Going limited - what do I need to know about becoming a director?
If you are setting up a company, it is advisable that you should take advice from an accountant and a solicitor in respect of the legal requirements involved and how they might apply to your individual situation.
Dear Reader,
There are different company types and the most common type is a limited company where there are shares that are owned by shareholders. The company is a separate legal entity and is separate and distinct from the shareholders or the people who run it.
In the event the company fails or is dissolved or becomes insolvent, the liability of the shareholders is limited to the amount, if any, remaining unpaid on the shares held by them.
You should not be personally liable in respect of any debts that the company holds which is known as the Doctrine of the Corporate Veil.
Company law in Ireland is predominantly governed by the Companies Act 2014. This is a lengthy and detailed Act that has 1,448 clauses.
When a company is formed, it is a requirement that the company has to have at least one director and one company secretary. The company secretary can be one of the directors. A director of a company has various duties, which are set out in Section 228 of the Companies Act 2014.
These duties include the following:
- A director must act in good faith as to what the director considers to be in the interests of the company.
- The director must act honestly and responsibly in relation to the conduct and affairs of the company.
- Must act in accordance with the company’s constitution and exercise their powers only for the purposes as allowed by law.
- Not to use company property, information or opportunities for their own benefit, unless this is permitted by the company’s constitution or is approved by resolution of the company in a general meeting.
- Avoid any conflict between the director’s duty to the company and the director’s other personal interests.
- Exercise care, skill and diligence which will be exercised by a reasonable person.
There are also general duties which the director owes, including the following:
- A director must ensure that the company complies with the Companies Act.
- The director must also take into account the interests of members of the company, including shareholders.
- The directors are required to acknowledge the existence of their duties by signing a declaration to that effect and form a compliance statement.
- The directors have to appoint a company secretary who is suitably qualified.
- They have a duty to disclose any interesting contracts made by the company at a meeting of the directors.
When a company is incorporated, an annual return has to be filed and the first annual return has to be within six months of the date of incorporation. The next annual return date would then be a year after that, but if the company files a B73 with its first return, it creates an annual return date.
Failure to file an annual return on time can have certain consequences, including penalties such as a late filing fee or a prosecution of the company and its directors.
However, there is a District Court application pursuant to Section 343 of the Companies Act 2014, where an application for an extension of time to file an annual return may be made, to either the High Court or the District Court.
If you are setting up a company, it is advisable that you should take advice from an accountant and a solicitor in respect of the legal requirements involved and how they might apply to your individual situation.
Email: info@walshandpartners.ie
- While every effort is taken to ensure the accuracy of the information contained in this article, Walsh & Partners does not accept responsibility for errors or omissions howsoever arising. Readers should seek legal advice in relation to their particular circumstances at the earliest opportunity.
