Directors' Duties in Ireland: Section 228 Explained

In short: Under section 227 of the Companies Act 2014, a director owes the duties listed in section 228 to the company alone, not to individual shareholders, employees or creditors. Those duties require the director to act in good faith, honestly and responsibly, within the constitution and for proper purposes; not to use the company’s property, information or opportunities for personal benefit; to keep an independent judgment; to avoid conflicts; to use reasonable care, skill and diligence; and to have regard to members’ interests. Since 2022, directors must also have regard to creditors’ interests when insolvency looms. A director in breach can be made to account for profits or indemnify the company under section 232.

The principle

A director is a fiduciary. The company is an artificial person that can act only through its board, so the law holds those who control it to standards of loyalty and care. Before 2014 those standards lived in case law, much of it English. Part 5 of the Companies Act 2014 wrote them into statute for the first time in Ireland.

Codification did not cut the link with the cases. Section 227(4) says the duties in section 228, apart from paragraphs (b) and (h), are based on common law rules and equitable principles and take effect in their place. Section 227(5) requires them to be interpreted in the same way, with regard to those rules. That is why an Irish answer on directors’ duties still uses English decisions. They do not bind an Irish court, but they are persuasive, and the Act directs attention to the principles they apply.

The single most important rule is the direction of the duties. Section 227(1) provides that they are owed to the company and the company alone. The Supreme Court had already taken that view: in Crindle Investments v Wymes [1998] IESC 65 IE · Supreme Court, Keane J held that directors do not owe fiduciary duties to individual members merely because they hold office, while accepting that special circumstances can create such a duty.

The duties bind more than formally appointed directors. Section 222 applies Part 5 to a de facto director, someone who occupies the position without formal appointment. Section 221 applies it to a shadow director, a person on whose directions the board is accustomed to act. Both sections carve out people who merely give professional advice.

Statutory basis

Part 5 of the Companies Act 2014 sets the duties out in this order.

Compliance, employees and creditors (sections 223–224A)

Section 223 makes it the duty of each director to ensure the company complies with the Act. Section 224 requires directors to have regard to the interests of the company’s employees in general, as well as its members; that duty is owed to the company alone, so employees cannot sue on it.

Section 224A, inserted by the European Union (Preventive Restructuring) Regulations 2022, applies where a director believes, or has reasonable cause to believe, that the company is or is likely to be unable to pay its debts. The director must then have regard to the interests of creditors, the need to take steps to avoid insolvency, and the need to avoid deliberate or grossly negligent conduct that threatens the viability of the business.

The basis of the fiduciary duties (section 227)

Section 227(1) directs the section 228 duties to the company alone. Section 227(2) provides that a breach does not of itself invalidate a transaction, while preserving the liability of third parties who assist a breach or knowingly receive its benefit.

Section 228: the principal fiduciary duties

Section 228(1) requires a director to:

(a) act in good faith in what the director considers to be the interests of the company;
(b) act honestly and responsibly in relation to the conduct of the company’s affairs;
(c) act in accordance with the constitution and exercise powers only for the purposes allowed by law;
(d) not use the company’s property, information or opportunities for their own or anyone else’s benefit, unless the constitution expressly permits it or the general meeting approves;
(e) not agree to restrict their power to exercise an independent judgment, save in the permitted cases;
(f) avoid conflicts between their duties to the company and their other interests, unless released under the constitution or by the general meeting;
(g) exercise the care, skill and diligence of a reasonable person having both the knowledge and experience expected of someone in the director’s position and the knowledge and experience the director actually has;
(h) have regard to the interests of the company’s members, in addition to the section 224 duty regarding employees; and
(i) have regard to creditors’ interests where the directors become aware of the company’s insolvency.

Paragraph (i) is not in the Act as originally passed. It was inserted by regulation 5 of the European Union (Preventive Restructuring) Regulations 2022 S.I. No. 380 of 2022, with effect from 27 July 2022.

Interests in contracts (section 231)

Section 231 requires a director to declare at a board meeting any direct or indirect interest in a contract or proposed contract with the company.

Liability and relief (sections 232–235)

Section 232(1) makes a director who breaches paragraphs (a), (c), (d), (e), (f), (g) or (i) of section 228(1) liable to account for any gain, indemnify the company for any loss, or both. Section 233 lets the court relieve an officer who acted honestly and reasonably and ought fairly to be excused; section 234 allows an application in advance. Section 235 makes void any provision exempting or indemnifying an officer against such liability, with limited exceptions for successfully defended proceedings and for insurance.

Transactions with directors (sections 238–247)

Section 238 requires prior approval by the general meeting before a company buys a non-cash asset of the requisite value from, or sells one to, a director or connected person. Section 239 prohibits loans, quasi-loans, credit transactions and related guarantees or security for directors and connected persons, subject to the exceptions in sections 240 and 242–245.

Interests in shares and debentures (sections 256–269)

Directors must notify the company of disclosable interests in its shares and debentures, and the company records them in a register of interests.

