This article is for company directors in Ireland who need to understand when they can vote on matters where they have a personal interest.
If you're unsure whether you need to disclose a conflict, what the disclosure process involves, or whether your company's constitution allows you to participate in conflicted decisions, this guide covers the legal requirements under Section 231, the disclosure process and timing, and what your constitutional documents might say about voting restrictions.
Key Takeaways
• Directors must disclose conflicts at board meetings before voting, with declarations recorded in a register within three days.
• The Companies Act allows conflicted directors to vote unless your constitution prohibits it, always check your constitutional documents first.
• Minor shareholdings under 1% and general notices for ongoing relationships are exempt from repeated disclosure requirements.
• Failing to disclose an interest is a criminal offence that can result in fines, civil liability, and voidable contracts.
• Consider abstaining from conflicted votes even when legally permitted, as voting creates perception problems regardless of legality.
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 I vote on a contract where I have a personal interest?
Yes, under the Companies Act 2014, directors can vote on contracts where they have an interest by default. However, you must check your company's constitution first, as most well-drafted constitutions restrict or prohibit conflicted voting regardless of what the Act allows.
When do I need to disclose my interest in a contract?
You must declare your interest at the board meeting before voting on the conflicted contract. For proposed contracts, disclose at the meeting where it's first considered; for existing contracts, disclose at the first board meeting after you become interested.
What happens if I don't disclose a conflict of interest?
Failing to disclose is a criminal offence under Section 231 of the Companies Act. You could face fines, civil liability if the company suffers loss, and the contract may become voidable if the conflict wasn't properly disclosed.
Do I need to disclose every potential conflict?
No, the Act exempts interests that cannot reasonably be regarded as creating a conflict. Minor shareholdings under 1% of nominal share capital and decisions made outside board meetings don't require disclosure.
Can I use a general notice instead of disclosing every time?
Yes, you can give general notice of ongoing interests in specific companies or persons to avoid repeated disclosures. The notice must be specific about which companies or persons it covers and should be recorded in the register like any other disclosure.
Can I vote on my own remuneration package?
Yes, unless your constitution prohibits it, though best practice suggests you should abstain from such votes. Many constitutions specifically address director remuneration voting rights, so check your company's constitutional documents first.
What if most directors are conflicted on the same matter?
Each director must make their own individual disclosure even if multiple directors have interests in the same contract. If too many directors are conflicted, the meeting might not be quorate, potentially preventing the decision from being made.
Where must conflict disclosures be recorded?
A copy of your declaration must be entered into a register kept at the registered office within three days of the meeting. This register must be available for inspection by directors, secretaries, auditors, members, and the Director of Corporate Enforcement.
