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‘Be cautious’ about accepting directorship of unknown firms
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28 Jul 2023 / regulation Print

‘Be cautious’ on unknown firms' directorships

The Corporate Enforcement Authority (CEA) has warned the public against becoming directors of companies about which they know little or nothing, a move that it  describes as “unwise”.

Ireland’s company-law enforcement agency has said that accepting an appointment as company director in such circumstances carries significant risks.

Company law sets down an accountability framework within which a director of a company assumes significant legal responsibilities, the CEA points out.

Those duties and obligations include 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 and exercise the director’s powers only for the purposes allowed by law,
  • Exercise the applicable level of care, skill, and diligence,
  • Ensure that the company maintains adequate accounting records,
  • Prepare financial statements for the company in respect of each financial year,
  • Ensure that certain statutory registers, and other documentation, are maintained by the company – including of members, directors and secretaries, directors’ and secretaries’ interests, debenture holders, minute books and directors’ service contracts .


These obligations are ongoing, the CEA points out, and acting responsibly includes keeping oneself informed about company affairs.

“A person who takes little, if any, active role, in the management of a company, or acts merely as a post box or as a signatory of company documents, is likely to encounter potentially significant difficulties in satisfying a court that they have acted responsibly,” the CEA has warned.

A company director who fails to adhere to their obligations under company law risks being held personally liable for the debts of a company if the company becomes insolvent, the CEA states.

A further risk is that of disqualification. If disqualified, a person may not act as a company director for a prescribed period.  

Recent disqualifications have been imposed by the courts for up to ten years.


Acting as a director of a company about which a person knows little or nothing can also risk criminal liability.

Examples of potential criminal liability under company law include:

  • Liability for providing false information, for instance to the CRO,
  • Liability under numerous ‘officer-in-default’ offence provisions under company law.

Any enforcement actions have the potential to seriously affect a person’s reputation, and/or their ability to work in a responsible position, to obtain credit, and to obtain directors’ and officers’ insurance, the CEA points out.

It urges that approaches to act as a director of a company about which little or nothing is known should be treated with extreme caution.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland