Companies Act 2014: Directors’ Duties

companies_act_2014 The Companies Act 2014, due to be commenced in law in June 2015, will put the duties of directors on a statutory basis for the first time.

Statutory Duties

These statutory directors' duties will be as follows:-
  1. To act in good faith, in the best interests of the company,
  2. To act honestly and responsibly in dealing with the company’s affairs,
  3. To act in accordance with the company’s constitution and to exercise powers only for lawful purposes,
  4. Not to use company property for their own or others personal gain unless approved by the company’s members or agreed to in the company’s constitution,
  5. Not to fetter discretion unless permitted by the company’s constitution or entered into the company’s interests,
  6. To avoid conflicts of interest,
  7. To exercise care, skill and diligence,
  8. To have regard to the interests of the company’s members.

General Duties

A number of general duties have also been introduced for directors in this Act:-
  1. Directors must ensure compliance with the Companies Act and the various Taxes Acts,
  2. Directors must ensure the company secretary is suitably qualified,
  3. Directors must acknowledge the existence of their duties by signing a declaration to that effect,
  4. Restrictions on loans, credit transactions and certain guarantees and security exist for directors, but will be subject to the new summary approval process,
  5. Directors must disclose any interests in contracts made by the company,
  6. Directors must notify the company of any interests in shares in the company, its parent or subsidiary but no obligation arises if the shares held represent less than 1% of the share capital of the company or if the shares do not have voting rights.
Breaches in these duties may result in a director(s) being liable to account for any gains accrued and they must indemnity companies for losses arising from any such breaches. A Court may grant relief to the director(s) in question where the officer is shown to have acted honestly and responsibly at all times.

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