Ireland · Directors and the secretary

Declaring an interest in a contract, loans to directors and transactions with directors

the Companies Act 2014 · sections 231, 238, 239, 241, 244, 245, 249, 251 to 253 and 255

The declaration of interest is not a board-minute formality. A copy of every declaration made and every notice given under section 231 must be entered in a book kept by the company for that purpose within 3 days after the date on which it is made or given (section 231(6)). Companies that record the declaration in the minutes and stop there have not met the section, because the book is a separate record with its own deadline.

Loans are the harder exposure. Except as section 240 and sections 242 to 245 allow, a company may not make a loan or a quasi-loan to a director of the company or of its holding company, or to a person connected with such a director (section 239(1)). Section 238(1) separately prohibits the arrangement it describes. Where a transaction is permitted by section 244(1), any liability arising from it must be discharged by the person concerned within the period section 244(2) sets.

Section 231 requires a director who is in any way interested in a contract or proposed contract with the company to declare the nature of that interest, and section 231(6) requires the three-day book entry. Sections 238, 239 and 241 carry the prohibitions on arrangements, loans, quasi-loans and credit transactions in favour of directors and connected persons, and on the giving of guarantees or security in connection with them.

Sections 244, 245 and 249 carry the exceptions and the approval routes. A resolution approving a relevant term may not be passed at a general meeting unless a written memorandum setting out the proposed agreement has been made available as section 249(4) requires. Sections 251 to 253 govern payments to a director for loss of office: such a payment is unlawful in connection with a transfer of the undertaking or property unless the particulars, including the amount, are disclosed to the members and the proposal is approved by resolution (section 252(1) and (2)). Section 255 governs contracts with a sole member.

Working files 36, 37, 38 and 39 of the IE-COMPANY agent toolkit cover this situation. Working file 36 works through every declaration of interest, its date and its entry in the section 231 book. Working file 37 works through each arrangement, loan, quasi-loan and credit transaction and the exception relied on. Working file 38 works through directors' expenses, business transactions and the approval memoranda. Working file 39 works through payments for loss of office and contracts with a sole member.

• Working file 36 · Disclosure by a director of an interest in a contract
• Working file 37 · Prohibition of loans and similar arrangements with directors and connected persons
• Working file 38 · Directors' expenses, business transactions and the exceptions to the prohibitions
• Working file 39 · Payments to directors for loss of office and contracts with sole members

ComplianceSME tracks the Companies Act 2014 and updates the toolkit on your account through the Compliance Complete account, so that you are never working from a superseded version. Compliance Complete

• Appointing directors and the secretary, and the EEA-resident director rule
• Removing a director, electing a director and paying directors
• Board meetings, written resolutions of directors and the audit committee
• Directors' duties, shadow directors and the compliance statement
• Notifying interests in shares and debentures and keeping the register

The Irish library holds all 75 situations →