Director’s duties in Ireland
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Director’s duties in Ireland

3 min.

A recent Irish court case dealt with directors’ duties, holding non-executive directors personally liable in a case of corporate fraud, even though they had been unaware of that fraud.

In Powers v Greymountain Management Limited (in Liquidation), Coates, Grainger, Cartu and Cartu [2022] IEHC 599, Mr. Powers asked the Irish High Court to find directors personally liable in circumstances where the company had played a key role in defrauding individuals, including the plaintiff.

The case before the court

Mr. Powers invested his savings in an online enterprise which allegedly traded in binary options. The business informed him it was based in Dublin and that payments were to be made through Greymountain Management Limited, an Irish Company. In fact, the moneys were paid to two non-nationals (the Cartu brothers) and it appears no moneys were invested. The Cartu brothers controlled the company as shadow directors and used two Irish non-executive directors to comply with Irish legislation.

Beware of taking on Directors’ roles without proper guidance. Ecovis can help you with this.
John C. O’Connor, Managing Partner, O’Connor LLP*, Dublin, Ireland

The reasons for the sentencing of the non-executive directors

The court found the two shadow directors personally liable for the losses. It then considered the position of the two non-executive directors and found that they had failed to observe the basic duties of a director as they:

  • failed to inform themselves about the nature of their duties as Director (or if they did, they ignored those duties);
  • failed to acquaint themselves with the company’s affairs generally;
  • failed to exercise appropriate supervision or oversight at board level in respect of the execution or discharge of whatever tasks or functions had been properly and appropriately delegated to others.

The court held that this was sufficient to impose personal liability on all of the directors, including the non-executive directors, notwithstanding that they had no knowledge of the fraud and had either a limited or no role in the management of the company. This case highlights the dangers for directors, and in particular for non-executive directors, in failing to have an appropriate level of understanding of the affairs of a company, say the Ecovis experts. All directors (including non-executive directors) should inform themselves about the affairs of the business and exercise appropriate supervision and oversight at board level in respect of any tasks that are delegated to others. They should inform themselves of the business of a company and not leave this to others.

For further information please contact:

John C. O’Connor, Managing Partner, O’Connor LLP*, Dublin, Ireland

Peter Benson, Partner, O’Connor LLP*, Dublin, Ireland

*O’Connor LLP – Member of ECOVIS International (Dublin)

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John C. O’Connor
O’Connor LLP – Member of ECOVIS International
8 Clare Street (Dublin 2)
Phone: +35 316 7644