Statutory Duties
Companies Act
Duty of each director
223. (1) It is the duty of each director of a company to ensure that this Act is complied with by the company.
(2) The breach by a director of the duty under subsection (1) shall not of itself affect—
(a) the validity of any contract or other transaction, or
(b) the enforceability, other than by the director in breach of that duty, of any contract or other transaction by any person,
but nothing in this subsection affects the principles of liability of a third party where he or she has been an accessory to a breach of duty or has knowingly received a benefit therefrom.
(3) The consent in respect of a director to accompany—
(a) statement under section 21 (1)(a), and
(b) a notification under section 149 (8),
shall include a statement by the director (immediately above his or her signature on the consent) in the following terms:
“I acknowledge that, as a director, I have legal duties and obligations imposed by the Companies Act, other statutes and at common law.”.
Directors to have regard to interests of employees
224. (1) The matters to which the directors of a company are to have regard in the performance of their functions shall include the interests of the company’s employees in general, as well as the interests of its members.
(2) Accordingly, the duty imposed by this section on the directors shall be owed by them to the company (and the company alone) and shall be enforceable in the same way as any other fiduciary duty owed to a company by its directors.
Fiduciary duties of directors — provisions introductory to section 228
227. (1) Without prejudice to the provisions of any enactment (including this Act), a director of a company shall owe the duties set out in section 228 (the “relevant duties”) to the company (and the company alone).
(2) The breach by a director of the relevant duties shall not of itself affect—
(a) the validity of any contract or other transaction, or
(b) the enforceability, other than by the director in breach of that duty, of any contract or other transaction by any person,
but nothing in this subsection affects the principles of liability of a third party where he or she has been an accessory to a breach of duty or has knowingly received a benefit therefrom.
(3) The relevant duties shall be enforced in the same way as any other fiduciary duty owed to a company by its directors.
(4) The relevant duties (other than those set out in section 228 (1)(b) and (h)) are based on certain common law rules and equitable principles as they apply in relation to the directors of companies and shall have effect in place of those rules and principles as regards the duties owed to a company by a director.
(5) The relevant duties (other than those set out in section 228 (1)(b) and (h)) shall be interpreted, and the provisions concerned of section 228 shall be applied, in the same way as common law rules or equitable principles; regard shall be had to the corresponding common law rules and equitable principles in interpreting those duties and applying those provisions.
Statement of principal fiduciary duties of directors
228. (1) A director of a company shall—
(a) act in good faith in what the director considers to be the interests of the company;
(b) act honestly and responsibly in relation to the conduct of the affairs of the company;
(c) act in accordance with the company’s constitution and exercise his or her powers only for the purposes allowed by law;
(d) not use the company’s property, information or opportunities for his or her own or anyone else’s benefit unless—
(i) this is expressly permitted by the company’s constitution; or
(ii) the use has been approved by a resolution of the company in general meeting;
(e) not agree to restrict the director’s power to exercise an independent judgment unless—
(i) this is expressly permitted by the company’s constitution;
(ii) the case concerned falls within subsection (2); or
(iii) the director’s agreeing to such has been approved by a resolution of the company in general meeting;
(f) avoid any conflict between the director’s duties to the company and the director’s other (including personal) interests unless the director is released from his or her duty to the company in relation to the matter concerned, whether in accordance with provisions of the company’s constitution in that behalf or by a resolution of it in general meeting;
(g) exercise the care, skill and diligence which would be exercised in the same circumstances by a reasonable person having both—
(i) the knowledge and experience that may reasonably be expected of a person in the same position as the director; and
(ii) the knowledge and experience which the director has;
and
(h) in addition to the duty under section 224 (duty to have regard to the interests of its employees in general), have regard to the interests of its members.
(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.
Other interests of directors
229. (1) Save to the extent that the company’s constitution provides otherwise, a director of a company may be or become a director or other officer of, or otherwise interested in, any company promoted by the company or in which the company may be interested as shareholder or otherwise; but neither this subsection nor anything in the company’s constitution governing the foregoing matter overrides section 228 .
(2) No such director shall be accountable to the company for any remuneration or other benefits received by him or her as a director or officer of, or from his or her interest in, such other company unless the company otherwise directs.
Power of director to act in a professional capacity for company
230. Save to the extent that the company’s constitution provides otherwise—
(a) any director may act by himself or herself, or his or her firm, in a professional capacity for the company of which he or she is a director, and
(b) any director, in such a case, or his or her firm, shall be entitled to remuneration for professional services as if he or she were not a director,
or she is director,
but nothing in this section authorises a director, or his or her firm, to act as statutory auditor of a company of which he or she is director.
