Watchdog warns about legal duties of company directors

The Corporate Enforcement Authority said: "From the moment that a person consents to become a director of any company, that person assumes significant legal responsibilities"

The warning comes amid widespread concerns there is a lack of understanding about the legal responsibilities entailed in becoming a director, no matter how small the company is.

People should be wary of accepting directorships of companies that they know little about, the Corporate Enforcement Authority has said.

The warning comes amid widespread concerns there is a lack of understanding about the legal responsibilities entailed in becoming a director, no matter how small the company is.

"However, from the moment that a person consents to become a director of any company, that person assumes significant legal responsibilities," the watchdog said. 

The risks include being held personally liable for the debts of a company if the company becomes insolvent; the risks of disqualification which in some cases has been determined as long as 10 years by the courts; and the risk of being charged for providing false information. 

"Under Irish company law, company directors are conferred with significant legal duties and obligations," the watchdog said. 

Duties include requirements "to act in good faith in what the director considers to be the interests of the company; act honestly and responsibly in relation to the conduct of the affairs of the company; act in accordance with the company’s constitution; exercise the applicable level of care, skill, and diligence; ensure the company maintains adequate accounting records; and prepare financial statements for the company each financial year".