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Buachaill, Lawyer
Category: Republic of Ireland Law
Satisfied Customers: 10623
Experience:  Barrister 17 years experience
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I have been asked to be a director of a private charitable

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I have been asked to be a director of a private charitable school that is registered as a company with the CRO. The current director and secretary were the acting chair and treasurer of the board of management of the school. The board of management under the current director and secretary disbanded and there is now a new board of management. The current directors are threatening to go to the CRO and resign as directors of the company. However, under the directorship of these two individuals, the company is late filing two years worth of accounts with the CRO. Furthermore, the two current directors are not forthcoming with any information for the past two years under their directorship. I do not want to be a director until the accounts are up to date with the CRO and all information has been passed to the current board of management from the current directors. Can they simply resign resulting in the company being wound up?

1. At the outset, just because a company has no directors, this does not mean that it will be wound up. So this possibility is not a real possibility. Secondly, even if you become a director before the accounts are filed, you can safeguard your position by ensuring that the accounts are properly filed by appropriate accountants who have had full access to all the books of the private charitable school. This sort of situation is very common as rows occur in private limited companies all the time. Essentially, a director is safe in law, once he ensures that the accounts are properly prepared from all available information at the time of filing. If there is fraud, this does not mean that the director is liable. It is the person who perpetrated the fraud who is liable, not the director who is merely the steward of the company. In reality, being a director when the accounts is of more beneficial effect as you can ensure that the accounts are done properly and there are no loose ends occurring due to the previous stewardship of the company by the resigning directors.

2. Be aware that the company can sue the previous directors if they refuse to hand over all information pertaining to the running of the school and the company. There is personal liability placed on a director for breach of duty in running a company. Refusing to hand over company documents and provide information about the running of a company is a definite breach of a director's fiduciary duty to the company. Accordingly, if you are a director you can ensure that legal proceedings are instituted against any defaulting director by the company. So once again I would suggest you are better off being a director than not being a director, as you can safeguard the position of the company in these circumstances.

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