Corporate governance and directors' duties in Ireland: overview

A Q&A guide to corporate governance law in Ireland.

The Q&A gives a high level overview of board composition, the comply or explain approach, management rules and authority, directors’ duties and liabilities, transactions with directors and conflicts, company meetings, internal controls, accounts and audit, institutional investors and reform proposals.

To compare answers across multiple jurisdictions, visit the Corporate Governance Country Q&A tool.

The Q&A is part of the multi-jurisdictional guide to corporate governance law. For a full list of jurisdictional Q&As visit


Corporate governance trends

1. What are the main recent corporate governance trends and reform proposals in your jurisdiction?

The Companies Act 2014 (Act) was signed into law in December 2014 and is expected to become operative in mid-2015. This new legislation consolidates and modernises Irish company law. Among the many reforms being introduced, directors' common law fiduciary duties are codified in a non-exhaustive list. The Act provides that where a director acts in breach of his statutory duties, the director will be liable to account to the company for any gain made or to indemnify the company for any loss suffered as a result.

The Act requires the directors of all public limited companies and those private companies which reach prescribed thresholds to:

  • Prepare a statement of compliance with company and tax law to be included in the directors' report contained in the annual accounts.

  • Ensure that the company adopts appropriate compliance measures.

It will be possible for the new model private company (see Question 2) to have a single director.


Corporate entities

2. What are the main forms of corporate entity used in your jurisdiction?

The main form of corporate entity used in Ireland is the limited liability company. There are two types of limited liability company.

Private limited liability companies

These can be limited by shares or by guarantee. In private companies limited by shares, the liability of shareholders is limited to the amount, if any, of unpaid share capital. This is the most common form of corporate entity in Ireland:

  • Private limited liability companies cannot offer their shares to the public and the right to transfer shares must be restricted by the company's articles.

  • The number of members of a private limited liability company must be limited to 99 or fewer persons.

Under the new companies regime being introduced by the Act, there will be two types of private company limited by shares (each type can have up to 149 members):,

New model private company (LTD) . This will have a one-document constitution and will have unlimited corporate capacity.

Designated activity company (DAC). The DAC:

  • Will have a two-document constitution, retaining an objects clause.

  • Must have at least two directors.

  • Is close in form to the existing private limited company. Any existing private company limited by shares that has not undergone the conversion process to one of the new company types by the end of the 18-month transition period after the Act becomes operative will automatically convert to a LTD.

The private company limited by guarantee will continue to exist under the new regime.

Public companies

Public companies:

  • Can offer their shares to the public.

  • Must have at least seven shareholders.

  • Must have an issued share capital of at least EUR38,092.14, of which 25% of the nominal value of each share and the entire share premium must be paid up.

  • Can have their shares admitted to trading on stock markets (in Ireland or elsewhere), but this is not a requirement.

Under the Act, public companies will continue to be recognised. They will be permitted to have a single member.


Legal framework

3. Outline the main corporate governance legislation and authorities that enforce it. How influential are institutional investors and other shareholder groups in monitoring and enforcing good corporate governance? List any such groups with significant influence in this area.

Principal sources of regulation for both public and private Irish companies

The following are the principal sources of regulation for Irish companies (both public and private):

  • The Companies Acts 1963 to 2013 (Companies Acts). This is the core legislation applicable to companies in Ireland. This legislation will be consolidated and simplified under the Act which is expected to be commenced in June 2015.

  • Constitutional documents. Each company must have a memorandum of association (memorandum) and articles. The memorandum sets out a company's name, its objects and powers and its authorised share capital. The articles set out the company's internal regulations. Many Irish companies adopt the standard form model articles contained in the Companies Acts, known as "Table A" (Table A Model Articles). Under the proposed new companies regime, a LTD will have a single constitutional document, amalgamating the current memorandum and articles. Many of the internal regulations currently contained in Table A will apply as default statutory positions under the Act but it will be possible to opt out of certain provisions.

  • Generally applicable legal provisions. For example, tax, employment and criminal legislation (and so on), and the common law.

  • The Office of the Director of Corporate Enforcement (ODCE) guidance notes. The ODCE ( plays an important role in enforcing and encouraging compliance with Irish company law. The ODCE has published a number of non-binding best practice guidelines that seek to promote transparency and accountability.

  • Information leaflets and guidance notes. The Companies Registration Office (CRO) ( is the statutory authority for registering companies in Ireland. It also plays an important role in relation to the enforcement of Irish companies' filing obligations and has issued a number of useful information leaflets and guidance notes in that regard.

