Company Director query

Paddyo

Hi

My boss is offering me a position on the board of directors of the company I work for - with no shareholding as of yet.

While this may well be very flattering, I understand that there is no tangible benifit to me. There is infact a number of legal responsibilities whiich I would be undertaking.

It is my undrstanding that I should have full disclosure of financiial information relating to the running of the business.

He feels that for examle with payroll, he should only give me a total figure and take this as being a true figure - without question.

Now what I understand or what he feels makes absolutely no difference. Does anyone know legally what I should be entitled to see as regards the financials of the company.


Thanks in advance

Paddyo

alleepally

If I were you I would talk to CRO directly. You need to satisfy yourself with the relevant authority rather than taking info from a public board.

www.cro.ie - you'll get relevant contact information on there. A 5 minute call with the CRO helpline would answer any questions you have.

Nuttzz

Directors run the company on behalf of the shareholders, so depending on the shareholders you could get a nasty surprise come AGM time if there is something up with the books.

To be blunt, why is he willing to make you a director but not let you see the payroll figure? To be come a director takes trust if he doesnt trust you I wouldnt trust him

You will lose your 800(??) paye tax credit by becoming a director and be required to fill in a tax return regardless if you are being paid via the companies paye system

By making you a director he will save on employers prsi to the tune of about 8.5 of your total wage, I would assume thats the real reason for making you a director of the company.

Feel free to PM me if you have any Q's

Paddyo

Thank you for your replies.

This is a small company with less than 20 employees. His concern about payroll is that that I should not see other directors salaries or them mine.

I think I have a choice of whether I lose the 800 and go onto the S1 prsi category. I would wish to stay exactly as I am in that regard.

Paddyo

Nuttzz

His concern about payroll is that that I should not see other directors salaries or them mine

which means one or more of them is being shafted compared to the other directors, if he cant trust anyone with that figure how can he trust anyone to run the business properly.

He is worried that you or Director Y will see that Director Z is on €XXk more and thats his main problem.

As a company director myself I wouldnt accept this position if there are strings attached, they will bite you in the ass in the long run.

dahamsta

Sounds to me like he's looking for a fall guy.

adam

Walter Ego

The fact fact that you are asking the question at all indicates to me that you smell a rat. Trust your instinct.

Victor

Originally posted by dahamsta
Sounds to me like he's looking for a fall guy.

Hmmm a hint of this anyway.

You can easily get around the issue of payroll confidentiality by having an executive compensation committee comprising, normally, 3 directors.

I suspect his real agenda is to hide his or other's earnings, whether out of paranoia / jealousy or fraud. However, as a director, you should have oversight (not necessarily exact details) of the content of the payroll for the other 15 or so.

dod

I would tread carefully because of recent legislative changes which make the directors potentially joint and severally personally responsible for the debts of a limited company (yes even a limited liability company) in the case of bankruptcy where the company is deemed to have traded itself into that position irresponsibly.

The Office of the Director of Corporate Enforcement has produced a must-read document on the Powers and Responsibilities of Company Directors here. There is also a suite of other documents on the ODCE site that are worth reading here.

I am not suggesting that there is any chicanery afoot, however I wouldn't agree to becoming a director of any company unless I had full disclosure of all relevant information. If you concede this point at this stage, it is going to be very hard for you to enforce it on other matters later. If you do not have full disclosure either now or later, you cannot perform your responsibilities as a director and, in the worst case scenario, you could find yourself at the wrong end of an ODCE enforcement case.

Just tread carefully. Sure it is an honour to be asked, but with the privilege comes responsbility, and under the new legislation, you must take those responsibilities extremely seriously.

Paddyo

Thanks for all of the replies.

I dont suspect any chicanery afoot here. I have worked here for nearly 20 years and have a good understanding of both the man himself and the company.

One director has retired and he is probably thinking about his own retirement a few years down the line.

The payroll issue for him is one of confidentiality.

I have just got a copy of the booklet from the ODCE and will read it now.

Paddyo

The Corinthian

He's giving you a new job title - it's like a raise, but cheaper. The fact that he considers the payroll too confidential to show you probably means that you’re not making anywhere as much as the rest of the directors, btw.

As a director you will have a number of responsibilities and liabilities. Why you would want to become one without equity or payment is beyond me as you have nothing to gain, other than ego, and potentially a fair bit to lose.

If there’s a promise of future equity, then get it on paper. Otherwise it’s just conversation and he’s stringing you along.

A similar offer was made to me a few years ago with a company I consulted for. They wanted me down on their board of directors, but were unwilling to pay for the privilege. Eventually we arranged a contra deal, but I still refused to be put down as a director so I offered them the compromise of being a member of their "board of advisors". They were happy with this, as they just wanted it for press releases anyway.

Just as well, we parted ways (amicably) six months later and a year after that they went bust owing the Revenue something like €100k. I would have been liable for a chunk of that had I accepted their offer.

Only become a director if they offer you something tangible, otherwise they’re just using delay tactics to keep you happy. As for becoming a director of a company without full access to the accounts - that is insane.

Johnmb

Originally posted by Paddyo
I think I have a choice of whether I lose the 800 and go onto the S1 prsi category. I would wish to stay exactly as I am in that regard.

No you don't have a choice, but you will stay as you are. You only go onto class S prsi and lose your credit if you are a propriatary director (i.e. own at least 50% of the share capital).