Responsibilities of Directors

The duties of Directors of companies incorporated in Ireland have been established in case law and successive Companies Acts and are summarised below:

Duty to exercise their power for the benefit of the company Directors should act in the best interests of the company.

1. Duty to retain freedom of action
Directors should not restrict their right to freely and fully exercise their duties and powers.

2. Duty to avoid conflict of interest
Directors have a duty to avoid placing him/herself in a position where his/her personal interests conflict with those of the company.

3. Duties of skill and care
Directors must not act negligently in managing the company's affairs. The standard of care is that of a reasonable man in managing his own affairs. Where directors are experts in their own field, e.g. accounting or law, a very high standard of competence is required.

4. Duty to keep proper books of account
The directors are required to ensure that the books of account of the company are kept on a continuous and consistent basis, whether in the form of documents or computerised records or otherwise.

5. Duty to keep within the powers of the company
A director may be liable to the company for any loss suffered for any acts which are illegal, ultra vires the company or are beyond the powers of the board.