Additional regulations for listed companies

Public companies listed on the main market of the Irish Stock Exchange (ISE). The following additional regulations apply to public companies listed on the main market of the Irish Stock Exchange (ISE) (which is a regulated market):

  • The ISE Listing Rules (Listing Rules). The Listing Rules set out conditions for listing and the continuing obligations that apply to companies listed on the main market of the ISE. The ISE website ( contains market and regulatory information applicable to listed companies. It also provides access to the Listing Rules and the Irish Corporate Governance Annex published by the ISE (Irish Annex).

  • The UK Corporate Governance Code as supplemented by the Irish Annex (Code).

  • Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading (Prospectus Directive), the Prospectus Regulations 2005 (Prospectus Regulations) and the Prospectus Rules. The Prospectus Regulations and the Prospectus Rules govern the preparation and publication of prospectuses.

  • Irish Takeover Panel Act 1997 (1997 Act) and Irish Takeover Rules 2013 published by the Irish Takeover Panel (Takeover Rules). The Irish Takeover Panel monitors and supervises takeovers to ensure compliance with the 1997 Act and the Takeover Rules.

  • Transparency (Directive 2004/109/EC) Regulations 2007 (Transparency Regulations) and the Transparency Rules published by the Central Bank of Ireland (Transparency Rules). The Transparency Regulations and the Transparency Rules seek to enhance the transparency of information provided by issuers on a regulated market.

  • Market Abuse (Directive 2003/6/EC) Regulations 2005 (Market Abuse Regulations) and Market Abuse Rules published by the Central Bank of Ireland (Market Abuse Rules). The Market Abuse Regulations and the Market Abuse Rules impose significant obligations on issuers and strengthen the rules in relation to insider trading and market manipulation.

Companies listed on the Enterprise Securities Market (ESM) . The following regulations apply to companies listed on the Enterprise Securities Market (ESM) (which is an unregulated market):

  • ESM rules, which are published by the ISE (ESM Rules).

  • Directive 2004/39/EC on markets in financial instruments (MiFID).

  • The Prospectus Regulations and the Prospectus Rules.

  • ESM-listed companies are encouraged to comply with the Code or with certain key aspects of the Code.

There are a number of Irish public listed companies listed on markets outside of Ireland such as the NASDAQ, NYSE and the London Stock Exchange (main and AIM markets) and these companies are subject to additional rules applicable to those markets.

Institutional investors

The Irish Association of Investment Managers (IAIM) is the representative body for institutional investment managers in Ireland. IAIM aims to ensure that the best standards are adopted throughout the industry and has issued guidelines for best practice in corporate governance. While these guidelines are not legally binding, they reflect the requirements of institutional investors in Ireland and, to that extent, are frequently observed by listed companies.

4. Has your jurisdiction adopted a corporate governance code?

Public companies listed on the main market of the ISE (but not the ESM) must comply, on a comply-or-explain basis, with the corporate governance standards set out in the Code.

The Code sets out principles of good corporate governance under the following headings:

  • Leadership.

  • Effectiveness.

  • Accountability, including internal control, audit committees and external auditors.

  • Remuneration.

  • Relations with shareholders.

In the event of non-compliance with the Code, the company must provide a clear rationale for its deviation in its annual report.

There are no prescribed governance requirements for ESM companies. However, many companies adopt at least some elements of the Code. Some ESM companies also look to the corporate governance guidelines for smaller quoted companies (QCA Code). The QCA Code applies key elements of the Code and other relevant guidelines where, because of the cost or complexity, full compliance with the Code may not be appropriate. The QCA Code is voluntary rather than mandatory.


Corporate social responsibility and reporting

5. Is it common for companies to report on social, environmental and ethical issues? Highlight, where relevant, any legal requirements or non-binding guidance/best practice on corporate social responsibility.

Companies must disclose political donations that exceed a certain threshold in their financial statements.

Companies other than small- to medium-sized companies must also include information in their financial statements in relation to key performance indicators relevant to the particular business. This includes information relevant to environmental and employee matters to the extent necessary to understand the company's development, performance or position.

Other than this, there are no specific legal requirements imposed on companies to report on social, environmental and ethical issues. However, greater awareness of corporate social responsibility has resulted in many larger companies reporting on their policies for these matters in their annual financial statements.


Board composition and restrictions

6. What is the management/board structure of a company?


Irish companies are managed by a single tier board of directors (board).


Day-to-day management of the company is typically delegated to the board in the articles with certain fundamental decisions relating to the company being reserved for the shareholders (for example, changes to the company's memorandum and articles).

Board members

The directors of a company together constitute the board.

Irish company law restricts certain persons from being appointed as directors, such as bodies corporate, undischarged bankrupts and persons subject to a disqualification order.

Employees' representation

There is no general provision for employee representation on the boards of Irish companies (other than certain state bodies). However, a company's articles or an agreement with a third party (such as a trade union) can provide for employee participation.

Number of directors or members

All companies must have at least two directors. The Act provides that the LTD may have one director (but in that case must have a separate company secretary). Other company types must still have a minimum of two directors.

