Directors’ Report
Companies Act
Obligation to prepare directors’ report for every financial year
325. (1) The directors of a company shall for each financial year prepare a report (a “directors’ report”) dealing with the following matters:
(a) general matters in relation to the company and the directors as specified in section 326 ;
(b) a business review in accordance with section 327 ;
(c) information on the acquisition or disposal of own shares as specified in section 328 ;
(d) information on interests in shares or debentures as specified in section 329 ;
(e) statement on relevant audit information as specified in section 330 ;
and containing the notice referred to in section 331 that (if such be the case) has been issued in that financial year in respect of the company under section 33AK of the Central Bank Act 1942 .
(2) Subsection (1) is in addition to the other requirements of this Act that apply in certain cases with regard to the inclusion of matters in a directors’ report, namely the requirements of—
(a) section 167 (3) (statement as to establishment or otherwise of an audit committee in the case of a large private company), and
(b) section 225 (2) (directors’ compliance statement in case of a company to which that section applies).
(3) For a financial year in which—
(a) the company is a holding company, and
(b) the directors of the company prepare group financial statements,
the directors shall also prepare a directors’ report that is a consolidated report (a “group directors’ report”) dealing, to the extent provided in the following provisions of this Part, with the company and its subsidiary undertakings included in the consolidation taken as a whole.
(4) Where group financial statements are published with entity financial statements, it is sufficient to prepare the group directors’ report referred to in subsection (3) (as distinct from that report and a directors’ report in respect of the holding company as well) provided that any information relating to the holding company only, being information which would otherwise be required to be provided by subsection (1) or section 167 (3) or 225 (2), is provided in the group directors’ report.
(5) A group directors’ report may, where appropriate, give greater emphasis to the matters that are significant to the company and its subsidiary undertakings included in the consolidation taken as a whole.
(6) If a director fails to fulfil his or her obligation under subsection (1), (3) or (4), he or she shall be guilty of a category 3 offence.
(7) Without limiting the obligations of the directors of a company under this section or subsection (6), it shall be the duty of a person who is a shadow director or de facto director of a company to ensure that the requirements of subsections (1), (3) and (4) are complied with in relation to the company.
(8) If a person fails to comply with his or her duty under subsection (7), the person shall be guilty of a category 3 offence.
Directors’ report: general matters
326. (1) The directors’ report for a financial year shall state—
(a) the names of the persons who, at any time during the financial year, were directors of the company,
(b) the principal activities of the company during the course of the year,
(c) a statement of the measures taken by the directors to secure compliance with the requirements of sections 281 to 285 , with regard to the keeping of accounting records and the exact location of those records,
(d) the amount of any interim dividends paid by the directors during the year and the amount, if any, that the directors recommend should be paid by way of final dividend.
(2) Where relevant in a particular financial year, the directors’ report shall state—
(a) particulars of any important events affecting the company which have occurred since the end of that year,
(b) an indication of the activities, if any, of the company in the field of research and development,
(c) an indication of the existence of branches (within the meaning of Council Directive 89/666/EEC) of the company outside the State and the country in which each such branch is located,
(d) political donations made during the year that are required to be disclosed by the Electoral Act 1997 .
(3) Where material for an assessment of the company’s financial position and profit or loss, the directors’ report shall describe the use of financial instruments by the company and discuss, in particular—
(a) the financial risk management objectives and policies of the company, including the policy for hedging each major type of forecasted transaction for which hedge accounting is used, and
(b) the exposure of the company to price risk, credit risk, liquidity risk and cash flow risk.
(4) In relation to a group directors’ report, subsections (1)(b) and (c), (2) and (3) shall have effect as if the reference to the company were a reference to the company and its subsidiary undertakings included in the consolidation.
Directors’ report: business review
327. (1) The directors’ report for a financial year shall contain—
(a) a fair review of the business of the company, and
(b) a description of the principal risks and uncertainties facing the company.
(2) The review required by subsection (1) shall be a balanced and comprehensive analysis of—
(a) the development and performance of the business of the company during the financial year, and
(b) the assets and liabilities and financial position of the company at the end of the financial year,
consistent with the size and complexity of the business.
(3) The review required by subsection (1) shall, to the extent necessary for an understanding of such development, performance or financial position or assets and liabilities, include—
(a) an analysis of financial key performance indicators, and
(b) where appropriate, an analysis using non-financial key performance indicators, including information relating to environmental and employee matters.
(4) The directors’ report shall, where appropriate, include additional explanations of amounts included in the statutory financial statements of the company.
(5) The review required by subsection (1) shall include an indication of likely future developments in the business of the company.
(6) In relation to a group directors’ report, this section has effect as if the references to the company were references to the company and its subsidiary undertakings included in the consolidation.
(7) In this section, “key performance indicators” means factors by reference to which the development, performance and financial position of the business of the company can be measured effectively.
