Nominee Directors in Ireland

In Ireland, Nominee Directors are directors appointed to represent the interests of third parties (e.g., shareholders or a parent company) on the board of directors. These directors act in accordance with legal requirements and are regulated by the Companies Act 2014. Nominee directors must fulfill their fiduciary duties to the company, even if they are appointed on behalf of external interests.

1. Definition of a Nominee Director

• A Nominee Director is a director appointed to the company’s board to represent the interests of a specific shareholder or group of shareholders, partners, or a parent company. They are typically appointed to provide oversight and protect the interests of specific parties within the company.

2. Fiduciary Duties to the Company

• Nominee directors, like other directors, must uphold fiduciary duties to the company. This means that, despite their obligations to the party that appointed them, they must act in the interests of the company as a whole.

• Key duties of a nominee director include:

• Loyalty: They are required to act in good faith and in the interests of the company, rather than solely in the interests of the party that appointed them.

• Integrity and Independence: Nominee directors must remain objective and independent, even though they represent the interests of a third party.

3. Conflict of Interest

• Nominee directors may face a conflict of interest when the interests of the company and the appointing party do not align. In such cases, they are required to disclose these conflicts to the board and to act in the best interests of the company.

• The Companies Act 2014 requires directors to avoid situations where their personal or assigned obligations might compromise the objectivity of their decisions.

4. Restrictions and Legal Norms

• Under the Companies Act 2014, nominee directors must adhere to corporate governance and disclosure rules, regardless of their relationship with the appointing party.

• Nominee directors must not disclose confidential information received during their role in the company without the board’s consent.

• They are also required to follow all corporate governance norms and standards, like other board members, including financial reporting and disclosure requirements.

5. Liability and Possible Sanctions

• If a nominee director breaches their duties, they can be held liable alongside other company directors.

• In cases of fiduciary duty breaches, sanctions can include disqualification from managing other companies, fines, and legal claims.

• The company may also take legal action against the nominee director if their actions cause harm to the company.

6. Independence Confirmation and Reporting

• Despite being appointed by a third party, nominee directors must confirm their independence and transparency in reporting, disclosing potential conflicts of interest, and providing regular reports on their activities.

• If a situation arises where the interests of the company and the appointing party conflict, the nominee director is required by law to act in the company’s best interests.

Conclusion

Nominee directors in Ireland play an important role in corporate governance, representing the interests of specific parties, such as major shareholders or parent companies. However, despite their connection to the appointing party, they are required to observe their fiduciary duties to the company in accordance with the Companies Act 2014. Nominee directors must act in good faith, avoid conflicts of interest, and ensure that their duties are performed in the company’s best interests.