There is no upper limit on the number of directors that can be appointed, unless provided for in a company's articles.

7. Are there any general restrictions or requirements on the identity of directors?


There are currently no specific age restrictions for directors of Irish companies under Irish company law. However, given that the legal age of capacity is 18 years and a director's appointment is not effective without consent, there is a strong argument that directors must be over 18 years old. Under the Act, directors must be at least 18 years old. There is no maximum age limit for directors.


Every Irish company must have at least one director who is resident in the European Economic Area (EEA), unless either:

  • The company has filed a non-resident bond to the value of EUR25,395 with the CRO.

  • The company holds a certificate from the CRO confirming that the company has a real and continuous link with one or more economic activities in Ireland.

The articles of a company may specify additional nationality requirements to satisfy tax residency requirements.


At present, Irish company law does not provide for gender quotas on boards or any related disclosure requirements.

For listed companies, the Code recommends that appointments to the board should be made with due regard for the benefits of diversity, including gender.

8. Are non-executive, supervisory or independent directors recognised or required?


Irish law recognises non-executive directors. However, they are subject to the same duties and obligations under Irish company law as executive directors.

Board composition

Private companies can, but are not obliged, to appoint non-executive directors.

For listed companies, the Code recommends that the board should include an appropriate combination of executive and independent non-executive directors.


The Code recommends that, except for smaller companies, at least half the board of listed companies should comprise independent non-executive directors. For smaller listed public companies, the Code recommends having at least two independent non-executive directors.

The Code indicates that the following factors are relevant to determining whether a particular director is independent:

  • Whether the director has been an employee of the company or group within the previous five years.

  • Whether the director has or has had within the previous three years, a material business relationship with the company either directly or as a partner, shareholder, director or senior employee of a body that has a relationship with the company.

  • Whether the director has received or receives additional remuneration from the company apart from a director's fee, participates in the company's share option or a performance-related pay scheme, or is a member of the company's pension scheme.

  • Whether the director has close family ties with any of the company's advisers, directors or senior employees.

  • Whether the director holds cross-directorships or has significant links with other directors through involvement in other companies or bodies.

  • Whether the director represents a significant shareholder.

  • Whether the director has served on the board for more than nine years from the date of their first election.

Duties and liabilities

The duties and liabilities of non-executive directors are the same as those for executive directors. Where a shareholder or third party nominates a non-executive director to the board, that nominee is entitled to have regard to the appointer's interests but only insofar as those interests do not conflict with the director's obligation to act in the company's interests.

9. Are the roles of individual board members restricted?

For private companies, Irish company law does not restrict the same person from acting as both chairman and chief executive officer (CEO) (or as managing director, which is the equivalent role referred to in the Table A Model Articles).

For listed companies, the Code recommends that the chairman and CEO should be separate individuals.

10. How are directors appointed and removed? Is shareholder approval required?

Appointment of directors

The articles govern the procedure for appointment of directors. Typically, the articles allow for their appointment by board resolution. For listed companies, the Code recommends that there should be a formal, rigorous and transparent procedure for the appointment of new directors. It recommends the establishment of a nomination committee to lead the appointment process, a majority of whom should be independent non-executive directors.

Removal of directors

Shareholders can remove directors using a specific statutory procedure set out in the Companies Acts, which requires compliance with specific formalities, including observance of an extended notice period.

The articles of a company can facilitate removal by the other directors in certain instances. This process must be used bona fide in the interests of the company and not for an improper purpose.

Additionally, if a director of a company is also an employee of the company, his contract of employment may provide that if he ceases to be an employee of the company he will also be deemed to resign as a director with immediate effect.

Where a director is involuntarily removed, this is without prejudice to any claim he may have against the company for compensation for termination of his position under his employment contract.

11. Are there any restrictions on a director's term of appointment?

Contracts of employment of directors with a term exceeding five years are subject to shareholder approval. The articles may contain restrictions on the term of appointment of a director of a private company.

For listed companies, the Code recommends that contract and notice periods should not be longer than one year.


Directors' remuneration

12. Do directors have to be employees of the company? Can shareholders inspect directors' service contracts?

Directors employed by the company

Directors do not have to be employees of the company. In practice however, executive directors are frequently employed by the company, while non-executive directors are generally engaged under service contracts.

Shareholders' inspection

Directors' service contracts must be made available for inspection at a company's registered office or at the place where the register of members is kept.

For listed companies the Code requires that the terms and conditions of appointment of non-executive directors be made available for inspection by any person at the registered office and for 15 minutes before, and during, the annual general meeting of the shareholders (AGM).

13. Are directors allowed or required to own shares in the company?

Directors are allowed, but not required to own shares in the company. If desired, the company's articles can specify a shareholding qualification for directors.

