This article is for company directors in Ireland who have family members involved in their business and need to understand their legal obligations around conflicts of interest.
If you're unsure when you need to disclose family connections, how to handle related party transactions, or what happens if you don't recuse yourself from certain decisions, this guide covers disclosure requirements, when to step back from board votes, and how to protect both yourself and minority shareholders from legal challenges.
Key Takeaways
• Directors must declare any family member's financial interest in a company transaction at a board meeting and record it in minutes. • A conflicted director should leave the boardroom during discussion and voting on matters where they have a material interest. • Related party transactions must be at arm's length, meaning terms as favorable as deals with independent third parties. • Transactions exceeding 10% of company assets (subject to €65,000 threshold) require shareholder approval under Section 238. • Minority shareholders can bring oppression claims under Section 212 if directors use their position to benefit family members unfairly.
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.
Can my spouse or family member do business with my company if I'm a director?
Yes, there's nothing automatically wrong with family members doing business with your company in Ireland. However, you must properly disclose these relationships and manage them according to Irish company law requirements to avoid serious personal liability.
What counts as a conflict of interest when family members are involved?
Under Section 228 of the Companies Act 2014, you have a conflict when a close family member (spouse, civil partner, child, or parent) has a financial interest in a transaction with your company. You're treated as having a "connected interest" that must be disclosed, even though the interest technically belongs to your family member.
How do I properly disclose a family member's interest in a company transaction?
You must declare the nature and extent of the interest at a board meeting as soon as reasonably practicable. The declaration must be recorded in the board minutes—a verbal mention isn't enough. If you become aware of the interest after the contract is signed, you must still disclose it at the next board meeting.
Do I need to leave the room when the board discusses a contract involving my family member?
Yes, in most cases disclosure alone isn't sufficient. You should leave the boardroom during the discussion, take no part in the vote, and ensure the minutes reflect your absence. If you participate despite a known conflict, the resolution can be challenged and you may face personal liability for any company losses.
Can I vote on a contract that benefits my family member?
No, good governance practice requires that you should not vote on any resolution relating to a contract where you have a material interest through family connections. Some company constitutions go further and prohibit you from even being counted in the quorum for that item, so check your own constitution.
What does "dealing at arm's length" mean for family transactions?
It means the terms of any transaction with your family member should be at least as favourable to the company as they would be with a completely independent third party. The deal must be transparent, fair, and follow proper process—you can't give your family member better terms than you'd give an outsider.
When do I need shareholder approval for a transaction with a family member?
Under Section 238 of the Companies Act 2014, you need shareholder approval when the transaction value exceeds 10% of the company's relevant assets, subject to statutory thresholds including a €65,000 benchmark. These are called "substantial property transactions" and require extra scrutiny.
How can minority shareholders protect themselves from directors benefiting their families?
Minority shareholders can bring a claim under Section 212 of the Companies Act 2014 if they believe the company's affairs are being conducted in a way that's oppressive or unfairly prejudicial to their interests. The best protection is ensuring all decisions are documented, disclosures are properly made, and records are kept clean.