Directors’ report: acquisition or disposal of own shares
328. Where, at any time during a financial year of a company, shares in the company—
(a) are held or acquired by the company, including by forfeiture or surrender in lieu of forfeiture, or
(b) are held or acquired by any subsidiary undertaking of the company, the directors’ report with respect to that financial year of the company shall state—
(i) the number and nominal value of any shares of the company held by the company or any subsidiary undertaking at the beginning and end of the financial year together with the consideration paid for such shares, and
(ii) a reconciliation of the number and nominal value of such shares from the beginning of the financial year to the end of the financial year showing all changes during the year including further acquisitions, disposals and cancellations, in each case showing the value of the consideration paid or received, if any.
Directors’ report: interests in shares and debentures
329. (1) The directors’ report in respect of a financial year shall, as respects each person who, at the end of that year, was a director of the company—
(a) state whether or not he or she was, at the end of that financial year, interested in shares in, or debentures of, the company or any group undertaking of that company,
(b) state, if he or she was so interested at the end of that year, the number and amount of shares in, and debentures of, the company and each other undertaking (specifying it) in which he or she was then interested,
(c) state whether or not he or she was, at the beginning of the financial year (or, if he or she was not then a director, when he or she became a director), interested in shares in, or debentures of, the company or any other group undertaking, and
(d) state, if he or she was so interested at either of the immediately preceding dates, the number and amount of shares in, and debentures of, the company and each other undertaking (specifying it) in which he or she was so interested at the beginning of the financial year or, as the case may be, when he or she became a director.
(2) The reference in subsection (1) to the time when a person became a director shall, in case of a person who became a director on more than one occasion, be read as a reference to the time when he or she first became a director.
(3) The information required by subsection (1) to be given in respect of the directors of the company shall also be given in respect of the person who was the secretary of the company at the end of the financial year concerned.
(4) For the purposes of this section, references to interests of a director and secretary in shares or debentures are references to all interests required to be recorded in the register of interests under section 267 and includes interests of shadow directors and de facto directors required to be so registered.
Directors’ report: statement on relevant audit information
330. (1) The directors’ report in relation to a company shall contain a statement to the effect that, in the case of each of the persons who are directors at the time the report is approved in accordance with section 332 —
(a) so far as the director is aware, there is no relevant audit information of which the company’s statutory auditors are unaware, and
(b) the director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company’s statutory auditors are aware of that information.
(2) In this section “relevant audit information” means information needed by the company’s statutory auditors in connection with preparing their report.
(3) A director is regarded as having taken all the steps that he or she ought to have taken as a director in order to do the things mentioned in subsection (1)(b) if he or she has—
(a) made such enquiries of his or her fellow directors (if any) and of the company’s statutory auditors for that purpose, and
(b) taken such other steps (if any) for that purpose,
as are required by his or her duty as a director of the company to exercise reasonable care, skill and diligence.
(4) Nothing in this section shall be read as reducing in any way the statutory and professional obligations of the statutory auditors in relation to forming their opinion on the matters specified in section 336 .
(5) Where a directors’ report containing the statement required by this section is approved in accordance with section 332 but the statement is false, every director of the company who—
(a) knew that the statement was false, or was reckless as to whether it was false, and
(b) failed to take reasonable steps to prevent the report from being so approved,
shall be guilty of a category 2 offence.
Directors’ report: copy to be included of any notice issued under certain banking legislation
331. The directors’ report shall contain a copy of any Disclosure Notice issued in respect of the company under section 33AK (inserted by the Central Bank and Financial Services Authority of Ireland Act 2003 and amended by the Central Bank Reform Act 2010 ) of the Central Bank Act 1942 during the financial year to which the report relates.
Approval and signing of directors’ report
332. (1) The directors’ report and, where applicable, the group directors’ report shall be approved by the board of directors making the report and signed on their behalf by 2 directors, where there are 2 or more directors.
(2) Without prejudice to the generality of section 11 and its application to the other provisions of this section, where the company has a sole director subsection (1) operates to require that director to approve and sign the report or reports concerned.
(3) Every copy of every directors’ report which is laid before the members in general meeting or which is otherwise circulated, published or issued shall state the names of the persons who signed it on behalf of the board of directors.
(4) If any copy of a directors’ report is—
(a) laid before the members, or otherwise issued, circulated or published without the report (the original of it as distinct from the copy) having been signed as required by this section or without the required statement of the signatory’s name on the copy being included, or
(b) delivered to the Registrar without the report (the original of it as distinct from the copy) having been signed as required by this section or without the required statement of the signatory’s name on the copy being included,
the company and any officer of it who is in default shall be guilty of a category 3 offence.
(5) In subsection (4) “officer” includes any shadow director and de facto director.
The text in italics on this page is sourced from the Irish Statute Book and is re-published under the Licence for Re-Use of Public Sector Information made pursuant to Directive 2003/98/EC Directive 2013/37/EU of the European Parliament and of the Council on the re-use of public sector information transposed into Irish law by the European Communities (Re-Use of Public Sector Information) Regulations 2005 to 2015.