Where directors hold shares or interests in shares in the company or any company in the group, they are required to notify the company of these interests. This information will also be included in the company's annual financial statements which (subject to exemptions) must be publicly filed at the CRO. The Act introduces de minimis thresholds for notification of interests in shares and share options which should substantially reduce or eliminate disclosure requirements for many directors.

For listed companies, directors must disclose to the company transactions conducted on their own account, such as the acquisition or disposal of shares. There are also restrictions on a director dealing in options to buy or sell shares in a public company.

In addition, the Code recommends that for listed companies, a non-executive director's remuneration package should not include the granting of share options. In exceptional cases where the remuneration package does include options, advance shareholder approval should be obtained and where these options are exercised, the non-executive director should hold the shares for at least one year after leaving the board.

14. How is directors' remuneration determined? Is its disclosure necessary? Is shareholder approval required?

Determination of directors' remuneration

The determination of directors' remuneration is generally a matter for the board, subject to any restrictions set out in the articles.

For listed companies, the Code recommends that the remuneration committee should determine directors' remuneration. The Code also recommends that the remuneration committee should judge where to position their company relative to other companies but that they should use such comparisons with caution and should avoid paying more than is necessary.


Detailed information in relation to a director's salary and remuneration must be disclosed in the company's annual financial statements, which (subject to exemptions) must be publicly filed at the CRO. Additionally, directors' service contracts must be made available for inspection at a company's registered office or the place where the register of members is kept.

For listed companies, the Listing Rules also require a remuneration report to be sent to the shareholders annually, which contains a wide range of disclosures on executive directors' remuneration.

Shareholder approval

Except where the company's articles provide otherwise, a director's remuneration does not require shareholder approval unless the engagement is for more than five years.

For listed companies, the directors' remuneration scheme must be submitted to a shareholders' vote. However, this does not affect the director's right to the remuneration. Additionally, shareholder approval must be obtained for long-term incentive schemes that do not meet certain criteria set out in the Listing Rules.


Management rules and authority

15. How is a company's internal management regulated? For example, what is the length of notice and quorum for board meetings, and the voting requirements to pass resolutions at them?

While the articles typically include certain provisions dealing with the internal management of the company, directors are generally left considerable discretion.

The articles generally address the following:

  • Quorum. This is normally set at two.

  • Notice requirements. The articles are frequently silent on notice requirements for directors' meetings, in recognition of the fact that board meetings often need to take place on an ad hoc, last-minute basis. Where the articles are silent on notice, reasonable notice must be given.

  • Voting requirements. Directors generally have one vote and voting takes place by a show of hands. The Table A Model Articles provide that questions arising are to be decided by a majority of votes and where there is an equality of votes, the chairman has the casting vote.

16. Can directors exercise all the powers of the company or are some powers reserved to the supervisory board (if any) or a general meeting? Can the powers of directors be restricted and are such restrictions enforceable against third parties?

Directors' powers

Managerial power is usually delegated to the directors. Certain fundamental decisions relating to the company are reserved to the shareholders by law or under the articles. There is no concept of a supervisory board.


Irish company law requires that certain fundamental decisions relating to the company must obtain shareholder approval, including but not limited to:

  • Changing the company's memorandum and articles.

  • Changing the company's name.

  • Converting from a limited to an unlimited company or a private to a public company or vice versa.

  • Providing financial assistance in connection with the purchase of shares in the company or its holding companies.

  • Entry into substantial property transactions with directors.

The articles can specify additional matters that require shareholders' approval.

In addition, the Listing Rules and ESM Rules require listed companies to obtain the prior approval of its shareholders in respect of certain significant transactions.

17. Can the board delegate responsibility for specific issues to individual directors or a committee of directors? Is the board required to delegate some responsibilities, for example for audit, appointment or directors' remuneration?

Subject to any restrictions in the articles, the directors are generally entitled to delegate responsibility for specific issues to individual directors or committees of directors. However, this delegation does not relieve the directors from their own general duties to the company. In these circumstances, the directors continue to have a residual duty to ensure that the delegated powers are exercised by the relevant director or committee of directors competently and in the best interests of the company.

All public companies must establish an audit committee. Listed companies subject to the Code must establish an audit committee, nomination committee and remuneration committee.


Directors duties and liabilities

18. What is the scope of a director's general duties and liability to the company, shareholders and third parties?

Currently, directors' duties are contained in a range of statutes and common law. The Act brings existing common law fiduciary duties into statute but the many other statutory duties of directors will not be affected by the Act. A director's duties under the common law include:

  • The duty to act with due skill, care and diligence.

  • The duty to act honestly and responsibly and in the best interests of the company.

  • The duty of good faith.

  • The duty to avoid conflicts of interest.

  • The duty not to make undisclosed profits from his position as a director.

