Ineligibility for Appointment
The purported appointment of a director without his consent is void.
A body corporate or unincorporated body of persons may not act as a director. Any such appointment is void. Persons under 18 years of age may not be appointed a director. Any purported appointment is void.
An undischarged bankrupt may not act as a director or the secretary of a company. He may not, directly or indirectly, take part or be concerned in the promotion, formation or management of a company. It is a category 2 offence to do so unless the leave of court is granted. Conviction is deemed to be a disqualification order (from holding office as a director) for the period specified in the order.
The ODCE may require a director or secretary to produce a sworn statement as to his financial position and bankruptcy status, within the State and elsewhere, at a particular date, where it has reason to believe that the director or secretary may be an undischarged bankrupt. Failure to comply is a category 3 offence.
On application to the court, the court may require the director to appear before the court and answer questions relating to the statement. The court may make a disqualification order on the grounds that the person is an undischarged bankrupt.
Validity of Acts of Directors
Where the Companies Act or the company’s constitution requires or authorised an act to be done by a director and secretary, the requirement is not satisfied if is done only by a person who is both director and secretary.
The acts of a director or secretary are valid notwithstanding that any defect is afterwards discovered in their appointment or qualification.
Where a director is required to hold a specified share qualification, he is deemed to vacate office if he does not obtain the relevant qualifying shareholding within two months of appointment. He may not be reappointed until he qualifies.
Disqualification from being a Director I
Disqualification from being a Director II
EEA Residence Requirement I
At least one director of an Irish registered company must be an EEA resident unless the company has the requisite economic link with the State. The EEA is the European Economic Area comprising the European Union and the former EFT countries.
In place of having an EEA resident director, the company may furnish a bond in respect of company or tax law fines and liabilities. If a person retires as director and no other EEA resident director remains, the CRO must be notified.
In this context, “residence” is reckoned on the tax rules for residence. 183 days’ presence in a year or 280 days’ presence in two years, with at least 30 days in both years, makes a person resident.
The requirement to have a bond or EEA resident director does not apply where a company has a real and continuous link with one or more economic activities being carried out in the State. The CRO must be given proof of the connection. If the CRO decides that the real and continuous link has ceased, it may notify the Revenue Commissioners.
If the above obligation is not complied with, the company concerned and any officer of it who is in default shall be guilty of a category 4 offence.
EEA Residence Requirement II
If a person ceases to be a director of a company and, at the time of that cessation he or she is resident in an EEA state; and either he or she was the sole director, or to his or her knowledge, no other director of the company is resident in an EEA state, that person shall, within 14 days after the date of that cessation, notify, in writing, the CRO of that cessation and this fact, as the case may be. A notification in writing to the CRO is not, of itself, to be regarded as constituting a defamatory matter.
If a person fails to comply with the above obligation, he or she shall be jointly and severally liable with the company of which he or she has ceased to be a director for any fine or penalty) imposed on the company, or which it is held liable to pay, after that cessation. Any such fine or penalty for which that person is so liable may be recovered by the Registrar or the Revenue Commissioners, as appropriate, from him or her as a simple contract debt in any court of competent jurisdiction.
Residence of Director
A director is resident in the State or in the EEA if he or she is present in the State or the EEA,
- at one time or several times in the period of 12 months preceding the time, for a period in the aggregate exceeding 183 days or
- at one time or several times in the immediate 12 months and the immediate 12 months preceding that, for a period in an aggregate exceeding 280 days or more total; or
- the person elects to be resident for income tax purposes.
Where a person has been present in the State / the EEA in the immediate 12 months for less than 30 days, he is deemed non-resident notwithstanding that has been present 280 days or more in the last year and preceding. A person is deemed present in the State / EEA for a day if he is present in the State/ EEA at any time during the day. Presence refers to physical presence.
The bond required by a company without an EEA resident director is in the sum of €25,000. It must provide that in the event of a failure by the company to pay the whole or part of any fine and penalty specified below, there shall become payable under the bond to the CRO, the Revenue Commissioners or in some cases to them jointly, the sum of money to be applied by the nominated person in discharging the whole or part, as the case may be, of the company’s liability in respect of a fine or penalty for certain specified Companies Act and taxation offences. It is also to cover expenses incurred by them.
The bond may be entered into and shall have effect according to its terms, notwithstanding any rule of law whereby any agreement to insure or indemnify a person in respect of any punishment or liability imposed on him or her in relation to any offence or unlawful act committed by him or by her is void or unenforceable.
The Minister, after consultation with the Minister for Public Expenditure and Reform, the Revenue Commissioners and any other person who, in the opinion of the Minister, might be concerned with or interested in the matter, may prescribe—
- that the arrangements in relation to the bond shall be entered into, only with persons of a prescribed class or classes;
- the form of that bond; and
- the minimum period to be specified in the bond as being the period for which it shall be valid.
A copy of the bond held by a company shall be appended—
- in case none of the directors of the company is resident in an EEA state on its incorporation, to the statement required by to be delivered to the Registrar in relation to the company;
- in case a notification is made below to the CRO in relation to the company, to that notification;
- in case during the period to which an annual return concerning the company relates, none of the directors of the company is resident in an EEA state, to that annual return (unless such a copy has been appended to a notification to the CRO made to the Registrar in that period).
