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Company Director question

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  • 29-12-2022 7:27pm
    #1
    alan kelly
    Registered Users Posts: 444 ✭✭


    Hi Folks,


    Silly question but wondering if someone was a company Director for 2 company's. Can company A do business for company B ? I assume there is no issue ?



Comments

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    #2
    Allinall
    Registered Users Posts: 6,668 ✭✭✭Allinall


    No issue, once the dealings are at “arms length “.



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    #3
    alan kelly
    Registered Users Posts: 444 ✭✭alan kelly


    Perfect, thanks Allinall.



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    #4
    Mick Tator
    Registered Users Posts: 670 ✭✭✭Mick Tator


    It depends. There is nothing to stop Company A doing business with Company B on ordinary commercial terms. However, if there are different shareholders and the Director of A is in a position to influence the terms/conditions of the transction with Company B s/he should disclose a potential conflict of interest and it would be wiser/best practice to recuse himself/herself from negotiating the transaction.



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    #5
    alan kelly
    Registered Users Posts: 444 ✭✭alan kelly


    Good input, thanks Mick.



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    #6
    Alexander Ozzie
    Registered Users Posts: 11 ✭Alexander Ozzie


    https://www.boards.ie/discussion/2058277417/company-director-question

    Less Profit for sure and might be loss,Not Recommended.



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    #7
    Andyumaaris
    Registered Users Posts: 14 ✭Andyumaaris


    We have 3 companies but same director for all. No issues at all. Each company invoices the other ones



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    #8
    Mick Tator
    Registered Users Posts: 670 ✭✭✭Mick Tator


    https://www.boards.ie/discussion/comment/120610332#Comment_120610332

    There ARE issues, as I pointed out above.

    Leaving aside sanctions and other legal barriers it is perfectly legal for companies to trade with each other. However. when those companies are related (by common directors or shareholders), issues for the directors do arise. If the companies are part of a group, there are also different requirements and exceptions.

    A company director has a fiduciary duty to the company. If a director of two companies, that duty applies equally to both. If there is a substantial transaction between those companies, the director must declare that s/he has a conflict of interest and would be best advise not to vote on the matter.

    There are strict rules on related party transactions. If company A sells a large amount of product to related company B at an unfair price and A subsequently becomes insolvent, those who authorised the transaction could become liable to company A for any gain made by B and would have to  reimburse A for any loss suffered by it. Related party transactions always are examined by a, auditors, who have a legal obligation to investigate and report on any suspected indictable offences (for which  there are civil and criminal sanctions ranging from disbarment to fines and prison).



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