Directors have many duties and responsibilities.
One statutory responsibility is for the filing of relevant returns/ documents (in relation to the Company) at Companies House and also with the Revenue.
There are also obligations to register with regulatory bodies and/or consumer redress schemes. An example is to register with the Data Protection Commissioner, and if the company is dealing with consumers in relation to property work, then it is also necessary to register with the Property Redress Scheme (PRS)
Directors have the legal obligation on behalf of their company to ensure filing with Companies House of required accounts, confirmation statements and other documents. Depending upon the legislation, Directors may be personally liable to criminal prosecution for any failure by the Company to comply with such obligations.
Directors will not be able to use the defence of delegation to someone else in respect of any breach of these responsibilities.
Directors may also have potential personal liability in the event of insolvent liquidation on the part of the company. This is a fairly complicated area.
In particular, a Director may be personally liable if the Company continues to trade whilst insolvent, where there is no reasonable prospect of creditors being paid.
If a Company is insolvent, the Directors have a legal responsibility to take all reasonable steps to protect the interests of the creditors. This will invariably involve consulting a professionally qualified Insolvency Practitioner.
The Directors also have a positive duty at all times to be aware of the Company’s financial position. It is no excuse that this duty has been assigned to the finance director or delegated to the Company’s internal accountant or some other person. Each Director has a duty to be personally aware of the company’s financial position and to raise the alarm if the Company is continuing to trade whilst insolvent.
The Directors at all times have a duty to exercise their functions in relation to the Company with reasonable skill and care.
The test of what is perceived as reasonable care and skill is a two-part test. Directors will need to satisfy that objectively they have carried out their duties to the standard as would be carried out by a reasonable director. Secondly, they must satisfy a subjective test of complying with the standards of someone who possess their own skill, knowledge, and experience.
Accordingly, not possessing the skill or knowledge to competently perform the role of a director is not a defence to a legal claim for breach of this duty.
There are many fiduciary (or trustee-type duties) that directors possess in relation to the Company and its affairs.
Such duties include: not to act where there is a conflict of interest, not to make a secret profit, to disclose to the board of directors any transaction where there is or may be a potential conflict of interest, and also to act at all times in the best interests of the Company.
Directors have a duty under the general law to maintain the confidence of confidential information relating to the Company and/or its business and affairs and staff and clients/customers.
More specific confidentiality obligations are invariably contained within their service agreements.
There are many other responsibilities and duties on the part of Directors, including statutory or legislative duties. Specific advice on Directors’ duties can be supplied upon requesting legal advice.
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