The intent of this bulletin is to give an overview of the subjects rather than in-depth analysis. Directors are advised to obtain professional advice before proceeding.
Every company must have at least two directors.
The main purpose of the directors is to manage the affairs of the company.
No formal qualifications are required to become a company director. However certain persons are ineligible to act as company directors, for example auditors of the company, undischarged bankrupts and persons disqualified by a Court from acting as a company director.
There is no legal distinction between an executive and non-executive director, and their legal responsibilities are the same.
Directors are usually appointed by members of the company in a general meeting.
Issues to be considered prior becoming a director
An individual appointed as a company director should become familiar with the following:
Director’s statutory duties and obligations
Director’s common law duties
Penalties for criminal offences
Penalties for civil offences
Appointment and removal of directors
Restriction and disqualification of company directors
Duties of Director
Maintain proper books and records
Proper books and records must be maintained by all companies. These should:
Record and explain the transactions of the company.
Enable the financial position of the company to be determined with reasonable accuracy at any time.
Enable the company’s directors to ensure that the balance sheet and the profit and loss account comply with the Companies Acts.
Enable the accounts to be readily and properly audited.
Prepare annual financial statements
All Companies must prepare annual financial statement which comply with the requirements of the Companies Acts and generally accepted accounting principles. The accounting must show a “true and fair view” of the company’s affairs.
These financial statements generally consist of the following:
Auditor’s report (unless audit exemption availed of)
Profit and loss account
Notes to the financial statements
A cashflow statement may also be required
The directors are generally required to have these statements audited. This is an independent examination of the accounts and must be conducted by a registered auditor. The annual financial statements may be unaudited where the company is eligible to, and has decided to, avail of the small company audit exemption.
Maintain certain registers
Directors must ensure the following are maintained:
Register of Allotments
Register of Members
Register of Transfers
Register of Directors
Register of Mortgages and Debentures
Register of Director’s and Secretarial Holdings
Register of Directors and Secretarial Interests in Securities