Duty of director to disclose his or her interest in contracts made by company
231. (1) It shall be the duty of a director of a company who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the company, to declare the nature of his or her interest at a meeting of the directors of the company.
(2) Subsection (1) does not apply in relation to an interest that cannot reasonably be regarded as likely to give rise to a conflict of interest.
(3) The declaration required by this section to be made by a director shall—
(a) in the case of a proposed contract, be made at the meeting of the directors at which the question of entering into the contract is first taken into consideration or, if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he or she became so interested; and
(b) in the case of his or her becoming interested in a contract after it is made, be made at the first meeting of the directors held after the director becomes so interested.
(4) Subject to subsection (5), for the purposes of this section a general notice given to the directors of a company by a director to the effect that—
(a) he or she is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm, or
(b) he or she is to be regarded as interested in any contract which may, after the date of the notice, be made with a specified person who is connected with him or her,
shall be deemed to be a sufficient declaration of interest in relation to any such contract.
(5) No such notice as is mentioned in subsection (4) shall be of effect unless it is given at the meeting of directors or the director takes reasonable steps to secure that it is brought up and read at the next meeting of the directors after it is given.
(6) A copy of every declaration made and notice given in pursuance of this section shall, within 3 days after the date of making or giving of it, be entered into a book kept by the company for this purpose.
(7) That book shall be open for inspection, without any charge, by any director, secretary, statutory auditor or member of the company at the registered office of the company and shall be produced at—
(a) every general meeting of the company; and
(b) any meeting of its directors if any of its directors so requests in sufficient time to enable the book to be available at the meeting.
(8) A company shall, if required by the Director of Corporate Enforcement, produce to the Director for inspection the book kept by it in accordance with subsection (6) and shall give the Director such facilities for inspecting and taking copies of the contents of the book as the Director may require.
(9) Nothing in this section shall be taken to prejudice the operation of any enactment or rule of law restricting directors of a company from having interests in contracts with the company.
(10) Any reference in this section to a contract—
(a) shall be read as excluding a reference to a contract the decision as to whether to enter into it is taken, or falls to be taken, other than by the board of directors or a committee of which the first-mentioned director in subsection (1) is a member;
(b) shall be read as including a reference to any transaction or arrangement, whether or not constituting a contract, but, in a case where the transaction or arrangement does not constitute a contract, a like limitation to that which applies under paragraph (a) applies to the construction of reference provided by this paragraph.
(11) For the purposes of this section, a transaction or arrangement of a kind described in section 239 made by a company for a director of the company or a person connected with such a director shall, if it would not otherwise be so treated (and whether or not prohibited by that section), be treated as a transaction or arrangement in which that director is interested.
Breaches of certain duties: liability to account and indemnify
232. (1) Subject to section 233 , where a director of a company acts in breach of his or her duty under section 228 (1)(a), (c), (d), (e), (f) or (g), he or she shall be liable to do either or both (as the corresponding common law rule or equitable principle with respect to the matter would have required) of the following things, namely—
(a) account to the company for any gain which he or she makes directly or indirectly from the breach of duty;
(b) indemnify the company for any loss or damage resulting from that breach.
(2) Subject to subsection (6), where a company enters into a transaction or arrangement contrary to section 238 or 239 with—
(a) a director of the company,
(b) a director of its holding company, or
(c) a person connected with a director of the company or its holding company,
that director and the person so connected and any other director of the company who authorised the transaction or arrangement (or, as the case may be, any transaction entered into in pursuance of the arrangement) shall be liable—
(i) to account to the company for any gain which he or she makes directly or indirectly from the transaction or arrangement;
(ii) (jointly and severally with any other person liable under this subsection) to indemnify the company for any loss or damage resulting from the transaction or arrangement; or
(iii) to do both of those things as the circumstances may require.
(3) Subject to section 233 , where a company makes a payment to a director contrary to section 251 or 252 that director shall be liable—
(a) to account to the company for any gain which he or she makes directly or indirectly from the payment,
(b) to indemnify the company for any loss or damage resulting from the payment, or
(c) to do both of those things as the circumstances may require,
and, in the case of section 252 , this is without prejudice to subsection (3) of that section.
(4) Subsection (2) applies irrespective of whether the transaction or arrangement concerned has been avoided.