A director's statutory duties include various duties of disclosure, as well as duties to ensure that the company keeps proper books of accounts and that it meets various company secretarial compliance obligations.

Directors' duties are owed to the following:

  • The company. Directors primarily owe their duties to the company.

  • Shareholders. A director has no general duty to the shareholders, but may develop a fiduciary relationship due to conduct or circumstances.

  • Employees. Directors must have regard to the interests of employees in the performance of their functions.

  • Creditors. Where a company is insolvent, even if not yet in liquidation, directors must also have regard to the interests of the company's creditors.

The Code sets out additional obligations for directors of listed companies.

19. Briefly outline the regulatory framework for theft, fraud, and bribery that can apply to directors.

Irish laws prohibiting theft, fraud and bribery are a combination of common law and statutory law, the main statutes applicable to directors being the Prevention of Corruption Acts 1906 to 2010 and the Criminal Justice (Theft and Fraud Offences) Act 2001. A draft Corruption Bill was published in 2012 which proposes to repeal the numerous pieces of Irish anti-corruption legislation and replace them with one consolidated statute.

Under the Companies Acts, where it appears that a director was knowingly a party to the carrying on of the business with intent to defraud creditors or for any fraudulent purpose, a court can find the director guilty of fraudulent trading. Fraudulent trading attracts both civil and criminal liability. Civil liability can also be imposed on a director for the lesser crime of reckless trading, where it appears he was knowingly a party to the carrying on of the business in a reckless manner or was engaged in fraudulent trading.

The Companies Acts also make it an offence for a director to destroy or falsify any book or document relating to the property or affairs of the company.

20. Briefly outline the potential liability for directors under securities laws.

Directors of listed companies have a duty to ensure the accuracy of company information contained in a prospectus, and in particular to ensure that the prospectus does not include any untrue statement and does not omit any information required by EU prospectus law. Of particular importance is the Investment Funds, Companies and Miscellaneous Provisions Act 2005, which imposes civil/criminal liability on any person who authorised the issue of the prospectus.

Under the common law, a director can also face civil liability for misstatements or omissions in a prospectus. It is also possible that the directors could be sued for damages under the torts of deceit, fraudulent misrepresentation or negligent misstatement.

Directors may face civil and criminal liability for insider dealing under the Companies Acts or for breach of the Market Abuse Regulations.

21. What is the scope of a director's duties and liability under insolvency laws?

The law of corporate insolvency is primarily governed by the Companies Acts.

The Companies Acts provide for a series of offences that may be committed by the directors of a company during the course of a liquidation, such as the failure to disclose information to the liquidator. A director can face either civil or criminal liability for these offences. A court can also impose liability on directors if a company fails to keep proper books of account, where the court considers this failure has contributed to the company's inability to pay all of its debts.

In certain cases where a company is insolvent, a director may owe duties to company creditors. Restriction and disqualification orders may be imposed on the directors of insolvent companies.

22. Briefly outline the potential liability for directors under environment and health and safety laws.


The principal pieces of environmental legislation are the:

  • Protection of the Environment Act 2003.

  • Waste Management Acts 1996 to 2001.

  • Air Pollution Acts 1987 and 2011.

  • Local Government (Water Pollution) Acts 1977 to 1990.

  • Environmental Protection Agency Act 1992.

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. The Irish courts have shown a willingness to impose personal civil liability on directors in this regard.

Health and safety

Directors can be held liable for various offences under 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. Sanctions include fines of up to EUR3 million and/or two years' imprisonment.

23. Briefly outline the potential liability for directors under anti-trust laws.

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 million and imprisonment for up to ten years as well as potential disqualification from acting as a director.

24. Briefly outline any other liability that directors can incur under other specific laws.

If a company commits certain revenue offences, a director can be deemed guilty where the offence is shown to have been committed with the consent or connivance, or attributable to any recklessness, of the director in question. The list of revenue offences includes failing, without reasonable excuse, to file tax returns or knowingly or wilfully furnishing an incorrect tax return.

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.

In certain limited circumstances, a director may be liable for acts of the employees of the company where a criminal offence has been committed by the company and the director has not taken reasonable steps to ensure that the relevant offence was not committed.

25. Can a director's liability be restricted or limited? Is it possible for the company to indemnify a director against liabilities?

The extent to which Irish companies can indemnify directors is limited. A company can only indemnify a director for:

  • Liability that does not involve negligence, default, breach of duty or breach of trust.

  • Costs incurred by a director in successfully defending a case against him.

Where the articles seek to indemnify a director in relation to other matters, the provisions will not be enforceable.

26. Can a director obtain insurance against personal liability? If so, can the company pay the insurance premium?

Companies are permitted to purchase insurance for the potential civil liability of directors for negligence, default, breach of duty or breach of trust. Typically, a Directors and Officers Liability Insurance (D&O) policy will contain a wide range of exclusions and cover will not extend to criminal fines or regulatory penalties that can be imposed on a director for fraudulent, dishonest or illegal acts established by a court judgment.

