This article is for company directors in Ireland who need to understand when family members, business partners, or controlled companies count as "connected persons" under the Companies Act 2014.
If you're unsure whether a transaction with a relative or related entity requires disclosure or shareholder approval, this guide covers who qualifies as a connected person, when you must disclose interests, and what transactions need shareholder sign-off to avoid penalties up to €5,000.
Key Takeaways
• Directors must declare any interest in transactions involving connected persons at the first board meeting discussing the matter.
• Substantial property transactions with connected persons exceeding 10% of net assets require shareholder approval before proceeding.
• Connected persons include spouses, children, parents, siblings, business partners, controlled companies, and relevant trusts.
• Failure to disclose connected person interests is a criminal offense with fines up to €5,000 plus potential personal liability.
• Directors with material interests generally cannot vote on connected person transactions under Section 228 fiduciary duties.
Laura Ryan is a practising Barrister at the Bar of Ireland. She graduated from the Honourable Society of King’s Inns in 2024, having previously qualified and practised as a Chartered Accountant in a big four accounting firm.
Who counts as a connected person under Irish company law?
Connected persons include your spouse or partner, children (including step and adopted), parents, siblings, business partners in any partnership you're in, companies you control, and trusts where you or your family are beneficiaries. The definition is deliberately broad to capture all relationships where you might have significant influence or personal interest.
Do I need to disclose transactions with my brother's company?
Yes, your siblings are connected persons, so any substantial transaction between your company and a business controlled by your brother requires disclosure and potentially shareholder approval. This applies even if you have no direct involvement in your brother's business.
What happens if I don't declare my interest in a transaction involving a connected person?
You face criminal penalties of up to €5,000, and the company can void the transaction entirely. You may also be personally liable for any losses the company suffers and required to account for any profits you gained from the undisclosed dealing.
Can I vote on a board resolution involving my spouse's business?
No, directors with material interests generally cannot vote on related transactions under their fiduciary duties. Your company constitution might permit voting in specific circumstances, but the default position is that you must abstain and the board quorum requirements must account for your exclusion.
At what point does a transaction with a connected person require shareholder approval?
Substantial property transactions exceeding 10% of the company's net assets require shareholder approval. This applies to non-cash assets like property, equipment, or intellectual property (not cash loans), whether your company is buying from or selling to the connected person.
When exactly do I need to make my disclosure about a connected person interest?
You must declare your interest at the first board meeting where the transaction is discussed, before any decisions are made. If you can't attend, you can provide written notice, or you can give a general standing notice about your interests in specific entities that gets updated when circumstances change.
Does my adult son who lives independently still count as a connected person?
Yes, all your children remain connected persons regardless of their age or living arrangements. This includes biological children, stepchildren, and adopted children, and the connection continues throughout your directorship.
Do these connected person rules apply to my small family company?
Yes, connected person rules apply to all Irish companies regardless of size. Small family businesses often have more frequent connected person situations, so proper disclosure and documentation are especially important even though operations may feel informal.
If I control 30% of a company's shares and my wife controls 25%, do we control that company for connected person purposes?
Yes, shares held by family members are aggregated when determining control. Your combined 55% would likely constitute control, making that company a connected person for transactions with your directorship company.
How long does someone remain a connected person after our relationship ends?
Connection status generally ends when the underlying relationship terminates—divorce ends spousal connection, leaving a partnership ends partner connection. However, any transactions completed while you were connected remain subject to connected person rules even after the relationship ends.
