Directors' duties in Ireland — 2026 update

Further reading from this practice: Blockchain and Irish Law, Brexit and your commercial contracts five years on. For Hugh's background and qualifications, see Hugh Phelan.

Section 228 of the Companies Act 2014 codified the duties of directors of Irish companies for the first time. The codification was substantive rather than merely declaratory — it changed the test for several duties and clarified the position on others — and a decade in, the section is the working framework for board practice in Ireland. This is a working note on what each of the eight duties looks like in practice, written for the director, in-house counsel or finance leader who needs to understand the standard before, not after, a problem arises.

The eight duties

Section 228 sets out eight principal fiduciary duties:

1. To act in good faith in what the director considers to be the interests of the company. The standard is subjective on what the director considers — but the consideration must be genuine and reasoned, and a director who cannot point to a contemporaneous reasoning process is exposed.

2. To act honestly and responsibly in relation to the conduct of the affairs of the company. "Honestly" is the threshold for fraud and dishonesty. "Responsibly" is the broader test that informs every directorial action — was the decision taken with proper preparation, on adequate information, after appropriate consultation, and within the scope of the director's authority?

3. To act in accordance with the company's constitution and to exercise powers only for the purposes allowed by law. The constitution is the contract among the members and between the members and the company. A power exercised outside the constitution is exposed to challenge, even if the exercise was otherwise reasonable.

4. Not to use the company's property, information or opportunities for the director's own or anyone else's benefit unless permitted or sanctioned by the company. This is the conflicts-of-interest duty in its fullest form. It is broader than the common law's no-conflict rule and captures the use of confidential information, business opportunities and corporate property in ways that may not have been understood as conflicted before 2014.

5. Not to agree to restrict the director's power to exercise independent judgment unless this is expressly permitted by the constitution or by the company. This duty protects against arrangements — sometimes seen in shareholder agreements or financing documents — that would commit the director in advance to vote in a particular way without regard to the merits at the time. Such arrangements are unenforceable unless authorised.

6. To avoid any conflict between the director's duties to the company and the director's other (including personal) interests. This is the conflicts duty, layered on top of the no-profit duty. A director with a personal interest in a matter before the board must disclose it, must recuse from the relevant decision, and must not influence the outcome.

7. To exercise the care, skill and diligence which would be exercised in the same circumstances by a reasonable person having both the knowledge and experience that may reasonably be expected of a person in the same position as the director, and the knowledge and experience that the director has. This is the new test for negligence — a combined objective and subjective standard that holds directors to the higher of what is reasonable in the role and what is reasonable given the director's actual knowledge.

8. To have regard to the interests of the company's members. A general duty to consider the interests of the shareholders as a whole, distinct from any particular shareholder or class.

The combined objective-subjective standard

The seventh duty is the one that has produced most discussion among Irish corporate lawyers since 2014. Before the Act, the negligence test for directors was largely subjective — what could reasonably be expected of this director given his or her actual knowledge and experience. The Act introduced an objective floor: the standard of a reasonable person in the same position. A director with limited financial experience is held to the standard of a director in the same position, not to the lower standard of a director with limited financial experience.

The practical implication is that a board appointment should not be accepted by someone who lacks the knowledge to discharge the duties of the role. The defence "I was just a non-executive and didn't understand the accounts" is much weaker now than it was before 2014. The director who accepts an appointment to a board takes on the standard of a director in that role, regardless of their personal background.

The combined standard also operates in the opposite direction: a director with specialist knowledge is held to the higher standard that knowledge implies. A chartered accountant on a finance committee is held to the standard of a chartered accountant; a solicitor on a board is held to the standard of a solicitor. Specialists cannot disclaim their specialism when convenient.

The reasoned-decision process

The duties operate at the level of decision-making, not at the level of outcome. A director who follows a reasonable decision-making process, on adequate information, with disclosure of any interests, and records the decision in a contemporaneous minute, is not in breach merely because the decision turns out to be wrong. A director who skips the process is exposed even if the outcome turns out to be right.

The practical implication for board practice is that the minute book matters. A board that meets, decides and minutes is in a much stronger position to defend a challenge than a board that meets and decides without record. The minute should record who attended, what was discussed, what information was before the board, what disclosure of interests was made, what alternatives were considered, what decision was made and the reasons for it. This is not new — but the Act gives the minute a heightened evidentiary role in any subsequent dispute.

Disclosure and recusal

The conflicts duty operates through disclosure and recusal. A director with an interest in a matter before the board must declare the nature and extent of the interest, must abstain from voting (unless the constitution and the Act permit), and must absent themselves from the relevant discussion. The disclosure should be in writing and entered on the minute book.

The most common failure I see is not the failure to disclose — most directors disclose the obvious conflicts — but the failure to disclose the less-obvious ones. A director whose family member is in a commercial relationship with the company has an interest to disclose. A director whose other board appointment creates an indirect conflict has an interest to disclose. A director who has had social or business contact with a counterparty in a transaction has an interest to disclose, even if the relationship is informal. The Act's test is not whether the conflict actually affected the decision; the test is whether a reasonable person aware of the relationship would consider it a conflict.

The personal-liability dimension

A director who breaches the section 228 duties is liable to the company for any loss caused. The company can pursue the claim directly, or in the event of liquidation, the liquidator can pursue it on behalf of creditors. The Director of Corporate Enforcement, who is the principal regulator of director conduct under the Act, has powers to seek restriction or disqualification orders against directors whose conduct has fallen below the standards.

The Companies Act also imposes specific statutory obligations and penalties — for failure to maintain accounting records, failure to file accounts, failure to maintain the beneficial ownership register, and a host of other procedural duties — each carrying its own personal exposure. For a CFO who is also a director, the combined exposure across the company-law and regulatory regimes is substantial.

The longer note on Irish company law in 2026 — what a CFO must know sets out the broader compliance picture.

Insurance and indemnification

Most Irish companies of any scale carry directors' and officers' liability insurance. The Act permits indemnification of directors against personal liability incurred in the proper performance of their duties, but the indemnification is limited — it cannot cover liability for fraud or wilful default, and the company cannot indemnify a director against criminal fines or civil penalties.

For a new board appointment, the prudent steps are to obtain a copy of the company's D&O policy, to confirm the limits and exclusions, to obtain a copy of the company's deed of indemnity if one exists, and to confirm the company's directors-and-officers insurance covers prior acts where the director is taking up a non-executive role on a board with historical liability exposure. These are conversations to have before the appointment, not after.

The 2026 environment

The directors' duties under the 2014 Act sit within a 2026 environment of heightened regulatory attention. The Central Bank's fitness-and-probity regime applies to directors of regulated firms. The Office of the Director of Corporate Enforcement has been replaced by the Corporate Enforcement Authority, which has expanded powers of investigation and prosecution. The European Union's directives on sustainability reporting, supply-chain due diligence and corporate responsibility impose additional expectations on boards.

A working board in 2026 needs to handle all of these together. The Act's duties are the foundation; the regulatory layer is the elaboration. The director who treats only the Act as relevant, or only the regulatory layer, is exposed on the other side.

For a related working note on the broader Irish company-law framework within which the directors' duties operate, see Irish company law in 2026 — what a CFO must know. To book a notarial appointment with Hugh Phelan, call (021) 489-7134 or visit phelansolicitors.com.