Director Appointment

Lily May

Hi,

I've recently been appointed as a director to a community centre - a company limited by guarantee. can anyone enlighten me as to the extent of my personal liability as a director? should I be asking for Directors & Officers Liability insurance?

thanks!

Peterdalkey

http://www.odce.ie/en-gb/companylawyou/companiesdirectorssecretaries/responsibilities.aspx has lots of info on the topic.

You can ask, but I would think it would be highly unlikely they could even afford the premium or be willing even if they could!!

pedroeibar1

Beat me to it! also
http://www.odce.ie/en-gb/publications/companylawguidance/quickguides.aspx

D&O is very worthwhile but if you have fulfilled your duties properly and have not been negligent you should be ok.

Lily May

but can you enlighten me as to the extent of 'personal liability' of directors of community centres should anyone take a case against us/me?

BONDIred

Lily May wrote: »

but can you enlighten me as to the extent of 'personal liability' of directors of community centres should anyone take a case against us/me?

Liability is limited to the amount the members have undertaken to contribute - Check the Memo & Arts or last set of accounts, will usually be €1

dbran

BONDIred wrote: »

Liability is limited to the amount the members have undertaken to contribute - Check the Memo & Arts or last set of accounts, will usually be €1

The liability of the members and the liability of the directors are two separate things as in company law they two are separate people.

You need to read the links provided earlier in the thread as they should answer your questions.

Regards

dbran

BONDIred

dbran wrote: »

The liability of the members and the liability of the directors are two separate things as in company law they two are separate people.

You need to read the links provided earlier in the thread as they should answer your questions.

Regards

dbran

Sorry assumed she was also a member

pedroeibar1

Lily May wrote: »

but can you enlighten me as to the extent of 'personal liability' of directors of community centres should anyone take a case against us/me?

To get D&O out of the way, it is more relevant to directors of financial institutions / large companies with institutional shareholders rather than entities such as community centres.

Your fears about personal liability - Directors can be held jointly and severally liable for a company’s debts arising from losses resulting from illegal acts, acting beyond their powers or failing to use sufficient skill and care IF IT IS PROVEN that they acted in breach of their responsibilities. This usually means trading while grossly insolvent, which is not usually an issue with the type of operation you have joined. Generally you would not be held responsible for the actions of other directors if you knew nothing about them and took no part in the decision process. However, you cannot do a Nelson and turn a blind eye (particularly in an area which is primarily your responsibility).

As a new director it is important for you to note that under the Companies Act 1990 – section 383 (3) It is the duty of each director and secretary of a company to ensure that the requirements of the Companies Acts are complied with by the company.

In your case, as a non-executive director, the principal things you should make sure of are that proper books and records are kept, that the annual return is filed on time and that taxes and PRSI payments are paid on time. Don’t be afraid to ask questions at board meetings. Do all that and you should be fairly safe. While the law technically treats all directors the same, there has been a tendency to make executive directors more responsible for errors than non-execs.

Being a director of a community project/company is a worthwhile and interesting role; if the board is properly organised they will have an induction course for you. If not, ask for the minutes of the last few board meetings so that you can ‘read’ yourself into the role and see what is going on.

Best of luck with it, obviously you have 'something special' to contribute so you should see their invite as a compliment!

Peterdalkey

to add but 1 item to perdroeibar's post, treat all matters relating to cash, money and expenses in relation to yourself and all others, exec and non-exec as if it belonged to your aged pensioner mother! That will keep you safe and cover your own legal and moral responsibilities!

Lily May

appreciate all responses! very informative.
thank you.

Lily May

pedroeibar1

pedroeibar1 wrote: »

................. if the board is properly organised they will have an induction course for you. If not, ask for the minutes of the last few board meetings so that you can ‘read’ yourself into the role and see what is going on..............

I forgot to include an important note - you should be given/obtain and read a copy of the company's 'Articles of Association' ; basically this is the company's rulebook for the internal management of its affairs.