act can only realistically provide core duties of position and case law may determine other requirements/existing requirements
Minimum number of Directors
Every company is required to have 2 directors. There is one exception to this and this the new LTD company type registered under Part 2 of the Companies Act 2014. This new LTD company type can have a single director if so desired. It is important to note that private limited by shares companies incorporated under the previous
Companies Acts cannot take advantage of the single-director option as they operate under the Designated Activity Company legislation for the duration of the Transition Period (June 1st 2015 to 30th November 2016) or until such time as they convert to the LTD company type.
All other company types must have two directors - public companies, DACs (Designated Activity Companies), unlimited and guarantee companies. Every company should have an EEA (European Economic Area) resident director. (Section 137). An alternate director is insufficient to meet the requirements of the section. There are exceptions.
For further information in relation to the requirement that at least one of the directors of a company be EEA-resident, see Information Leaflet No. 17, “Requirement To Have An EEA-Resident Director”.
The principal fiduciary responsibilities of a director are set out in Part 5 of the Companies Act 2014.
There is a requirement on a director to act in good faith, to act honestly and responsibly and to act according to the company’s constitution. There is a requirement for the directors to have regard to the interests of the company’s employees as well as to the interest of the members. Under section 231 of the Act, there is a duty on directors to disclose any interest they have in contracts made by the company. The duties set out in the Act are not exhaustive and will still require directors to consider obtaining legal advice concerning compliance with their duties.
Section 228 states: 1) A director of a company shall—
(2) If a director of a company considers in good faith that it is in the interests of the company for a transaction or engagement to be entered into and carried into effect, a director may restrict the director’s power to exercise an independent judgment in the future by agreeing to act in a particular way to achieve this.
(3) Without prejudice to the director’s duty under subsection (1)(a) to act in good faith in what the director considers to be the interests of the company, a director of a company may have regard to the interests of a particular member of the company in the following circumstances.
(4) Those circumstances are where the director has been appointed or nominated for appointment by that member, being a member who has an entitlement to so appoint or nominate under the company’s constitution or a shareholders’ agreement.
Directors of certain large companies must supply compliance statement as part of the directors report (section 325) that accompanies financial statements submitted to CRO. A large company in such a case is one with balance sheet total in excess of €12.5m and with a Turnover in excess of €25m.
Directors of such companies must acknowledge responsibility for securing compliance with its obligations and confirming whether certain things have been done (section 225(3)).
Those certain things are – the drawing up a Compliance Policy Statement setting out company’s policies regarding obligations and then setting out arrangements designed to ensure compliance. Thirdly, a review to be conducted of those arrangements during the financial year. If these things are not done this must be stated in the directors report.
Relevant obligations means anything where a failure to comply will result in a category 1/2 offence being committed or a serious Market Abuse offence/Prospectus offence.
Category 1 Offences:
Category 2 Offences include:
The duties of a secretary are duties delegated to the position by the directors. There is no definitive term covering what this will entail. Directors must ensure person is capable of doing the job.
For PLCs though, there is reference to categories of qualification as secretary:
Please Note: Single-director companies (new simplified LTD company model only) must have a separate secretary. The director cannot also act as the secretary.
Copyright 2016 Public Office Address: Companies Registration Office, Parnell House, 14 Parnell Square, Dublin 1, Eircode: D01 E6W8. DX Number: 145001. Phone: +(353 1) 8045200
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