(5) Subsections (1) to (3) are without prejudice to—
(a) the company’s right at common law to claim damages for breach of duty, or
(b) the company’s right to make an application seeking the grant of equitable relief,
but the provisions of this section shall not be read as having the combined effect of enabling the company to be afforded more compensation for any damage or injury, or more protection of any proprietary right, than is just and equitable in the circumstances.
(6) Where a transaction or arrangement is entered into by a company and a person connected with a director of the company or of its holding company in contravention of section 238 or 239 —
(a) that director shall not be liable under subsection (2) (or under any law referred to in subsection (5)) if he or she shows that he or she took all reasonable steps to secure the company’s compliance with section 238 or 239 , as the case may be, and
(b) in any case, a person so connected and any such other director as is mentioned in subsection (2) shall not be so liable if he or she shows that, at the time the transaction or arrangement was entered into (or, as the case may be, at the time the particular transaction was entered into in pursuance of the arrangement), he or she did not know the relevant circumstances constituting the contravention.
Power of court to grant relief to officers of company
233. (1) This section applies to any proceedings for negligence, default, breach of duty or breach of trust against an officer of a company.
(2) In proceedings to which this section applies the court hearing the proceedings has the power of granting relief provided under subsection (3) if it appears to the court that the officer concerned is or may be liable in respect of the negligence, default, breach of duty or breach of trust (the “wrong concerned”) but that he or she has acted honestly and reasonably and that, having regard to all the circumstances of the case (including those connected with his or her appointment), he or she ought fairly to be excused for the wrong concerned.
(3) The power referred to in subsection (2) is to relieve the officer concerned, either wholly or partly, from his or her liability in respect of the wrong concerned on such terms as the court may think fit.
Anticipated claim: similar power of relief as under section 233
234. (1) If an officer of a company has reason to apprehend that any claim will or might be made against him or her in respect of any negligence, default, breach of duty or breach of trust (the “wrong concerned”) he or she may make the following application to the court.
(2) That application is an application to be relieved of liability in respect of the wrong concerned; on the making of such an application the court shall have the same power to relieve the applicant as it would have had (by virtue of section 233 ) if it had been a court before which proceedings against that person for the wrong concerned had been brought.
Any provision exempting officers of company from liability void (subject to exceptions)
235. (1) Subject to the provisions of this section, the following provision shall be void, namely, any provision:
(a) purporting to exempt any officer of a company from; or
(b) purporting to indemnify such an officer against;
any liability which by virtue of any enactment or rule of law would otherwise attach to him or her in respect of any negligence, default, breach of duty or breach of trust of which he or she may be guilty in relation to the company.
(2) Subsection (1) applies whether the provision concerned is contained in the constitution of a company or a contract with a company or otherwise.
(3) Notwithstanding subsection (1), a company may, in pursuance of any such provision as is mentioned in that subsection, indemnify any officer of the company against any liability incurred by him or her—
(a) in defending proceedings, whether civil or criminal, in which judgment is given in his or her favour or in which he or she is acquitted; or
(b) in connection with any proceedings or application referred to in, or under, section 233 or 234 in which relief is granted to him or her by the court.
(4) Notwithstanding subsection (1), a company may purchase and maintain for any of its officers insurance in respect of any liability referred to in that subsection.
(5) Notwithstanding any provision contained in any enactment, the constitution of a company or otherwise, a director may be counted in the quorum and may vote on any resolution to purchase or maintain any insurance under which the director might benefit.
(6) For the avoidance of doubt, if—
(a) any business, trade or activity has been carried on by means of a company, or other body corporate, registered or formed under the laws of another country,
(b) the period for which that business, trade or activity was so carried on was not less than 12 months preceding the date on which this subsection falls to be applied,
(c) a provision of the kind referred to in subsection (1)(a) or (b) in relation to officers of the company or other body corporate was in being and valid under the laws of that country, and
(d) a private company limited by shares is formed and registered to carry on that business, trade or activity,
then nothing in this section invalidates the operation of the provision referred to in paragraph (c) in respect of any negligence, default, breach of duty or breach of trust occurring before that private company limited by shares is formed and registered.
(7) Any directors’ and officers’ insurance purchased or maintained by a company before 6 April 2004 is as valid and effective as it would have been if this section had been in operation when that insurance was purchased or maintained.
(8) In this section—
(a) “officer” includes a statutory auditor,
(b) a reference to an officer includes a reference to any former or current officer of the company.
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.