27. Can a third party (such as a parent company or controlling shareholder) be liable as a de facto director (even though such person has not been formally appointed as a director)?

A person who is not formally appointed to the board but acts as a director and effectively occupies the position of director can be liable as a de facto director. A de facto director is bound by the same duties and obligations and is subject to the same liabilities as formally appointed directors.

Parent companies or controlling shareholders can be treated as "shadow directors" (persons in accordance with whose directions or instructions the directors of a company are accustomed to act). For certain purposes, Irish company law treats these persons as directors and holds them to the same duties and liabilities.


Transactions with directors and conflicts

28. Are there general rules relating to conflicts of interest between a director and the company?

Directors have a duty at common law not to place themselves in a position where their personal interests or duties to other persons are likely to conflict with their duties to the company. Directors must not make an undisclosed personal profit from their position as directors and must account to the company for any profit that they secretly derive from their position.

Directors also have specific duties of disclosure relating to conflicts of interests under the Companies Acts. For example, directors must give notice to the company of any interest they have in a contract or proposed contract involving the company.

Under the Act, the duty to disclose will not apply in relation to an interest that is reasonably considered not to give rise to a conflict of interest.

29. Are there restrictions on particular transactions between a company and its directors?

A company is prohibited from entering into certain transactions with its directors (and in some cases, persons connected with its directors), except in limited circumstances where the consent of shareholders has been obtained and/or a formal statutory validation procedure has been complied with. Restricted transactions include:

  • Making loans, quasi-loans, guarantees or credit transactions with directors outside the ordinary course of business of the company.

  • Substantial property transactions with directors where the value of the arrangement is over 10% of the company's net assets or more than EUR63,487.

  • Contracts of employment of directors with a term exceeding five years.

The Act introduces changes to the evidential provisions regarding certain transactions with directors.

For directors of companies listed on the main market of the ISE, the Listing Rules require shareholder approval for certain additional related-party transactions.

30. Are there restrictions on the purchase or sale by a director of the shares and other securities of the company he is a director of?

The purchase or sale of shares in a company (public or private) by a director must be disclosed to the company.

For listed companies, a director cannot enter into an option to buy or sell shares in the company or an associated company.

Under the Listing Rules, a director of a listed company must not deal in any securities of the company without first notifying the chairman and receiving clearance to deal from him. In circumstances where clearance to deal is granted, the director must deal within two business days of clearance being obtained. In general, a director will not obtain clearance to deal during a "prohibited period", which includes the period of 60 days preceding the publication of the company's annual financial report and any period where the director has inside information in relation to the company.

It is also unlawful for a director of listed companies to deal in the company's securities if, because of his connection, he has price-sensitive information not generally available. The Takeover Rules prohibit persons (including directors) who are privy to confidential price-sensitive information concerning an offer or contemplated offer, from dealing in the securities of the buyer, from the time the director has reason to believe that an offer is being made until the announcement of the offer or the termination of discussions.


Disclosure of information

31. Do directors have to disclose information about the company to shareholders, the public or regulatory bodies?

Generally (subject to certain exceptions), companies must present their annual audited financial statements to the AGM and publicly file a copy with the company's annual return in the CRO. The Companies Acts require a directors' report on the state of affairs of the company and its subsidiaries to be attached to the balance sheet laid before the AGM.

Certain information regarding the company must also be disclosed to the Revenue Commissioner when making tax returns.

Companies listed on a regulated market (which would not include the ESM) are subject to the following additional disclosure requirements:

  • Under the Market Abuse Regulations, an issuer must make a disclosure of inside information either to the Regulatory Information Service or indirectly to the Companies Announcements Office of the ISE.

  • The Transparency Regulations require the publication of annual and bi-annual financial reports. In addition, listed companies must publish interim management statements that contain an explanation of material events and transactions that have taken place during the relevant period and a general description of the company's financial position.

  • The Listing Rules and ESM Rules require the disclosure of certain information in a company's annual report and in the report to shareholders.

  • The Prospectus Regulations require a prospectus to contain all information necessary to enable investors to make an informed assessment of the company's financial position and the rights attaching to the securities. A prospectus must be approved by the Central Bank before publication and once approved, it must be filed in the CRO. The Prospectus Regulations also apply to companies listed on the ESM.


Shareholder rights

Company meetings

32. Does a company have to hold an annual shareholders' meeting? If so, when? What issues must be discussed and approved?

Every company, other than a single member company, must hold an AGM once every calendar year. The following items of business are typically dealt with at the AGM:

  • The adoption of the company's annual financial statements.

  • The appointment of the company's auditors.

  • The approval of final dividends (if any).

