Directors - Do You Know Your Fiduciary Duties?
The Companies Act 2014 has, for the first time in Irish law, set out in statute the fiduciary duties of a director of a company that is registered in Ireland. The Act consolidates the duties and responsibilities of directors by setting out a non-exhaustive list of eight fiduciary duties owed by directors to a company.
If you are a company director, it is vital that you are fully aware of your responsibilities and have a clear understanding of your legal obligations. In addition to fiduciary duties, directors also have many other statutory duties and responsibilities.
Principal Fiduciary Duties of Directors – Section 228, Companies Act 2014
- To act in good faith in what the director considers to be the interests of the company;
- To act honestly and responsibly in relation to the conduct of the affairs of the company;
- To act in accordance with the company’s constitution and exercise his or her powers only for the purposes allowed by law;
- Not to use the company’s property, information or opportunities for his or her own benefit, or that of anyone else, unless (a) this is permitted expressly by the company’s constitution or (b) the relevant use has been approved by a resolution of the company in general meeting;
- Not to agree to restrict the director’s power to exercise an independent judgement unless (a) this is expressly permitted by the company’s constitution or (b) the case concerned falls within limited exceptions;
- To avoid any conflict between the director’s duties to the company and the director’s other (including personal) interests, unless the director is released from his or her duty to the company in relation to the matter concerned, whether by the company’s constitution or by a resolution of the members in general meeting;
- To exercise the care, skill and diligence which would be exercised in the same circumstances by a reasonable person having both (a) the knowledge and experience that may reasonably be expected of a person in the same position as the director and (b) the knowledge and experience which the director has; and
- (As mentioned above) to have regard to the interests of the company’s employees in general and its members.
To find out more about the Companies Act 2014 and how it affects you in your role as a director, read our information updates, produced in association with McCann FitzGerald.
The second edition of the Directors’ Handbook, produced together with McCann FitzGerald, is now available for a fee of €10 per copy (incl p&p). Incorporating directors’ duties under the Companies Act 2014, the revised Directors’ Handbook is a valuable resource and comprehensive guide to being a director in Ireland.