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Implications for 'dummy' director

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    #2
    Boom Boom
    Registered Users Posts: 240 ✭✭Boom Boom


    Hi Op

    As far as I know to be a director of a limited company you must be at least 18.

    If unemployed and claiming state benefits a directorship could impact those benefits.

    An employed person, providing they are not receiving any payments from this company should have no impact on their personal tax circumstances.

    I would advise you to seek professional advice though from an accountant in relation to structuring your set-up.

    Also from a legal aspect there are implications and duties that a person must be aware of whilst acting as a director of a company.

    you should also read http://www.cro.ie/ena/business-registration-company.aspx


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    #3
    JonJoeDali
    Closed Accounts Posts: 537 ✭✭✭JonJoeDali


    nice1franko wrote: »
    I'm opening an online store and mainly due to info like...

    http://www.boards.ie/vbulletin/showthread.php?p=64445716
    http://webkit.o2online.ie/ideasroom/?p=1501
    http://www.boards.ie/vbulletin/showthread.php?p=64848772

    ...I've decided to go with a ltd company. It would appear I need two directors.

    If I put down a family member who is either a) in school (age 16), b) unemployed or c) employed, are there any tax (or other implications) for that person?


    edit- should mention: this director will not be paid or hold any shares

    That's pretty reckless of you tbqh.


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    #4
    nice1franko
    Closed Accounts Posts: 2,300 ✭✭✭nice1franko


    How so? I mean, I'm asking about three different cases: a school-going 16 year old, an unemployed and an employed person.

    Boom Boom has kindly suggested (amongst other things) that case 1 is not possible and further investigation seems to support that. Thanks, again boom boom.

    I'm a bit confused:

    Firstly, I can't see how it would affect him in any way. Secondly, despite that, I'm seeking advice from others to verify that it couldn't possibly affect him. I don't to see how asking questions about the options are in anyway reckless.


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    #5
    JonJoeDali
    Closed Accounts Posts: 537 ✭✭✭JonJoeDali


    nice1franko wrote: »
    Firstly, I can't see how it would affect him in any way.

    Google: directors responsibilities ireland


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    #6
    nice1franko
    Closed Accounts Posts: 2,300 ✭✭✭nice1franko


    I can google very well thanks jonjoe. I've read through a mountain that stuff (e.g. here)... and as best as I can see there wouldn't be any implication for the director provided they didn't get a wage or dividend. As I said, I will be performing all the tasks. The other director will be an ornament, so to speak.

    I honestly can't see how it could affect them but I've no experience in the subject so I'm here to ask people who do and who have more knowledge than me.

    Presumably, the issue you have is with the lads age? Boom boom already pointed out that it's not possible in the first place - so how can it be reckless? The application would be rejected!


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    #7
    antoinolachtnai
    Registered Users Posts: 9,787 ✭✭✭antoinolachtnai


    The fact they aren't getting a dividend or paid makes no difference to their responsibility as director, unfortunately.


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    #8
    nice1franko
    Closed Accounts Posts: 2,300 ✭✭✭nice1franko


    So, in your experience, it is not possible to have a 'dummy' director?


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    #9
    antoinolachtnai
    Registered Users Posts: 9,787 ✭✭✭antoinolachtnai


    It is certainly possible to have a 'dummy' director. But not in the sense you mean.


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    #10
    NCG
    Registered Users Posts: 80 ✭✭NCG


    All directors have responsibilities, even if they choose to take no active part in the management of the company. This has also been tested and proven in case law, where the wife director of a "husband and wife company" has pleaded ignorance to avoid the implications of reckless trading, and lost. I'm sure there are many cases the other way around too, but I can only recall ones with the wife claiming to be a "dummy director".


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    #11
    AndyJB
    Closed Accounts Posts: 177 ✭✭AndyJB


    Hi,
    In legal terms there is no such thing as a "dummy director".

    All directors with or without a shareholding or salary from a ltd co are all equally responsible for the running of the ltd co. This includes being equally accountable for the various annual returns that must be filed each year eg Revenue and CRO returns etc etc.

    You do need to get some legal advice, but in parallel why not review running the business as a sole trader until you're happy with the performance.

    As other posters have also stated it'd be best to get some professional advice.

    Best of luck.


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    #12
    nice1franko
    Closed Accounts Posts: 2,300 ✭✭✭nice1franko


    Thanks guys. I'm meeting an accountant at the weekend but she's a friend so just wanted to learn as much as possible beforehand.

    I have considered ST v. ltd co v. partnership too. I figured I should go as a ltd. co. because I'll be staying on in my current job so as a sole trader I'd be paying tax at highest band on everything this venture makes. In addition, making money in the short term isn't the goal - I need the company to build up some money internally so it can be spent on stock and marketing rather than me pumping money into it all along the way.

    To anyone in a similar situation as myself who might find this useful:

    My sis is applying for this http://www.citizensinformation.ie/categories/social-welfare/social-welfare-payments/social-welfare-payments-and-work/back_to_work_enterprise_allowance which is great - she'd have been helping out with it anyway (without pay) with a view to officially working on it and taking a wage once it's up an running.

    I don't often praise the govt. but hat's off to whoever in there introduced this incentive.


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    #13
    Fergal C
    Registered Users Posts: 298 ✭✭Fergal C


    nice1franko wrote: »
    ...so as a sole trader I'd be paying tax at highest band on everything this venture makes.....

    You would only have to pay tax on actual profits made. So what you could do is start out as a sole trader until the business starts covering its costs and making a profit and then consider forming a limited company at that time. Becoming a sole trader would save you money and time, in comparison to forming a limited company. However, it also has some risks such as unlimited liability and any legal liabilities that the business could potentially incur, would come back to you personally as a sole trader.


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