Office of Director
A company director is a person appointed by the members of the company to act as a director. A director is a person who as part of a board of directors conducts and manages the affairs of the company. It is now possible to have single director companies.
A director includes any person who occupies the position of director howsoever named. Most of the duties of directors also apply to persons who act as directors in effect, without having been formally appointed or having notified their appointment to the Companies Registration Office.
The relationship of the director with the shareholders is governed by the company’s constitution. The vast majority of companies have adopted the standard memorandum and articles of association. In the case of companies formed under the new (2014) companies legislation, the standard constitution makes very similar provision.
Even where a bespoke constitution is adopted or amendments are made to the standard constitution( or memorandum and articles) generally the broad provisions applicable to directors are usually left in accordance with standard default provisions
In broad terms, the Board of Directors is responsible for the governance and management of the company. The shareholders’ role is residual and limited to a number of key functions which occur annually or exceptionally. Other arrangements may be provided for under constitution or other agreement whereby shareholders may have a greater say in operational matters.
In order to be eligible to be appointed as a director person must be
- over 18 years
- not be disqualified from acting as a director by court order or undertaking
- not be another discharged bankrupt
- not be the company’s auditor
A person who is restricted from acting as a director may only act as director in a company which has certain minimum capitalisation (€100,000 for private companies). A person may be restricted in consequence of a restriction order following insolvent liquidation or receivership of another company or pursuant to a restriction undertaking given to the Office of the Director for Corporate Enforcement in that context.
Types of Director
A shadow director is a person other than as a professional adviser in accordance with whose directions or instructions the director of the company is accustomed to act. Shadow directors have the duties of a director together with certain additional duties to disclose an interest in the company
The de facto director i.e. an effective director is a person who occupies the position of director and who has not been formally appointed or has been disqualified and acts as if he was a director. Once again such persons are treated as if they were appointed as directors
It is possible to appoint alternate directors to represent the director when the director is not present. The approval of the majority of the directors is required.
A director may be a full-time director involved in the day-to-day management of the company. He or she may also be an employee. The may fill specific role such as a marketing director, finance director et cetera,
A managing director may be appointed on such terms as are decided by the board. The directors may confer roles on him or her, on such terms and conditions as they see fit. All directors fees whether or not as an employee are subject to the PAYE deduction obligation on behalf of the company.
In most such cases the authority and role of the director are determined by the Board of Directors. Designation as a particular role may have consequences in terms of authority on behalf of the company in dealing with third parties.
A non-executive director is a person who is not involved in the management of the company. Commonly a non-executive director is appointed for his or her independence outside influence, perspective or relationships which he or she may bring to the company.
Directors have powers to act on behalf of the company. The power and authority of individual directors will depend on the nature of the company and how the powers have been delegated to them. The default position is that the powers should be exercised by the directors collectively.
There are reliefs available to outsiders who deal with a company director of other person held out or appearing to have authority. Generally, third parties are entitled to rely on persons who appear to have authority. If however, the person concerned does not have the authority the company may nonetheless be bound but have a right of recourse and compensation against the person such as a director who exceeded his authority.
Many statutory obligations of directors apply to them individually and collectively. Often the legislation provides that directors who are a party to or privy to particular breaches are liable often criminally liable or the failure concerned.
The first directors are those appointed by the persons who form the company in the initial statement filed on incorporation.
Directors may be removed by an ordinary resolution of the company. The company may still be in breach of contract by reason of the removal.
In the case of a resolution to remove a director 28 days’ notice must be given to the company concerned. The director may make representations to the shareholders
Directors have a right to be reimbursed expenses properly incurred for the purpose of their duties unless prohibited by the Constitution of the company. Remuneration of directors is decided by the Board of Directors.
In most circumstances, one of the directors of the company must be resident. The alternative is that upon €25,000 in Ireland or in another European Economic Area country.
A person may not be a director of more than 25 companies at any time in respect of which the Registrar of Companies has not certified that there is a real and continuous link with an economic activity being undertaken in the state. Public limited companies are excluded as are investment companies, certain banking companies and some other entities