Single member companies can pass a shareholder resolution to dispense with the requirement to hold an AGM (other than the first AGM). Under the Act, multi-member LTDs and single-member DACs will be able to adopt written procedures in place of holding an AGM.

33. What are the notice, quorum and voting requirements for holding meetings and passing resolutions?

Notice of shareholder meetings must be given to all members and to the auditors:

  • An AGM requires 21 days' notice.

  • An extraordinary general meeting (EGM) (other than a meeting for the passing of a special resolution) must be called on at least seven days' notice (subject to any longer period provided under the articles).

  • An EGM where a special resolution is being proposed requires 21 days' notice.

  • Where a resolution is proposed by persons other than the directors to remove a director or to replace an auditor at an AGM, extended notice of 28 days must be given to the company by the requisitioning members. 21 days' notice of the actual meeting must then be given to the members (even though the relevant resolution is an ordinary resolution).

Shareholder meetings may be held on short notice with the written consent of members and auditors. The quorum for shareholder meetings is set out in the articles:

  • Unless otherwise provided for in the articles, two members present (in person or by proxy) is a quorum in the case of a private company, and three members present is a quorum in the case of a public company.

  • For single-member companies, that single member is a quorum.

Voting at general meetings is usually by show of hands unless a poll is called. Teleconferencing is not provided for but voting by unanimous written shareholder resolution is permitted if authorised by the articles. The Act provides for the introduction of majority written resolutions for private companies.

34. Are specific voting majorities required by statute for certain corporate actions?

The Companies Acts require certain corporate actions to be decided by special resolution of the company, being 75% of members entitled to vote at general meetings of the company. These corporate actions include:

  • Alteration of the company's articles.

  • Variation of class rights attaching to shares.

  • Approving financial assistance in connection with own-share purchases.

  • Entry into substantial property transactions with directors and connected persons.

35. Can shareholders call a meeting or propose a specific resolution for a meeting? If so, what level of shareholding is required to do this?

Shareholders holding at least 5% of the issued share capital of the company in the case of companies listed on a regulated market, or 10% of the issued share capital of the company in all other cases, can require an extraordinary general meeting (EGM) to be convened. Additionally, a shareholder of any company can apply to the Director of Corporate Enforcement to convene an AGM where the company has failed to do so.

The Act introduces a new right whereby registered shareholders of a limited company holding, or together holding, 50% or more of the shares of the company carrying voting rights can directly convene an EGM.

Shareholders holding at least 3% of the voting shares of a listed company can place items on the agenda of an AGM, provided that each item is accompanied by either stated grounds justifying its inclusion or a draft resolution to be adopted.

Minority shareholder action

36. What action, if any, can a minority shareholder take if it believes the company is being mismanaged and what level of shareholding is required to do this?

Any member of the company can petition a court for relief where the member believes that the affairs of the company are being conducted or the powers of the directors are being exercised in an oppressive manner or in disregard of their interests.

In exceptional circumstances, a shareholder can also bring a derivative action where a majority in control of the company are committing a fraud on the minority.


Internal controls, accounts and audit

37. Are there any formal requirements or guidelines relating to the internal control of business risks?

Companies listed on a regulated market in Ireland are subject to certain risk management and internal control systems under the Code:

  • The board must at least annually conduct a review of the effectiveness of the company's risk management and internal control systems. The review must cover all material controls, including financial, operational and compliance controls.

  • The board must also establish an audit committee that will review the company's internal financial controls and internal control and risk management systems.

Under the Listing Rules, companies listed on a regulated market must:

  • Attach a statement to their annual report confirming whether or not the company has complied with the provisions of the Code.

  • Include a corporate governance statement in their consolidated accounts. The statement must contain a description of the main features of the internal control and risk management systems of the company.

38. What are the responsibilities and potential liabilities of directors in relation to the company's accounts?

Directors have a duty under the Companies Acts to ensure that the company keeps proper books of account that give a true and fair view of the state of affairs of the company:

  • A director who fails to take all reasonable steps to secure compliance or is the cause of default is guilty of an offence and liable to a fine and/or imprisonment.

  • In circumstances where the company is insolvent and the failure to keep proper books of accounts contributed to the company's insolvency, a director can be held personally liable and can also be restricted or disqualified from acting as a director for a period of up to five years.

Under the Act, directors will be required to state in their directors' report that:

  • So far as each director is aware, there is no relevant audit information of which the company's auditors are unaware.

  • Each director has taken all steps necessary to be aware of any relevant audit information, and to establish that the auditors are aware of that information.

39. Do a company's accounts have to be audited?

Companies must have their financial statements audited each year. However, a private company can take advantage of an audit exemption if all the following apply:

  • The amount of turnover of the company does not exceed EUR8.8 million.

  • The balance sheet total of the company is less than EUR4.4 million at the end of its financial year.

