It is vital that directors remain informed of a company’s affairs even if they are not involved in the day-to-day running of a company.
A Court of Appeal (COA) judgment confirms that a claim of ignorance in relation to a company’s affairs will not absolve a director of legal responsibilities under the Companies Act 2014.
The appeal was against the High Court restricting a director from acting as a director or secretary of a company for five years.
The COA found that the director provided no information on the role he played in the company nor evidence to demonstrate that he informed himself of the company’s affairs at any time and there was a total failure by him to provide information from which the High Court could find that he had fully informed himself in relation to the affairs of the company consistent with his legal obligations as a director.
The COA held that he had not established that he acted responsibly and upheld the restriction.
Individuals should not be directors of an Irish company unless they are prepared to engage actively in the affairs of the company, understands their duties and always act in the best interest of the company. Failure to do so may result in the imposition of personal liability for liabilities of the company as well as being prevented from acting as a director or company secretary.