Directorship of a Company

01. What is a company director?

A company director is a person duly appointed by the members of the company to manage the company on their behalf.

Please see ODCE Information Booklet and Quick Guide on Company Directors 

02. Do companies have to appoint directors?

Yes, by law all companies must appoint company directors (Section 128 Companies Act).  A Private Limited Company (LTD) must appoint at least one director.  Other types of companies must appoint at least two directors.  The responsibility for appointing directors lies with the members and/or shareholders of the company.

A company is obliged to notify the CRO of any change among its directors on the prescribed form within 14 days (Section 149(8) Companies Act).

03. How are company directors appointed?

The first directors of a company are the persons who gave their consent to become directors and are listed in the incorporation documents filed in the Companies Registration Office (CRO). Subsequent appointments and resignations in most companies take place at the company’s Annual General Meeting (AGM) where the members elect the directors. If a director resigns or leaves during the year, the board of directors may co-opt a person to fill the vacancy until the next AGM when the appointed person is eligible for re-election.

A company’s own Constitution (Articles of Association) normally set out the rules for the appointment and resignation of directors and the minimum and maximum number of directors allowed.

04. Can a company director be removed from office?

Yes - generally. The members of the company can by ordinary resolution remove a company director. Extended notice of 28 days is required and the director is entitled to be heard on the resolution at the meeting. However, a director holding office for life as set out in the company's constitution can only be removed if the correct procedure for the alteration of the constitution is followed.   Independent legal advice should be sought on serious and contentious issues.

05. Is there a limit on the number of directorships a person can hold?

Yes. A person is not allowed to be a director or shadow director of more than 25 companies at any one time. However there are some exceptions to this rule, for example groups of companies are treated as one company and companies that have a real and continuous link with an economic activity being carried out in the State are excluded.

06. Are all directors of Irish companies required to reside in the State?

No. The Companies Act requires that a company should have one director resident in the European Economic Area (EEA) (the EU States plus Iceland, Liechtenstein and Norway). If no director is resident in the EEA, the company must hold a bond to the value of €25,000. If companies can prove they have a permanent place of business in the State they can also avoid this obligation. Details in relation to these exceptions are available on the CRO website.

07. Can a director be restricted?

Yes.  Restriction relates to insolvent companies, that is, companies that are unable to pay their debts as they fall due. Where an insolvent company goes into liquidation or receivership, a director of the company who fails to satisfy the Office of the Director of Corporate Enforcement (ODCE) or the Court that he or she has acted honestly and responsibly may be restricted.   Restriction undertaking is a new administrative procedure that provides an option to submit to a restriction without the need of a Court hearing.

Restriction lasts for a period of five years and confines a person to being a director of companies that have been adequately capitalised by their members or shareholders.

08. Can a person be disqualified from acting as a director?

Yes. A person can be disqualified by way of:  (a) Disqualification order by the court; or (b) Accepting and signing a disqualification undertaking offered by the Office of the Director of Corporate Enforcement.

Automatic disqualification - a person is automatically disqualified by the court, if that person is convicted on indictment of:  (1) any offence under the Companies Act or any other enactment in relation to a company as prescribed; or (2) any offence involving fraud or dishonesty.  

Disqualification is for a period of 5 years and means that person is prevented from being appointed or acting as;- a director or other officer, statutory auditor, liquidator/receiver/examiner, or being in any way, whether directly or indirectly, concerned or taking part in the promotion, formation or management of any company.

The Companies Registration Office (CRO) maintains a public register of disqualified persons.

09. Can a person be automatically disqualified as a director?

Yes. Persons convicted in the Circuit Court or a higher Court of an indictable offence relating to a company or involving fraud or dishonesty are automatically disqualified for five years from acting as company officers (directors, secretary, auditor, liquidator, etc.)

A director becoming disqualified under the law of another state is deemed to be a "change among directors" and must notify the Registrar of Companies.

Where a person that is restricted acts except in the circumstances allowed (company is capitalised adequately) the person is guilty of an offence and if convicted can be disqualified. A director who allows a company to be struck off the register of companies for failing to file annual returns while that company owes money can also be disqualified.

10. Where can I undertake a search of a disqualified/restricted director?

The Companies Registration Office (CRO) maintains a register of disqualified/restricted persons. An online search of the register  can be undertaken to find out if a person is restricted/disqualified.

11. Is there a prohibition on loans by companies to directors and connected persons?

A company is generally prohibited from making loans or quasi-loans to a director or entering into a credit transaction or guarantee providing security. 

This general rule is subject to a number of exceptions-

  1. The value of the arrangement does not exceed 10% of the company's relevant assets (relevant assets means the net assets of the company as contained in the last financial statements as laid before the members at an AGM or where no accounts have been prepared the called up share capital of the company), or
  2. the arrangement was entered into by the company in accordance with the "Summary Approval Procedure" (Section 202 Companies Act), or
  3. the arrangement is an inter-group transaction, that is a transaction with a holding company, a subsidiary, or a subsidiary of its holding company (Section 243), or
  4. directors vouched expenses properly incurred.

12. Can a director notify the CRO of their resignation on failure by the company to do so?

Yes.  Where a company fails to notify the CRO that a director or secretary has resigned, that person may serve notice on the company requesting that the company notify the CRO of their resignation within 21 days.  If the company fails to comply with their request, the person can forward to the Companies Registration Office (CRO) a copy of their resignation together with notice of proof of request to the company on the prescribed form.  (Section 152 Companies Act refers). 

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