Key authorities

Crindle Investments v Wymes [1998] IESC 65, [1998] 4 IR 567 IE · Supreme Court — directors owe no fiduciary duty to individual members merely by virtue of their office; special circumstances may create one.
Re Frederick Inns Ltd [1993] IESC 1, [1994] 1 ILRM 387 IE · Supreme Court — where a company clearly had to be wound up, its directors had no power to use its assets to pay other group companies’ tax, and owed a duty to its creditors not to dissipate those assets.
Re Lynrowan Enterprises Ltd [2002] IEHC 90 IE · High Court — an unappointed person is a de facto director where there is clear evidence that they directed the company’s affairs alone, alongside others lacking appointment, or on an equal or more influential footing with the real directors.
Re Tralee Beef and Lamb Ltd [2008] IESC 1 IE · Supreme Court — the common law duties of executive and non-executive directors are not simply to be assumed identical; the role a director was appointed to fill matters.
Re Tuskar Property Holdings Ltd [2026] IEHC 6 IE · High Court — section 228 applied, including the care, skill and diligence standard, to a director without legal or financial training who had routed company money through a personal account.
Connolly v Seskin Properties Ltd [2012] IEHC 332 IE · High Court — the company is the proper plaintiff for a wrong done to it; a shareholder needs the court’s leave, and a very strong case, to bring a derivative action.
Regal (Hastings) Ltd v Gulliver [1942] UKHL 1 England · House of Lords — a director who profits through the fiduciary position must account, whether or not they acted in bad faith and whether or not the company lost anything.
Bhullar v Bhullar [2003] EWCA Civ 424 England · Court of Appeal — directors who took for themselves an opportunity that would have been worthwhile for their still-trading company were in breach.
O’Donnell v Shanahan [2009] EWCA Civ 751 England · Court of Appeal — whether the company could or would have taken the opportunity, or whether it fell within the company’s line of business, is irrelevant.
BTI 2014 LLC v Sequana SA [2022] UKSC 25 UK · Supreme Court — creditors’ interests enter the good-faith duty when the company is insolvent or bordering on it, or insolvent liquidation or administration is probable; a real but not remote risk of future insolvency is not enough.

The English and UK decisions are persuasive in Ireland, not binding. Irish Supreme Court decisions bind the High Court, the Court of Appeal and the lower courts.

How it is examined

Directors’ duties is one of the most heavily examined topics in Irish company law, whether in undergraduate papers, the King’s Inns and FE-1 examinations or the QLTT. It usually appears in one of three forms:

a problem question about a director, often also an employee, who diverts business or an opportunity to a venture of their own;
a problem question about a board taking a hard decision that affects staff and creditors;
an essay on how far section 228 reaches, or on how the duty owed to the company alone sits with the duties to consider members, employees and creditors.

A strong problem answer works in this order:

Frame. Section 227: owed to the company alone, restating equity, English cases persuasive.
Classify the director. De jure, de facto or shadow.
Breach. Take each engaged paragraph of section 228(1) by letter, with one authority and one fact each.
Wider interests. Test the solvency trigger for section 224A and paragraph (i) against the facts.
Remedies. Section 232, injunction, third parties under section 227(2), who sues, section 233 relief.

The trap. Accepting the director’s argument that the company could not or would not have taken the opportunity anyway. On Regal and O’Donnell, that is no answer, and the absence of loss to the company does not help either. The second trap is saying employees or creditors can sue a director directly under sections 224 or 224A: both duties are owed to the company.

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Frequently asked questions

Who do directors owe their duties to in Ireland?

To the company. Section 227(1) of the Companies Act 2014 provides that the duties in section 228 are owed to the company and the company alone. The Supreme Court in Crindle Investments v Wymes held that directors do not owe fiduciary duties to individual shareholders merely because they are directors, although special circumstances can create such a duty.

Do directors have to consider creditors in Ireland?

Yes, in two situations added in 2022. Section 224A requires a director who believes, or has reasonable cause to believe, that the company is or is likely to be unable to pay its debts to have regard to creditors’ interests, the need to avoid insolvency, and the need to avoid deliberate or grossly negligent conduct threatening the business. Section 228(1)(i) requires regard to creditors’ interests once the directors become aware of insolvency. Both duties are owed to the company.

Can a director take a business opportunity the company did not want?

Not without authorisation. Section 228(1)(d) forbids a director to use the company’s opportunities for their own or anyone else’s benefit unless the constitution expressly permits it or the general meeting approves. English authority, persuasive in Ireland, holds that it is irrelevant whether the company could or would have taken the opportunity itself.

Do the section 228 duties apply to shadow and de facto directors?

Yes. Section 221 treats a shadow director, and section 222 a de facto director, as a director for the purposes of Part 5 of the Companies Act 2014, which contains section 228. Both sections exclude a person who only gives advice in a professional capacity, and a company is not a shadow director of its own subsidiaries.

What happens if a director breaches section 228?

Under section 232(1), a director who breaches paragraphs (a), (c), (d), (e), (f), (g) or (i) of section 228(1) must account to the company for any gain, indemnify it for any loss, or both. The court can also grant equitable relief such as an injunction. Section 233 allows the court to relieve a director who acted honestly and reasonably and ought fairly to be excused.

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Directors’ duties in Ireland: section 228 explained