  • The average number of employees does not exceed 50.

In addition, the company must not be a parent or subsidiary company.

Under the Act, a LTD and a DAC can use the audit exemption where at least two (and not all three) of the conditions above are met, and in certain group situations.

40. How are the company's auditors appointed? Is there a limit on the length of their appointment?

The directors of the company usually appoint the first auditors at the first board meeting. The auditors will automatically be re-appointed at every AGM after the initial appointment unless the shareholders pass a resolution either objecting to the re-appointment or proposing the appointment of another auditor. There is no statutory limit on the length of the appointment.

41. Are there restrictions on who can be the company's auditors?

The auditors must be a member of a body of accountants recognised by the Irish Auditing and Accounting Supervisory Authority (IAASA) (or have an equivalent qualification) and hold a valid practising certificate from that recognised body. Auditors who qualify in other EU member states can carry out audits in Ireland if they pass an aptitude test. Auditors that qualify in non-EU member states can also obtain approval from the IAASA. The Companies Acts also require certain standards of continuing education, professional ethics, integrity and objectivity.

Bodies corporate and certain individuals are not permitted to be auditors of the company. Restricted individuals include:

  • Officers and employees of the company, their partners and close family members.

  • Undischarged bankrupts.

  • Individuals who have been disqualified from acting as auditors.

42. Are there restrictions on non-audit work that auditors can do for the company that they audit accounts for?

There are currently no restrictions on non-audit work that auditors can do for the company.

However, where non-audit work is carried out, it must be recorded in the annual accounts. In the case of listed companies, if the aggregate remuneration for non-audit works exceeds the remuneration for audit and audit-related work, the audit committee must state in its report for that year whether it is satisfied that the auditor's independence has not been compromised.

43. What is the potential liability of auditors to the company, its shareholders and third parties if the audited accounts are inaccurate? Can their liability be limited or excluded?

The auditors of the company are under a general duty to carry out the audit with professional integrity and must exercise the skill, care and caution of a reasonably competent, careful and cautious auditor. If the auditors do not comply with this duty they can be liable for damages to the company, the shareholders and any third parties that suffer loss as a result of the inaccurate audited accounts. This liability cannot be limited or excluded.

44. What is the role of the company secretary (or equivalent) in corporate governance?

All companies, including single member companies, must have a company secretary. The functions and duties of a company secretary are essentially administrative, as opposed to managerial. Primarily, the secretary is responsible for maintaining the company's statutory registers.

Unlike private companies, directors of public companies have a duty to choose a secretary who meets certain standards, specified by legislation. The Code identifies the company secretary as one who should advise the board, through the chairman, on all governance matters.

Under the Act, company secretaries will no longer be obliged to ensure compliance with the Companies Acts. Instead, the Act provides that the directors have a duty to ensure that the company secretary has the skills or resources to discharge their statutory and other duties, or has the necessary resources available to do so.


Online resources

Irish Statute Book


Description. This official government website is an online resource for up-to-date Irish legislation.

Irish Stock Exchange


Description. This is the website maintained by the Irish Stock Exchange and contains market and regulatory information relating to listed companies.

UK Financial Reporting Council


Description. This website, maintained by the UK Financial Reporting Council, provides information relating to corporate governance and financial reporting, as well as access to the UK Corporate Governance Code.

Central Bank of Ireland


Description. The Central Bank acts as a financial regulator to certain financial service providers and funds carrying on business in Ireland. Their website provides regulatory information for this industry.

Contributor profiles

Robert O'Shea


T +353 1 232 2201
F +353 1 232 3333

Professional qualifications. Ireland, 1998; England and Wales, 1998

Areas of practice. Corporate and commercial law and general counsel to international businesses.

Recent transactions

  • Standing corporate counsel to numerous international corporations in respect of their Irish operations.
  • Advising Fortune 100 US corporations on group-wide international restructurings.
  • Representation of international corporations on their establishment in Ireland.
  • Substantial integration projects pre- and post-mergers and acquisitions for various international clients.
  • Ongoing strategic advice and counselling for a range of international corporations including in relation to cash and dividend repatriation strategies.

Gina Conheady


T +1 650 617 3352
F +1 650 617 3251

Professional qualifications. Ireland, 2008; England and Wales, 2010; California, US, 2012

Areas of practice. Corporate and commercial law and international business.

Recent transactions

  • Corporate counsel to numerous international corporations in respect of their Irish operations.
  • Advising numerous leading US corporations on Irish corporate structures and the establishment of Irish operations.
  • Advising Fortune 100 US corporations on complex cross-border reorganisations, strategic restructurings and pre- and post-acquisition integration and consolidation projects.
  • Advising several multinationals on the implementation of cross-border mergers under the EU Cross Border Merger Directive.
  • Advising leading multinationals on cash repatriation and dividend planning.

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