Real and Continuous Link
A company which has a real and continuous link with an economic activity in the State is not subject to the obligation to have an EEA resident director or bond. The CRO may grant the company on the application in the prescribed form, a certificate stating that the company has such a link. The company must furnish proof of such link.
A statement by Revenue made within the previous period of two months on foot of an application, stating that it has reasonable grounds to believe the company has a real and continuous link, is deemed to be proof for the CRO, for this purpose.
The certificate may be revoked, if the CRO forms the opinion that the company has ceased to have the requisite real and continuous link. If Revenue forms this opinion, whether on foot of information received or otherwise, it may give notice to the CRO for this purpose.
A company has a real and continuous link with an economic activity being carried on in the State where one or more of the following conditions are satisfied.
- the affairs of the company are managed by one or more persons from a place of business established in the State and that person or those persons are authorised to act on its behalf;
- the company carries on a trade in the State;
- the company is a subsidiary or a holding company of a company or other body corporate which complies with either or both of the above conditions;
- the company is a subsidiary of a company, another subsidiary of which satisfies the either or both of the above conditions.
25 Directorship Limitation I
A person may not have more than 25 directorships, other than in companies which have a real and continuous link with an economic activity in the State. The rules do not apply to public companies. There are exceptions for certain financial services companies. It is an offence to be a director or shadow director of more than the requisite number of companies.
A person may not be a director of more than 25 private companies limited by shares or by more than 25 companies one or more of which is a private company limited by shares and one or more of which is of any other type of corporate body, capable of being wound up under the Companies Act. There is deemed to be one company in the case of two or more companies, where one of the companies is the holding company of the other or others.
This requirement covers the majority of corporate bodies in the State including all kinds of companies formed under the Act, previous Companies Acts and the range of corporate entities which may be wound up under the Act. Companies in respect of which there is a certificate that there is a real and continuous link to an activity in the State, are not counted in this limitation to 25 shareholders.
25 Directorship Limitation II
If a person, in contravention of the above requirement, purports to become or remain, a director of one or more companies he or she shall be guilty of a category 4 offence. Such an appointment as a director is void. Each purported appointment, in excess of the limit (reckoned above) of a person as a director of a company shall constitute a separate offence.
An appointment, not in excess of the foregoing limit, of a person as a director of a company shall not become unlawful, be rendered void or cease to have effect by reason of a subsequent appointment, in excess of that limit, of the person as a director of a company.
If the appointments of a person as a director of 2 or more companies are made at the same time, or the times at which the appointments of a person as a director of 2 or more companies were made are not capable of being distinguished from one another, then those appointments are deemed to have been made at different times on the day concerned and in the same order as the order in which the companies to which the appointments relate were registered.
Exceptions to Limitation
Public limited companies are not counted for this purpose. A private company (LTD) in respect of which there is a certificate that there is a real and continuous link to an activity in the State, is not counted in this limitation to 25 shareholders.
Certain financial services companies are excluded including banks, various entities and operators in the financial services sector including building societies, banks, market operators authorised investment firms, elective investment undertakings, management companies of financial services entities, unit trust investment, limited partnerships and certain insurance entities.
The CRO may certify in writing that the company falls into other categories or if the Minister directs that the company is not to be counted for the above purpose.
Where the CRO refuses to accept, or certify that the company falls within one of the financial services type categories, an appeal may be made to the Minister. The Minister may reverse or uphold the decision of the and may in the latter case nonetheless, exclude the company from being counted for the above purpose, provided that certain conditions apply.
References and Sources
Companies Act 2014 (Irish Statute Book)
Companies Act 2014: An Annotation (2015) Conroy
Law of Companies 4th Ed. (2016) Courtney
Keane on Company Law 5th Ed. (2016) Hutchinson
Other Irish Sources
Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury
Introduction to Irish Company Law 4th Ed. (2015) Callanan
Bloomsbury’s Guide to the Companies Act 2015 Courtney & Ors
Company Law in Ireland 2nd Ed. (2015) Thuillier
Pre-2014 Legislation Editions
Modern Irish Company Law 2nd Ed. (2001) Ellis
Cases & Materials Company Law 2nd Ed. (1998) Forde
Company Law 4th Ed. (2008) Forde & Kennedy
Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy
Companies Acts 1963-2012 (2012) MacCann & Courtney
Constitutional Rights of Companies (2007) O’Neill
Court Applications Under the Companies Act (2013) Samad
Company Law – Nutshell 3rd Ed. (2013) McConville
Questions & Answers on Company Law (2008) McGrath, N & Murphy
Make That Grade Irish Company Law 5th Ed. (2015) Murphy
Company Law BELR Series (2015) O’Mahony
Companies Act 2006 (UK) (Legilsation.gov.uk)
Statute books Blackstone’s statutes on company law (OUP)
Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington
Company Law in Context 2nd Ed. (2012) D Kershaw
Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam
Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington
UK Practitioners Services
Tolley’s Company Law Handbook
Palmer’s Company Law